Is the Hong Kong government in danger of having the third constitutional crisis in 12 months erupt in its face? Amazingly, that is the threat being made by Dragonair in its dispute with Cathay Pacific Airways over lucrative mainland routes. However unlikely Dragonair's threat may be, it certainly goes a long way towards explaining the Economic Development and Labour Bureau's (EDLB) apparent attempts to have a public hearing, to be held next week by the Air Transport Licensing Authority (Atla), adjourned in favour of a backroom settlement. The EDLB has denied involvement, but it is widely believed in the airline industry that Stephen Ip Shu-kwan, Secretary for Economic Development and Labour, has put tremendous pressure on Cathay to abandon its application to fly mainland routes. What is Dragonair saying that can cause so much consternation in the government? Dragonair senior counsel Alan Hoo contends that Article 134 in Section 4 of the Basic Law, which covers civil aviation matters, puts the authority of the Central People's Government above that of the Hong Kong government on matters relating to mainland routes from the SAR. He argues that the Basic Law does not give Atla the authority to license Hong Kong carriers for routes to the mainland not already provided for under the present air services arrangement with Beijing. The legality of this point is something for legal clarification and not this column to decide. But consider the can of worms it opens for the government. The possibility of yet another interpretation of the Basic Law being dragged through the courts must be the last thing that the government wants, given the controversy that has surrounded the right of abode ruling and the present debate over anti-sedition laws in Hong Kong as mandated by the Basic Law. To quickly recap, the two airlines have been engaged in a tussle for regional routes with mainland destinations, monopolised by Dragonair, emerging as the key bargaining chip. In August, Cathay applied to Atla for a licence to resume operations from Hong Kong to Beijing, Shanghai and Xiamen. Dragonair launched a formal objection, triggering a public hearing. Dragonair's objection was predictable, given its heavy dependence on the Hong Kong-Shanghai route for the bulk of its profits, a windfall which Cathay wants its own share of. But on Tuesday the two airlines dropped a bombshell by asking that the hearing be postponed while the pair worked out a compromise in private. Atla chairman High Court Justice William Stone denied the request. However, that Cathay had agreed to consider a settlement with Dragonair was a shock. The airline had pushed heavily for the hearing to be held as soon as possible, guessing that Atla's mandate to protect consumer interest would sway a decision in its favour. The critical question for this column has been, what sparked Cathay's about-face? It now seems obvious, given Dragonair's threat to turn the hearing into a wider constitutional debate with much potential for embarrassment to the government. As yet, Mr Hoo has made only a slight indication of the Basic Law point he plans to present. But whether Mr Hoo's so-called constitutional point is legally upheld is almost irrelevant. Dragonair has managed to scrape up another delaying tactic in its quest to buy time for a backroom deal to solidify. Mr Justice Stone has agreed to hear the point, probably during the first of the five days set aside for the hearing. More importantly, the airline has made good on its threat to turn the hearing into an embarrassing affair if it does not get its way. But whether this tactic will prove fruitful in the long term remains to be seen.