Cathay lets fly over Jetstar's plan to launch services from Hong Kong
Hong Kong's flag carrier has lodged a formal objection with regulatory authorities in which it claims the budget airline would be in violation of the city's constitutional law because its principal place of business is in Australia, even though it has a local shareholder and managers.
"Any local franchise operation has local managers. This does not stop it from being controlled from overseas," Cathay Pacific said. "Management control of the Jetstar Hong Kong franchise rests in Australia."
Cathay Pacific said approval of Jetstar's application for a licence to operate services would "set a dangerous precedent by granting control of Hong Kong's hard-negotiated sovereign air traffic rights to a carrier that is nothing more than a franchise operation controlled by a foreign airline".
"The setting up of Jetstar Hong Kong is an attempt by a foreign carrier to gain access to Hong Kong's pool of traffic rights without a fair exchange of value to Hong Kong," it said.
"It is not in the best interests of Hong Kong."
Jetstar Hong Kong is a joint venture between Qantas, Shanghai-based China Eastern and more recently Shun Tak Holdings, the Hong Kong conglomerate founded by gambling and shipping billionaire Stanley Ho.
Qantas had originally slated the middle of this year for the launch of the budget offshoot, but delays in gaining regulatory approval have meant it is unlikely to get off the ground until at least December.
Cathay's formal objection is far stronger than a statement it made late last month. It also claimed in its latest attack that giving Jetstar Hong Kong approval to fly would "severely weaken" the city's ability to negotiate with foreign governments for expansion of air services.
"Doing so would also open the door to similar attempts to grab Hong Kong's air traffic rights by other foreign airlines based in rival aviation hubs to Hong Kong," Cathay said.
Cathay's subsidiary airline Dragonair has also filed a formal objection, claiming Jetstar would not make the best use of the few remaining landing slots at the city's busy airport.
Jetstar has said it was confident the Hong Kong offshoot would meet all the requirements for approval, including that concerning its principal place of business.
Separately, Australia's competition watchdog has chosen not to stop Air New Zealand from raising its stake in Virgin Australia by 6 per cent to 26 per cent.
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Cathay Pacific has lodged a formal objection to Jetstar Hong Kong's bid to launch services from Hong Kong, arguing the budget carrier is effectively controlled from Australia and that approval would risk Hong Kong "losing out" on its hard-negotiated air traffic rights.
Cathay Pacific claims Jetstar Hong Kong's principal place of business is in Australia despite local shareholders and managers, and that management control ultimately rests in Australia—an arrangement Cathay says could breach Hong Kong requirements for local control.
Jetstar Hong Kong is a joint venture involving Qantas, Shanghai-based China Eastern, and Hong Kong conglomerate Shun Tak Holdings (founded by Stanley Ho), combining a foreign airline partner with local shareholders and managers.
Cathay argues that approving Jetstar Hong Kong would set a precedent by effectively granting control of Hong Kong's sovereign air traffic rights to a franchise operation controlled by a foreign carrier, potentially weakening Hong Kong's ability to negotiate air-service expansion with other governments.
Jetstar originally planned to launch around the middle of the year, but regulatory delays in gaining approval mean the carrier is now unlikely to begin services until at least December, according to the article.
Dragonair filed a separate formal objection arguing Jetstar Hong Kong would not make the best use of the few remaining landing slots at Hong Kong's busy airport, a concern about efficient slot allocation raised in the article.
Jetstar has said it is confident the Hong Kong offshoot meets all the requirements for approval, including rules concerning its principal place of business, despite Cathay's formal objections.
Separately, the article notes Australia's competition watchdog chose not to block Air New Zealand from increasing its stake in Virgin Australia by 6% to a total of 26%, a regulatory decision affecting airline ownership in the region.
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