Jetstar to launch Hong Kong based carrier
Seems like its easy to make money if the incumbent pulls out and gives you the route+pax.
Seems like its hard to make money if you have displace an incumbent.
Read some of the comments in the HKG papers, there's no love for a monopolistic airline system thats currently the status quo in HKG. If Australia was smart they would limit further expansion of CX's rights into this country, much like what would happen if the shoe was on the other foot.
Seems like its hard to make money if you have displace an incumbent.
Read some of the comments in the HKG papers, there's no love for a monopolistic airline system thats currently the status quo in HKG. If Australia was smart they would limit further expansion of CX's rights into this country, much like what would happen if the shoe was on the other foot.
600ft-lb
Yep, seen that rubbish in the Hong Kong newspapers. Most I wouldn’t wipe my backside with. If you think there is a monopoly in the airline industry here then you are just as delusional as the hordes of the great unwashed that read that trash. For your information there are over 107 difference airlines that operate into and out of Hong Kong. Just because there are four local carriers doesn’t mean there isn’t very stiff competition here. I can tell you there is more competition here than there is in Australia.
As for your threat that Australia should block any further expansion of CX into Australia, it’s already happened sunshine. QF lobbied the Federal government well over a year ago. But just like when QF pressured the Federal government into giving it billions of dollars of loan guarantees and grants most federal politicians will figure out QF’s play here, especially when Hong Kong’s big brother next door gets involved, and believe me, they will.
Read some of the comments in the HKG papers, there's no love for a monopolistic airline system thats currently the status quo in HKG. If Australia was smart they would limit further expansion of CX's rights into this country, much like what would happen if the shoe was on the other foot.
As for your threat that Australia should block any further expansion of CX into Australia, it’s already happened sunshine. QF lobbied the Federal government well over a year ago. But just like when QF pressured the Federal government into giving it billions of dollars of loan guarantees and grants most federal politicians will figure out QF’s play here, especially when Hong Kong’s big brother next door gets involved, and believe me, they will.
For starters, I'm no fan of Jetstar I'll just put that out there.
I didn't suggest there wasn't competition in HKG. But isn't this a 'free' market all the airlines operate in ? Strongest survive, the weakest fade away ? Why would they be so scared of a minnow turning up with a 'capital light' investment.
Let us in or else ? Don't protect your local market or else ? Shoe, other foot, etc.
"At the end of the day the governments should look after the public interest, and expansion will provide more public interest. If there is more capacity, we will take advantage of that."
-Ivan Chu
Just because there are four local carriers doesn’t mean there isn’t very stiff competition here. I can tell you there is more competition here than there is in Australia.
As for your threat that Australia should block any further expansion of CX into Australia ........ especially when Hong Kong’s big brother next door gets involved, and believe me, they will.
"At the end of the day the governments should look after the public interest, and expansion will provide more public interest. If there is more capacity, we will take advantage of that."
-Ivan Chu
600ft-lb
No it’s not a free market. Just as no Hong Kong airline can set up a foreign controlled international airline in Australia, neither can a foreign airline do the same in Hong Kong. No Hong Kong carrier has anything to be scared about. All they have insisted upon is the laws governing airline ownership in Hong Kong be upheld. If the shoe was on the other foot I can assure you Qantas would be demanding the same from the Australian Federal Government. I still have memories of Qantas squealing like stuffed pigs when Singapore Airlines wanted to operate from Australia to the USA.
With all due respect, you clearly have no clue how the negotiation of Bilateral Air Service Agreements are conducted and how they operate. QF through the federal government have tried to blackmail Hong Kong into changing Hong Kong’s airline ownerships laws by blocking any further traffic rights to Hong Kong carriers into Australia. What QF was really trying to do though was circumvent Australia’s Bilateral Air Service agreement with Hong Kong by gaining direct access to Hong Kong’s Air Service agreements with other countries. This is something that clearly isn’t available to foreign carriers in Australia so why should it be available to Australian carriers in Hong Kong? QF through their lobbying of the Federal Government started this fight not Hong Kong. Hong Kong will try to sought it out diplomatically with Australia. I’m sure that sane heads will prevail from Australia but if they don’t Hong Kong will have little option but to refer it to the Chinese Central Government who will sought it out.
Totally irrelevant to this debate. Ivan was making a comment about the building of the third runway in Hong Kong.
I didn't suggest there wasn't competition in HKG. But isn't this a 'free' market all the airlines operate in ? Strongest survive, the weakest fade away ? Why would they be so scared of a minnow turning up with a 'capital light' investment.
Let us in or else ? Don't protect your local market or else ? Shoe, other foot, etc.
"At the end of the day the governments should look after the public interest, and expansion will provide more public interest. If there is more capacity, we will take advantage of that."
-Ivan Chu
-Ivan Chu
No it’s not a free market. Just as no Hong Kong airline can set up a foreign controlled international airline in Australia, neither can a foreign airline do the same in Hong Kong.
Like Alan Joyce said, if the same rules were applied to everyone, CX and KA would be shut down tomorrow.
