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Cathay Pacific notes issues of bilateral rights in objection to Jetstar Hong Kong

19-Sep-2013 1:04 PM

Cathay Pacific CEO John Slosar, in the Sep-2013 edition of CX World Magazine, reiterated (18-Sep-2013) the carrier's objection to Jetstar Hong Kong's licence application. He said the issue of providing a licence to the proposed LCC  "deserves very careful
consideration because there are serious implications for Hong Kong in granting a licence to what is essentially a franchise of a foreign airline". In addition to noting that "granting Jetstar Hong Kong a licence to operate here would actually break the law" due to the requirement that the carrier must have their principal place of business her, Mr Slosar also noted the issue of bilateral rights. He also stressed that the carrier's objections are not designed to "stifle competition", stating: "We are not worried about one more airline entering the market, and indeed we are very much in favour of giving more choice to Hong Kong’s consumers". [more - original PR

Cathay Pacific:"Aviation is not like other businesses because every government has specific requirements that airlines have to meet in order to get access to traffic rights...As a franchise of a foreign airline, why should Jetstar Hong Kong just come in and grab traffic rights that our government has negotiated to secure? The bilateral system is based on a principle of “you give something, you get something” but Jetstar seems to want to take and not give. This cannot possibly be in the interests of Hong Kong. Our contention is that our hardwon air traffic rights should be used to support the development of aviation that is truly Hong Kong based, and be for the benefit of the local economy. This is particularly important when our airport is already getting short of the capacity it needs to meet even existing air traffic demands," John Slosar, CEO. Source: Company statement, 18-Sep-2013.

Cathay Pacific: "Granting Jetstar Hong Kong a licence to operate here would actually break the law. It would violate Article 134 of Hong Kong’s Basic Law which stipulates that airlines licensed to operate from Hong Kong must have their principal place of business here. That is not the case for Jetstar Hong Kong, which is clearly being set up as a franchise of Jetstar in Australia. In fact, Jetstar Australia and its parent company Qantas have openly admitted they are setting up franchises. Jetstar will argue that it has Hong Kong shareholders and that it will have a local team in place. That may well be the case but, as with any franchise operation, management control will rest firmly with the parent company – in this case back in Australia with Jetstar and Qantas. What this means is that Jetstar Hong Kong’s principal place of business will be in Melbourne, not in Hong Kong. We think the law here is pretty clear and it wouldn’t be good for Hong Kong if any airline can simply come in and set up a franchise," John Slosar, CEO. Source: Company statement, 18-Sep-2013.