Jetstar Hong Kong investor China Eastern reiterates confidence in ventures

China Eastern says it still believes its one-third holding in proposed budget carrier Jetstar Hong Kong would eventually pay off, even as the latter has been forced to sell all but one of its planes as it remains in an indefinite wait for a decision on its fate from the Hong Kong government three years after its creation.

"The process of approval for Jetstar Hong Kong has taken longer than we had expected," China Eastern vice-chairman and chief executive Ma Xulun said yesterday.

Jetstar Hong Kong, a joint venture with Australia's Qantas Airways and local conglomerate Shun Tak Holdings, in March sold two more of its three remaining aircraft for US$83 million as Hong Kong's Air Transport Licensing Authority showed no sign of announcing a decision on whether the airline qualifies as a Hong Kong carrier after a public hearing ended in February.

"Even though the [Jetstar Hong Kong] board has decided to sell two more planes, there is still [one] plane left. That would not affect it entering operation once the approval is in; it is very easy to buy planes from the market," Ma said. "We hope the HKSAR government would speed up the process of approval."

China Eastern's other planned collaboration with Qantas is also on the verge of being quashed by regulatory hurdles after the Australian competition regulator said last week it planned to reject their revenue-sharing joint venture because they together account for more than 80 per cent of the Shanghai-Sydney route.

"There are already many airlines on the China-Australia market. The two countries have agreed to further expand traffic rights after the China-Australia free trade pact was signed [last November]. This will open the door to more airlines serving the market, so you cannot possibly have a monopoly even if you want to," Ma said. "We will make further submissions and try to convince the [Australian Competition and Consumer Commission (ACCC)]."