• Sun
  • Dec 21, 2014
  • Updated: 1:26pm
Cathay Pacific

Jetstar Hong Kong not a genuine local carrier, says Cathay in bid to ground budget airline

Budget airline's application for services in the city is challenged on the ground that it violates the Basic Law and is not a genuine local carrier

PUBLISHED : Thursday, 05 September, 2013, 1:11pm
UPDATED : Friday, 06 September, 2013, 10:10am

In a fresh attempt to stop a budget airline from taking off in Hong Kong, Cathay Pacific Airways said yesterday that it has filed an objection to Jetstar Hong Kong's application to run scheduled services in the city on the ground that it violates the Basic Law and is not a genuine local carrier.

Founded by Qantas Airways and China Eastern Airlines last year, Jetstar Hong Kong has been burnishing its local credentials of late to pre-empt just this kind of resistance. In June, Shun Tak took a 33 per cent stake in Jetstar Hong Kong and its managing director, Pansy Ho Chiu-king, was last month appointed chairwoman of the planned budget airline.

Without naming Shun Tak, Cathay said that having a Hong Kong-based shareholder did "not determine management control or principal place of business under the Basic Law".

"Any local franchise operation has local managers. This does not stop it from being controlled from overseas. Management control of the Jetstar Hong Kong franchise clearly rests in Australia," Cathay said.

Management control of Jetstar Hong Kong clearly rests in Australia
Cathay Pacific 

Rejecting Cathay's assertion that Jetstar Hong Kong was controlled by a foreign airline, the budget carrier's chief executive Edward Lau said: "Jetstar Hong Kong is managed locally and we are confident of meeting all regulatory approvals, including principal place of business."

Dragonair, controlled by Cathay, also cast doubt on the Hong Kong International Airport's capacity to accommodate a new carrier.

"We do not believe that Jetstar's business model will make the best use of the remaining available slots at [the Hong Kong airport]. This is particularly important since the third runway at the airport, if approved, is not expected to be in operation before 2023," Dragonair said.

The Air Transport Licensing Authority (ATLA), part of the Transport and Housing Bureau, is responsible for granting licences for passenger airlines and freighters.

"The ATLA will consider applications for licences to operate scheduled air services and the related objections in accordance with the Air Transport (Licensing of Air Services) Regulations," a spokesman for the watchdog said.

In 2005, Cathay opposed the licence application by Oasis Hong Kong Airlines, saying the low-cost carrier had not obtained the required aircraft operator certificate. The ATLA rejected Cathay's objection.

And in 2002, before it took full ownership of Dragonair, Cathay engaged in a dogfight with Dragonair, trashing each other's licence applications.

Dragonair objected to Cathay's application to fly to three mainland cities while Cathay retaliated by opposing Dragonair's application for routes to five other Asian cities.


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This article is now closed to comments

So lets all have an in-depth look at Cathay Pacific's cross share-holding arrangements (with associate companies) and corporate management structure, with directors appointed by a private unlisted company called John Swire & Sons, with their head office at Swire House, Buckingham Gate, London, England.
Talk about the pot calling the kettle black!
Cathay's management is entirely Hong Kong based - the board, CEO, COO etc. Their biggest shareholder Swire is UK based but the test is the centre of gravity of management, not shareholders. Cathay's argument is that the ultimate management decisions (operations, strategy etc) will be taken by Jetstar/Qantas in Australia.
Dragonair quotes:“We are not against competition." ....."we do not believe this is a matter of competition. This application raises important legal and public interest issues."
Yeah, sure. Whenever did any Hong Kong big business ever give a damn about the public interest? This is all about Cathay, Dragonair and other members of the cosy airline cartel continuing to overcharge regional passengers fares well over what people in Europe and North America pay.
And CX is not controlled by management in the UK?
selfishly I actually don't want Jetstar to get the application because this will become another excuse for CX to raise prices (as if they haven't done enough of that already) and reduce the benefits to Marco Polo club. Shun Tak controls the casinos/Macau and now they flushing that cash over to airlines business? not exactly level playing field here.
with qantas shutting down its airlines in a dispute with employees over pay and conditions... and owning Jetstar, do we really want them shutting down their airline when based out of Hong Kong. They could of shown some corporate responsibility to their passengers trapped overseas. Instead they did not... they left their passengers stranded along with their staff. So a company with this record to be based out of HK... **** them leave them stranded!!
this is a budget airline so cx's "excuse" is in order to effectively compete in the budget segment, they need to drop prices, thus reducing their margin and profitability.
Big Sheep
With more competition, comments that prices would increase seem illogical. If anything the reverse tends to happen. It's time for the CX/KA monopoly/ duopoly, call it what you will, to be broken.


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