Jetstar Hong Kong, the budget airline set up by China Eastern Airlines and Australia's Jetstar, has sought regulatory approval for a licence to operate air services from Hong Kong, a senior China Eastern executive confirmed.
Liu Shaoyong, chairman of China Eastern Airlines, said yesterday the joint venture had lodged an application for an operating licence, the air operator's certificate, with the Transport and Housing Bureau. He expected the application to be approved by the end of this year, ready for services to start next year.
'I am confident that the Hong Kong government will be supportive of the joint venture,' Liu said while attending the annual general meeting of the International Air Transport Association (IATA) in Beijing.
The certificate is a document certifying an operator is technically competent to operate an airline.
Jetstar Hong Kong would also need to obtain a licence from the Air Transport Licensing Authority before it could operate scheduled services to and from the city. In addition, it would need to be a designated Hong Kong carrier.
The US$198 million joint venture plans to operate short-haul routes from Hong Kong with three aircraft in the first half of next year. Liu said Jetstar Hong Kong and China Eastern would collaborate, but he declined to give further details.
It is expected that China Eastern will channel passengers from second- and third-tier mainland cities transiting Hong Kong to Jetstar Hong Kong's regional routes.
But observers doubted whether the budget carrier could fulfil the requirements set out in the Basic Law for a Hong Kong airline.
A Hong Kong government spokeswoman said any designated Hong Kong carrier had 'to be incorporated and have its principal place of business in Hong Kong. Any new players are required to meet our regulatory requirements.'
Andrew Pyne, a senior partner at airline and aviation consultant Concuros, said it was difficult to see how Jetstar Hong Kong could qualify as having its principal place of business in the city if decision-making was not done in Hong Kong.
'There are strict regulations on airline ownership,' Cathay Pacific chief executive John Slosar said on the sidelines of the IATA meeting.
Slosar said Cathay Pacific welcomed competition, adding that the airline was already competing with dozens of low-cost carriers, including on Southeast Asia routes.
Air China chief Wang Changshang warned that the low-cost carrier model might not be suitable for mainland China owing to political and economic constraints.
'The infrastructure of China cannot support the growth of low-cost carriers, as there are only 150 airports in the nation,' Wang said at the IATA meeting yesterday.