The airline is also looking to add Manila and Seoul Travellers flying to Sydney are set to have more options in the second half of next year, with Dragonair launching flights to the Australian city. The dominant carrier for mainland-Hong Kong routes is also eyeing Manila and Seoul as its next destinations. This follows the airline's launch of a twice-daily service to Bangkok in November and seven flights a week to Tokyo in April. Dragonair won rights to compete with flagship carrier Cathay Pacific on regional routes after the government abandoned its 'one airline, one route' policy in late 2002. China National Aviation Holding owns 43.29 per cent of Dragonair. Speaking after CNAC's annual meeting, chairman Kong Dong said Dragonair had applied to fly to Manila and Seoul. Dragonair is also focusing on the individual mainland traveller market by lobbying for access to secondary mainland cities where individual travel will be liberalised, as well as more frequent flights to Beijing and Shanghai. Government officials are still negotiating an air services agreement between Hong Kong and the mainland. Asked if Dragonair was interested in launching its own low-cost airline amid the growing presence of regional carriers such as Malaysia-based Air Asia, which will fly to Macau, Mr Kong did not rule out the possibility but said it remained to be seen whether budget airlines would succeed in the region. 'We welcome their competition,' he said. 'My personal view is that customers need different levels of service, not just high-end ones.' Dragonair executive director Thomas Tsang Hing-kwong said the airline was opposed to CR Airways' application to fly to six mainland destinations that Dragonair already flies to. 'These air routes they hope to get are already well served by mainland carriers and Dragonair,' he said. On the pressing issue of how rising fuel costs are affecting the airline industry, Dragonair chief financial officer Francis Wai King-fai said they accounted for 16 per cent of total operating costs. With fuel prices surging 25-30 per cent in the first quarter from last year's average, he said total operating costs were estimated to have risen 4-5 per cent.