Air war on time for a soft landing

PUBLISHED : Wednesday, 19 April, 1995, 12:00am
UPDATED : Wednesday, 19 April, 1995, 12:00am

FEW people will be surprised by an announcement, expected this week, that Qantas Airways' operating permit to the territory is being renewed.

Officially, a dispute between Hong Kong and Australia had put flights between the two points in jeopardy.

A failure to agree by April 29 would have meant no services between the territory and Australia by Cathay Pacific Airways or Qantas.

A renewed permit for Qantas was to be expected; in reality, it was a certainty, as both sides have far too much to lose with an air war.

It started with Cathay crying foul - Qantas, said Cathay, was taking too many Hong Kong originating passengers from the territory on its onward flights to Singapore and Bangkok - Cathay's so-called 'fifth freedom' traffic.

Qantas said it was not taking too many.

Hong Kong then demanded a 35 per cent limit on the amount of domestically originating passengers Qantas could carry to Singapore and Bangkok.

Australia said no, and talks broke down.

As no more discussions are to be held before Qantas's permit expires, one might think that would mean an end to services.

But no. Hong Kong said it would renew the permit, although with a fifth-freedom restriction for Qantas.

It will not be 35 per cent as anticipated or as demanded, but it has not yet been revealed exactly how much it will be.

That restriction will be the deciding factor on whether this really was the dispute that never was.

Industry observers expect a 50 per cent limit, which the Hong Kong Government will likely come out with and say is a compromise.

What it will be is the industry norm, which Qantas and the Australian Government cannot argue against.

The winner here will be Cathay, although more so in terms of saving face than in saving money.

At the end of the day, the only actor that may gain is Ansett Australia, a relative newcomer on the Hong Kong-Sydney route.

The airline negotiated an agreement with Hong Kong separate from Qantas and Cathay that sees its permit run to October.

Ansett's managers must be patting themselves on the back for securing that one.