Jetstar battles headwind for Hong Kong takeoff

Jetstar Hong Kong faces stiff opposition from Cathay Pacific to its bid to launch flights by the end of the year, after the incumbent airline claimed the new entrant did not meet the Asian city's constitutional law.

Hong Kong's national carrier also warned that the local economy and aviation industry would be damaged by putting "valuable and limited air-traffic rights into the hands of a carrier controlled by a foreign airline".

Jetstar Hong Kong is a joint venture between Qantas, Shanghai-based China Eastern Airlines and more recently Shun Tak Holdings, the Hong Kong conglomerate founded by gambling and shipping billionaire Stanley Ho.

Qantas had originally planned to launch the budget offshoot in the middle of the year but delays in regulatory approval make it unlikely to get off the ground until at least December.

In a boost to its bargaining position, the budget airline named Pansy Ho, one of the richest women in Hong Kong and daughter of Mr Ho, its chairwoman on Friday. She replaces China Eastern vice-president Tang Bing, less than a year after he was named Jetstar Hong Kong chairman.

The appointment of the well-connected Hong Kong businesswoman will add clout to Jetstar Hong Kong's licence application.

But, in a sign of the fight it will put up, Cathay said the budget airline did not meet Hong Kong's Basic Law requiring airlines to have their principal place of business in the city in order to gain regulatory approval.

"Our review of this application will not change the fact that Jetstar Hong Kong is a carrier that is a franchise of and controlled by Jetstar Australia and its parent, Qantas Airways," Cathay said in a statement.

"It also will not change the fact that putting some of Hong Kong's valuable and limited air-traffic rights into the hands of a carrier that is controlled by a foreign airline would also be very damaging to the local aviation industry and the Hong Kong economy."

Despite the opposition, Jetstar was confident the Hong Kong offshoot would meet all the requirements, including that concerning its principal place of business. A spokesman emphasised that Jetstar Hong Kong was managed by a local team that included chief executive Edward Lau.

Cathay and other interested parties have two weeks to lodge their positions with Hong Kong regulators.

Jetstar Hong Kong hopes to fly A320 aircraft to a long list of Asian countries.

Macquarie Equities analysts have maintained Jetstar Hong Kong faces a "much fiercer" competitor response from Cathay than the Jetstar offshoot has experienced in Japan.