Cathay Pacific

New budget airline has no claim to home advantage

PUBLISHED : Wednesday, 18 April, 2012, 12:00am
UPDATED : Wednesday, 18 April, 2012, 12:00am

Australia's Qantas Airways and China Eastern Airlines have teamed up to launch a new budget airline for the region, Jetstar Hong Kong. The two are prepared to invest nearly US$100million each to pursue the fast-growing Asian market covering the mainland, Japan and South Korea, among other destinations.

The new carrier plans to take to the skies in the middle of next year with three Airbus A320 aircraft. By the end of 2015, it plans to have 18 jetliners providing low-cost services for millions of passengers.

Jetstar Group has its business headquarters and maintenance base overseas. So the new budget airline will only be Hong Kong-tagged but not a Hong Kong-based operation. This will infringe Hong Kong's air traffic rights and directly harm local interests with their principal place of business in Hong Kong.

Such a joint venture would create unhealthy competition in the aviation sector and erode the rights and interests of local airlines. Worse, it would set an undesirable precedent and open the floodgates to foreign airlines knocking on our door wanting to provide low-cost airline services for regional markets.

The short-term benefits offered by Jetstar Hong Kong would eventually bring long-term losses to the city, challenge our status as an international aviation hub and threaten to weaken our competitive edge.

Air traffic rights that allow an airline to pick up passengers from one foreign territory and fly them to another foreign territory are privileges that are heavily guarded by any country or territory. They are not something to be given away unconditionally.

If a country or territory decides to open up its airspace or assign air traffic rights to another country or territory, they will sign air treaties that offer mutual benefits. Only airlines that are owned by or incorporated in that country will be given air traffic rights to operate routes into and out of that country.

Since the handover, Hong Kong's status as an aviation hub and its civil aviation sector have been under intense focus. The Basic Law gives over significant space to dealing with Hong Kong's aviation sector.

Article 132 states that all air service agreements providing services between other parts of China and other states and regions with stops in Hong Kong, and air services between Hong Kong and other states and regions with stops at other parts of China, shall be concluded by the central government. And, in concluding such agreements, Beijing shall take into account the 'special conditions and economic interests' of Hong Kong and consult its government.

Furthermore, Article 134 specifies that Beijing shall give Hong Kong the authority to negotiate and conclude with other authorities all arrangements concerning the implementation of its air service agreements. It allows the Hong Kong government to issue licences to airlines incorporated in Hong Kong and having their principal place of business in the city.

Without getting prior approval from the government, Qantas Airways and China Eastern Airlines might have jumped the gun. They have gone against the principles and rules laid down by the Basic Law. This is something we cannot tolerate.

For a region to become and then maintain its aviation hub status, there are many preconditions. Besides having all the geographical advantages and proper infrastructure, it needs to have a strong home carrier with an extensive network of routes.

Cathay Pacific is a genuine Hong Kong-based home carrier, offering extensive global connectivity for passengers and serving the city well. There are other examples, such as Dragonair, Hong Kong Airlines and Metrojet.

The government must remain vigilant in safeguarding our air traffic rights. It should also make it a priority to protect the interests of Hong Kong's own airlines because their well-being is critical to the sustainability of our hub status and the survival of our aviation industry.

Albert Cheng King-hon is a political commentator.