DHL Express has extended its partnership with AHK Air Hong Kong Limited with a new 15-year block space agreement which will enable the carrier’s overnight air services to continue supporting the DHL Express network until 2033.

In July 2017, Cathay Pacific signed a non-binding memorandum of understanding with the DHL Group to purchase its 40% stake in AHK, becoming the sole shareholder of the carrier. Under the agreement, DHL will also purchase eight of Air Hong Kong’s A300-600Fs and lease them back to AHK.

“Asia is expected to experience exponential trade growth and our renewed block space agreement with Air Hong Kong forms a natural complement to DHL’s broader growth strategy in Asia Pacific to meet continually strong market demand,” said Ken Allen [left in photo], CEO of DHL Express. “Air Hong Kong has provided the backbone of our air express capabilities in Hong Kong for 15 years since 2002, and the latest agreement with Cathay Pacific will allow it to reach even greater heights as we consolidate its operations for maximal efficiency and availability.”

The new agreement takes effect on January 1, 2019 and replaces Air Hong Kong’s current agreement with DHL when it expires. The new arrangement will provide a stable revenue stream to Air Hong Kong and a predictable cost base for DHL.

“Air Hong Kong is a joint venture between Cathay Pacific and DHL that has proven extremely valuable to both our businesses, and we expect it to yield even better results and operational agility in its newest iteration,” said Rupert Hogg [right in photo], chief executive officer of Cathay Pacific. “With Air Hong Kong becoming a wholly owned subsidiary of our group, and with the block space agreement  in place, these will enable us to invest in the long-term success of Air Hong Kong, which benefits from the prospering express air cargo market in the region, and capture the abundant business opportunities that are prevalent.”

The new agreement will initially provide DHL with the same service and access to AHK’s capacity as the current agreement, but allows for greater growth and flexibility in aircraft deployment and route selection. DHL’s own air network in Asia uses more than 800 daily flights around the Asia-Pacific region and to Europe and the US.

“This new block space agreement reinforces the successful and longstanding collaboration between DHL Express and Air Hong Kong as we gear up for ongoing growth in Asia-Pacific trade, guaranteeing capacity on many of our critical routes that use Hong Kong as a logistics hub,” said Ken Lee, CEO of DHL Express Asia Pacific. “With Hong Kong’s merchandise exports between January and September 2017 growing by 8.5% compared to last year, we’re keenly aware of the upward momentum that the region’s trade lanes are facing. Our renewed partnership with Air Hong Kong, combined with the new leaseback deal governing its fleet, gives us greater flexibility to add new routes and optimize our aircraft utilization in the face of unpredictable changes or sudden increases in demand.”