Few subjects within the local aviation industry are likely to generate as much debate as that about how the relationship between Dragonair and Cathay will develop. The immediate advantages of their links are obvious within this competitive and global industry, and both sides have credits to count from their 12-year tie-up. But it is difficult to see how Cathay can gain great leverage in the long term by retaining a 25 per cent shareholding in the company.
At the same time, Dragonair appears to be sensing a coming of age and a willingness to be more assertive in policy and direction. Given the turbulence within the industry, it has performed well and is developing a strong front-line management, influenced obviously by Cathay's experience.
The Chinese walls that exist ensure there is a highly controlled flow of information and neither side is discussing frankly its strategy. However, the unease within the relationship that has been present for several years appears to be deepening.
The clearest evidence of the rift that has emerged between the airlines came on Tuesday with a terse announcement from Dragonair that it was preparing to challenge Cathay's attempt to resume services to the mainland. The statement made it blatantly plain that the company would oppose its significant shareholder flying into three of the mainland's most popular routes.
Dragonair argued that the profits it was extracting from the Beijing and Shanghai routes enabled it to maintain more marginal regional routes, which in turn strengthened Hong Kong's status as an aviation hub. By inference, competition from Cathay would threaten this regional role.
This is a flawed argument, which is contrary to everything that Hong Kong should be striving for. Ignoring the politics permeating relations between the airlines, Dragonair is attempting to stifle competition and that cannot be good for Hong Kong.
