Airline industry sources say Dragonair and Cathay Pacific Airways have abandoned talks aimed at a private settlement of their dispute over Cathay's bid to resume mainland flights and are focusing their efforts on preparing for the public hearing scheduled to begin on Thursday. Last week, the Air Transport Licencing Authority (Atla) - an independent statutory body tasked with licencing Hong Kong airlines for air services - refused an application by the two carriers to adjourn the hearing into Cathay's application to operate on China destinations from Hong Kong. Dragonair sparked the issue in September when it filed a formal objection with Atla over Cathay's application to fly between Hong Kong and Beijing, Shanghai and Xiamen. Both airlines said last week, in the wake of Atla chairman High Court Justice William Stone's decision to order the parties to the public hearing, that they were prepared to begin the hearing as scheduled. Five working days from Thursday have been set aside by Atla for the hearing, which is to start at 10am at the High Court in Admiralty. The hearing may end early, depending on how long it takes the two airlines to argue their respective cases and to cross-examine witnesses. Both Dragonair and Cathay are due to present about five witnesses each. The two airlines can still avoid a public hearing if either party drops its Atla submission before Thursday. The hearing is the first to be held by Atla since late 1993, when Cathay filed an objection to then-independent Air Hong Kong's bid to operate a joint-venture cargo service with EVA Air to Taiwan. Industry observers who were present at the last Atla hearing say it was characterised by mudslinging and antipathy by both sides, with this week's hearing likely to be similar. An industry source said Cathay's Atla submission, made before Christmas, contained 'a lot of uncomplimentary remarks about Dragonair's management'. 'There is some bare-knuckle commentary about Dragonair's overall profitability, route economics and overall strategy,' the source said. Dragonair's rebuttal, filed on Wednesday, was about twice as long as Cathay's filing and largely concerned with challenging Cathay's points, he said.