CATHAY Pacific can rest a little easier after the pledge from Beijing that it will not intervene in support of China National Aviation Corporation's (CNAC) controversial application to operate out of the territory. In promising that the issue will be left to the Hong Kong Government to resolve, the Hong Kong and Macau Affairs Office director, Lu Ping, may have merely been reiterating what is written in the Basic Law. But, after the confidence-shaking events of the past year, the territory can never hear too many reassurances that it will be allowed to enjoy its promised autonomy.
These remarks should remove Cathay's worst nightmare: that China might back an overt campaign to drive it out of business. Yet it is scarcely surprising if the Swire Group, which currently holds a controlling stake in the company, remains concerned.
Even without Beijing's active intervention, CNAC will still enjoy an unfair advantage in any future battle between the two carriers as a subsidiary of the mainland's air regulator, the Civil Aviation Administration of China (CAAC). That is why further reassurances are necessary. It must be made clear that Mr Lu's promise of non-interference covers not only the central government, but also CAAC. Such guarantees should not be impossible to obtain.
Having presided over the break-up of its former monopoly of air travel in China, CAAC has plenty of experience in remaining impartial between the multitude of competing carriers which now exist on the mainland - and many of which originated as its subsidiaries.
Reassurances that the same impartiality will be observed in Hong Kong can only come directly from CAAC. Government ministers, such as Mr Lu, cannot speak on its behalf. Nor is this a proper subject for discussion in the Joint Liaison Group.
As a commercial matter, it would be best resolved by direct discussions between the parties involved, just as is proving to be the case with the Container Terminal 9 impasse. Now that relations with Beijing seem to be back on track, Cathay would be wise to tone down its rhetoric against CNAC's licence application, and redouble efforts to open a dialogue with CAAC. Only in that way can the necessary assurances of a post-1997 level playing field be obtained, to the benefit of everyone who believes in fair competition.
