Jetstar Hong Kong licence application rejected: Hong Kong becomes an island of protectionism in Asia

"Never imagine yourself not to be otherwise than what it might appear to others that what you were or might have been was not otherwise than what you had been would have appeared to them to be otherwise." (Alice in Wonderland; Lewis Carroll).

The battle of semantics over the issue of Jetstar Hong Kong's compliance with an esoteric and highly subjective definition of the words "principal place of business" appears to be over. As Hong Kong's licensing authority rejected Jetstar Hong Kong's licence application on 25-Jun-2015, Cathay Pacific had successfully defended its market dominance with arguments more befitting of a scene from Alice in Wonderland. It is a precious victory over longstanding foe Qantas, which recently attacked Hong Kong's bilateral access to the Australian market as making no "concession to the legitimate interests of Australian airlines in establishing reciprocal hub opportunities in Hong Kong."

Ironically, the principal place of business test was established to circumvent the fact that Cathay was actually a foreign owned airline operating under a local AOC; consequently it could not be accommodated under typical bilateral air services agreements which required "substantial ownership and effective control" to reside in Hong Kong. For decades, the world made a special exception for Cathay. Today, even though it is based in Hong Kong, nearly two thirds of Cathay's voting rights reside in London with the Swire Group. And 30% of the airline is owned by Air China. It is also a common assertion that Hong Kong Airlines, another opponent to Jetstar's entry, is controlled by mainland-based HNA.

But, in the arcane world of international aviation regulation, logic and good sense is frequently a scarce commodity. The result here, as Alice in Wonderland's delightfully illogical Queen of Hearts would have said, is "Off with their heads!".