Basic Law statute a sticking point in inquiry on Jetstar Hong Kong's licence bid

PUBLISHED : Friday, 23 January, 2015, 3:41pm
UPDATED : Saturday, 24 January, 2015, 4:16pm

A public inquiry to consider low-cost airline Jetstar Hong Kong’s application for an air transport licence allowing it to operate scheduled air services in Hong Kong has centred on arguments about interpretation of the Basic Law, which led to different understandings of whether Jetstar’s principal place of business was Hong Kong.

Cathay Pacific Airways objected to Jetstar’s application in September 2013, arguing  the airline,  though incorporated in Hong Kong, was a franchise of Jetstar in Australia and its management control rested in Australia with Jetstar and Qantas Airways. 

Cathay said that meant Jetstar Hong Kong did not meet the Basic Law requirement of having its principal place of business in the city. 

Jetstar Hong Kong’s lawyer Johnny Mok argued at an inquiry hearing yesterday that the company had its final control in Hong Kong as its headquarters was in the city. 

“Five out of seven board members are Hong Kong permanent residents, and four of them were nominated by Shun Tak Holdings,”  Mok said.

“So far, its employees and senior management all work and live in Hong Kong. Why is the principal place of business not in Hong Kong?”

He added that Cathay was also ultimately controlled by  John Swire & Sons  in Britain  but that did not affect the carrier’s principal place of business being in Hong Kong.

Benjamin Yu, a lawyer representing Cathay, said “principal place of business” did not necessarily mean the place where most of the company’s business was carried out, and the focus should be the ultimate control of the company. “The word ‘principal’ does not mean ‘main’ but means ‘most important’,” he said.

According to the Basic Law, the  government can issue licences to airlines incorporated in Hong Kong  with their principal place of business in the city. 

Yu said the purpose of the article was to make sure  Cathay and other concerned airlines could continue to  keep the licence to operate in Hong Kong at the time of the handover, but no one had interpreted the definition of “principal place of business”.

He said Jetstar Hong Kong’s board meeting resolutions were subject to extraordinary approval from Australia, which indicated ultimate control by Australia.

The inquiry opened yesterday at the Hong Kong International Arbitration Centre and will last for two to three days. It was chaired by Teresa Cheng Yeuk-wah,  the chairman of the Air Transport Licensing Authority.

The Transport and Housing Bureau,  in charge of designating the local carrier status, said late last year that a 10-month review completed in April had “fine-tuned” the framework of designation by spelling out the factors it took into account, which now also include “public interests”.

Sources  said the bureau also looked at the location of the applicant’s  shareholders, their voting powers, places of residence and staff composition.