SWIRE PACIFIC FEW would argue that Swire Pacific has a vested interest in maintaining what many call its 'control' of the territory's aviation industry after 1997. After all, the hong owns 52 per cent of Cathay Pacific Airways, the sole locally based carrier to operate long-haul passenger flights. Swire directly owns 13 per cent of number two carrier Hong Kong Dragon Airlines and indirectly, through Cathay, a further 30 per cent of the increasingly profitable regional carrier. Cathay also holds a 75 per cent stake in all-cargo carrier Air Hong Kong and the two hold separate and combined interests in airline catering, aircraft maintenance, cargo handling and other aviation-related businesses. Although the managing director of Cathay, Rod Eddington, disputes the fact that Swire has a monopoly on aviation in the territory, by his own admission 'it all depends on how you define the word monopoly'. By the textbook definition, it does not have a monopoly. But it is commonly referred to as the territory's de facto flag carrier so it is not difficult to argue that it holds a de facto monopoly. The Hong Kong Government years ago implemented a one-route, one-airline policy, giving whichever airline flies it an effective monopoly. Again, this is a question of how one defines monopoly: it has at least one competitor on each route, as air services are bilateral, and a carrier from the country a Hong Kong airline will service will correspondingly serve the territory. But for a local competitor to fight here is a difficult task, as those who helped start then arch-rival Dragonair found in the mid-1980s. Cathay has been long-protected by the Economic Services Branch, which negotiates air services agreements on behalf of local airlines, and Cathay now faces the very real prospect of losing that protectionism. The opening of the massive new airport at Chek Lap Kok in 1998 will also mean a smaller piece of the pie for Swire, as it faces competition in almost every other area of the business. Swire's agenda is clear. Like any business, it wants to keep what it has. And what it has is financially beneficial. But its management knows that it will not be able to control the industry the way it did in the past. Swire's reliance on earnings from its aviation interests has dropped from almost 50 per cent just a few years ago to about 30 per cent today.