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 the 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.
In a boost to its bargaining position, Jetstar Hong Kong last month named Pansy Ho, one of the richest women in Hong Kong and the daughter of Mr Ho, as its chairwoman.
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.
Frequently Asked Questions about this Article…
Cathay Pacific lodged a formal objection with regulators arguing Jetstar Hong Kong would violate Hong Kong’s constitutional rules because its principal place of business is Australia. Cathay says the franchise is effectively controlled from overseas and that approval would hand Hong Kong’s sovereign air traffic rights to a carrier run by a foreign airline.
Jetstar Hong Kong is a joint venture involving Qantas, China Eastern (Shanghai-based) and Hong Kong’s Shun Tak Holdings. While it has local shareholders and managers, Cathay Pacific contends management control rests in Australia via the Jetstar parent group.
Cathay warns that approving Jetstar Hong Kong would set a precedent by granting control of Hong Kong’s negotiated air traffic rights to a foreign-controlled franchise, which it says would weaken the city’s bargaining power with other governments and invite similar attempts by rival foreign airlines.
Yes. Jetstar Hong Kong has said it meets approval requirements, including principal place of business tests, and recently named Pansy Ho — a prominent Hong Kong businesswoman — as chairwoman to bolster its local credentials.
Dragonair filed a formal objection arguing Jetstar Hong Kong would not make the best use of the few remaining landing slots at Hong Kong’s busy airport, implying a potential negative impact on slot allocation and airport efficiency.
Qantas originally planned a mid-year launch, but regulatory delays have pushed expectations back — the article says it is unlikely Jetstar Hong Kong will start services before at least December.
The article notes that Australia’s competition watchdog decided not to block Air New Zealand from increasing its stake in Virgin Australia by 6 percentage points, taking its holding to 26%.
Investors should monitor regulatory decisions on Jetstar Hong Kong’s licence, any changes to slot allocations at Hong Kong airport, and statements from Cathay Pacific, Jetstar/Qantas and local partners — because these outcomes could affect competition dynamics and revenue prospects for the airlines involved.
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