Hong Kong Dragon Airlines may be forced to rethink its planned network expansion in Asia and the United States because of the impact of expanded US cargo and passenger airline operations through Chek Lap Kok.
US cargo airlines, especially, were given massively expanded opportunities to operate beyond Chek Lap Kok as a result of the bilateral agreement signed last weekend between Hong Kong and the US, which industry sources said could be detrimental to Dragonair's fledgling cargo operation.
As a result of the agreement, US cargo carriers have an eight-fold increase in fifth-freedom rights through Hong Kong to 64 services per week.
The biggest portion of the cargo rights was expected to be allocated to express carriers United Parcel Service and Federal Express to operate between Hong Kong and their respective Philippines hubs at Clark Airbase and Subic Bay.
But US cargo operators will also be allowed to operate onwards from Chek Lap Kok to most points in Southeast Asia, possibly increasing their appetite for more direct services between US cities and Hong Kong.
As an indication of Hong Kong's importance as a cargo hub to US carriers, Kalitta Air - a small cargo airline and charter operation based in Michigan - attended the negotiations for the first time. The carrier was expected to be certified for Hong Kong operations. A Dragonair spokeswoman declined to comment on the deal, saying only that the airline 'welcomed the new agreement'.
Robert Adams, a Dragonair director seconded from Citic Pacific, which owns a 29 per cent stake in Dragonair, said it was now up to Dragonair to figure out a strategy to build up its cargo operations in light of the new deal. 'It's now a reality, it's done, so each airline has to live with it. Will it be a real problem for Dragonair? I don't think so, they will just have to work with it,' he said.
