State-controlled China National Aviation Company (CNAC), which own's 43 per cent of Dragonair, has given its strongest indication yet the carrier may challenge Cathay Pacific Airway's dominance. CNAC said yesterday that Dragonair was planning a substantial acquisition of Boeing freighters. Dragonair plans to launch a European cargo service next month, and CNAC has long wanted to enter the long-haul passenger market. Cathay is the only domestic carrier that serves long-haul routes from Hong Kong. 'We have already been given permission to fly to Europe,' CNAC chairman Wang Gui-hsiang said yesterday. 'From this, you should be able to see where things are headed. Nothing in this business is permanent; change is the norm.' Dragonair recently received permission from authorities to launch cargo services to 25 destinations in Europe, Asia and North America. After its annual meeting yesterday, Dragonair's chief executive Stanley Hui said the carrier would acquire another two B747 freighters in the next year. 'Over the next three to five years, we will probably acquire another four to five [B747 freighters],' Mr Hui said. He said cargo services to the US would be launched once Dragonair was ready and the conditions were right. Director Peter Lok Fung-kam - former head of the Civil Aviation Department - said that the 'one route-one airline' policy was not fixed and that the arrangements on specific routes were now being reviewed. The 'one route-one airline' policy was effected in the mid-80s to prevent competition between the two airlines. Cathay was designated all of the premier routes within Asia, while Dragonair was given sole rights to service the mainland market. 'The Government did not see it as an absolute policy,' Mr Lok said. 'Some routes can have more than one airline, but on others it would be wasteful.' Mr Lok indicated that CNAC would like Dragonair to gain access to new routes. But he said the carrier would be reluctant to allow Cathay on to its most prized turf - the Hong Kong-Shanghai route. 'We would rather not consider other airlines on [the Shanghai] route yet,' Mr Lok said. '[As for routes outside of China], each will have to be reviewed on its own merit.' In the short term, Dragonair is looking to expand its passenger services in the regional market and to expand its dedicated cargo operations to the mainland, Europe and North America. Dragonair said it had no immediate plans to begin passenger services to cities served by Cathay. Mr Wang side-stepped questions on whether CNAC was seeking to takeover majority control of Dragonair. 'It's not about what we want,' he said. 'None of the other shareholders want to sell.' CNAC has long wanted to start its own SAR-based international carrier. In 1996, to prevent it from doing so, Cathay and parent Swire Pacific sold it a 43 per cent stake in Dragonair. Today, Cathay retains a 17.78 per cent stake in Dragonair, Swire Pacific 7.78 per cent and Citic Pacific 28.49 per cent. It is understood that Citic do not wish to see Dragonair and Cathay compete, as they also own a 25 per cent interest in Cathay.