Talks herald more landing rights as bilateral system opens up Hong Kong airlines can expect to gain further access to the lucrative China market at the next round of bilateral talks scheduled for early next year, the government's chief negotiator said yesterday. Wilson Fung, the deputy secretary for economic development and labour, told delegates at the 'Opening the Skies' conference, co-organised by the South China Morning Post, that he was confident of further liberalisation in the mainland market at the next meeting with the General Administration of Civil Aviation of China, which is expected in January. The significance of the mainland routes to both Hong Kong airlines and the prosperity of Hong Kong as a hub for regional travel was recently highlighted in a report commissioned by Cathay Pacific. But the government has been criticised in the past, based on the perception that foreign authorities were winning better agreements from their Chinese counterparts and that Hong Kong was losing its status as the preferred gateway to the mainland. 'I think we must admit we are losing some leverage because a lot more countries are allowed to operate direct services into Beijing and Shanghai,' Mr Fung said. 'But Hong Kong remains a very important business hub and still maintains one of the biggest networks into China. 'I do not think we are facing any insurmountable difficulty in liberalising the mainland market.' In addition to new rights in China, an industry source said negotiations with the hitherto resistant Italian authorities would resume at the end of this month. Mr Fung was speaking during a wider debate on the government's policy of 'progressive liberalisation', a gradual opening of the system of bilateral agreements that determine the capacity and competition on international routes. He said that while the government did not insist on reciprocity in its bilateral negotiations, there could be no unilateral liberalisation as Hong Kong would inevitably receive nothing in return. Likewise Tony Tyler, the chief operating officer at Cathay Pacific, said: 'Hong Kong is already very open, with 63 air service agreements of which 56 have spare capacity. There is a lot of openness and a lot of traffic rights available for airlines on all sides.' But University of Hong Kong business professor Michael Enright said Cathay's support was predictable, given that the airline flourishes in a system that arguably protects its interests. The airline has enjoyed net margins 10 percentage points above the industry average over the past decade, he said. 'Why is it necessary for a Hong Kong carrier to have access to a route in order for it to be beneficial to Hong Kong?' Mr Enright asked. 'The fact of the matter is that more competition means lower fares and higher throughput.' Lack of carriers on routes out of Hong Kong is only part of the reason why ticket prices remain high - a recent survey by American Express showed the average price of a full economy ticket had risen 5.8 per cent over the last three-year period. The other reason is a dearth of low-cost carriers either serving or based in Hong Kong. Wow Macau and Air Asia established themselves in Macau due to lower costs. One argument put forward yesterday was that the government had done too little to encourage the low-cost carriers via tax breaks or lower infrastructure costs.