Cathay Pacific Airways has decided against filing an official objection against Hong Kong Dragon Airline's plans to start competing services to five regional cities in an apparent move to mend the growing rift between the two Hong Kong-based carriers. In a statement last night, Cathay said it would 'not lodge an objection with Hong Kong's Air Transport Licensing Authority (Atla) over Dragonair's application to fly to Manila, Tokyo, Seoul, Bangkok and Sydney'. 'Cathay Pacific fully supports what is in the best interests of Hong Kong,' Cathay's general manager of international affairs, Andrew Pyne, said. 'Two strong and respected airlines are now well established here, and we believe they should both be able to contribute to Hong Kong's future economic development by building more effective hub operations at [Chek Lap Kok]. 'To do this they will both need to have the ability to expand operations to serve new destinations and markets.' Earlier this month, Dragonair filed an official objection against Cathay's application for rights to resume flights to Beijing and Shanghai after a 12-year absence, and to start a new service to Xiamen. Speculation arose that Cathay would follow suit with its own objection, although its officials remained cagey over the issue. In making its case against Cathay, Dragonair said that for a second carrier to begin mainland operations from Hong Kong would create 'uneconomic overlapping of services'. Dragonair also said that a Cathay return to China would damage its ability to serve small mainland destinations, given that opportunities for Dragonair to diversify its revenue base away from Shanghai and Beijing and towards other major air travel destinations had been limited in the past. A Cathay official denied, however, that it was making a 'concession to Dragonair' with its decision not to file an objection. 'Now that Dragonair is maturing as a company, they are rightly looking about going further afield. What we are saying is that we are comfortable with this competition,' the Cathay official said. 'It may have been government policy in the past to limit competition amongst the airlines, but it's an old policy and we feel that the time is right to re-examine that. We think the industry should be allowed to operate openly.' It is uncertain whether Dragonair will drop its objection as a result of Cathay's gesture, although that certainly would be Cathay's hope. The Cathay official said: 'I don't know if Dragonair will also drop its objection, although they can certainly do so under law. A contested hearing takes a lot of energy to prepare for, and we can save a lot of taxpayers' money [if the objections are dropped].' Dragonair said last night that 'since the licence application process is ongoing, it would be inappropriate to comment'.