404 Titan
"No it’s not a free market. Just as no Hong Kong airline can set up a foreign controlled international airline in Australia, neither can a foreign airline do the same in Hong Kong."
You are wrong, In Australia ANY airline can set up, irrespective who owns it. This is unlike any country in the planet. I would not be surprised if CX does just that and there is nothing QF can do about it because the Government has already opened the doors!
600ft-lb-CX is based and controlled IN Hong Kong, Jetstar is NOT! Alan Joyce has been poorly advised! If the same rules applied around Asia then Jetstar would be shut down tomorrow!
"No it’s not a free market. Just as no Hong Kong airline can set up a foreign controlled international airline in Australia, neither can a foreign airline do the same in Hong Kong."
You are wrong, In Australia ANY airline can set up, irrespective who owns it. This is unlike any country in the planet. I would not be surprised if CX does just that and there is nothing QF can do about it because the Government has already opened the doors!
600ft-lb-CX is based and controlled IN Hong Kong, Jetstar is NOT! Alan Joyce has been poorly advised! If the same rules applied around Asia then Jetstar would be shut down tomorrow!
600ft-lb
SQ, NZ & EY own a domestic airline in Australia. Perfectly legal under Australian laws. They don’t own the international arm (separate company) of the domestic airline. Funnily enough I remember QF squealing like stuffed pigs to the Fed’s when the said international carriers increased their shareholding in the domestic carrier claiming unfair competition and breaching Australian ownership rules of international carriers based in Australia.
Last time I looked Swire Pacific was a Hong Kong company with its “Principal Place of Business” in Hong Kong. They are one of Hong Kong’s largest property developers/owners/managers, they have substantial shipping and insurance businesses here in Hong Kong and are one of the largest bottles of Coca Cola in the world with their ownership of Swire Coca Cola HK Ltd. Swire Pacific owns 42% of CX, Air China owns 30%, Public Shareholders in Hong Kong own 25% and CITIC Pacific owns 3%. 67% of CX is owned in accordance with the “Principal Place of Business” set in Hong Kong’s constitution, “The Basic Law”. What businesses do Qantas or China Easter have in Hong Kong? Nil
A completely false through away line by Joyce to the hordes of the great unwashed. I see you have fallen for it hook, line and sinker.
busdriver007
Actually all international carriers based in Australia must be 51% locally controlled and owned. There are no such rules for domestic carriers operating in Australia. They can be 100% foreign controlled and owned.
AIR NAVIGATION ACT 1920 - SECT 11A
You had best tell SQ, AirNZ and EY that I'm sure they'll be interested.
You should also tell Swire Group that as well. I'm really interested what material difference there is between an ownership structure like CX's parent company has compared to the proposed Jetstar HK ownership structure.
Like Alan Joyce said, if the same rules were applied to everyone, CX and KA would be shut down tomorrow.
busdriver007
You are wrong, In Australia ANY airline can set up, irrespective who owns it. This is unlike any country in the planet. I would not be surprised if CX does just that and there is nothing QF can do about it because the Government has already opened the doors!
AIR NAVIGATION ACT 1920 - SECT 11A
404 Titan
Check the Virgin Australia structure and you will find it definitely does not conform with Section 11A! Chinese mirrors, just like Jetstar! The difference is that
most Governments enforce their own laws.
Check the Virgin Australia structure and you will find it definitely does not conform with Section 11A! Chinese mirrors, just like Jetstar! The difference is that
most Governments enforce their own laws.
Originally Posted by busdriver007
You are wrong, In Australia ANY airline can set up, irrespective who owns it. This is unlike any country in the planet. I would not be surprised if CX does just that and there is nothing QF can do about it because the Government has already opened the doors!
Australia also does not permit airlines from most countries to pickup and fly internationally beyond Australia, where Australia requires that of most countries in order for them to operate into Australia. Hong Kong does permit airlines to pickup passengers in Hong Kong and fly beyond, eg the Qantas Hong Kong London route, Qantas can sell tickets on that leg commencing in Hong Kong.
In Hong Kong, there is no local ownership requirement, when Qantas made their application the structure was 50% Qantas, 50% China Eastern, no local ownership (that came later). The requirement in the EU, Hong Kong and a few other places in the world the requirement is for the PPOB to be in the state, the place where the majority of the airline operations are conducted.
Jetstar failed in Hong Kong as being a franchise of the Australian operation, key airline functions under the Jetstar service agreement were not going to be performed in Hong Kong, they were going to be performed in Melbourne, like they are for the other franchises. Other key features were that Jetstar Hong Kong was not able to self determine routes and fares. Jetstar would not provide competition on routes Qantas, China Eastern and their subsidiaries operate.
The other silly part of the application was applying for around 250 routes out of the gate with 6 aircraft, no new airline with a handful of staff can have the systems, processes, and people in place to manage that route structure to the satisfaction of the regulator. It is no secret that the Hong Kong regulator put the brakes on other operators when they see the see them expanding too quickly. Why they did not start with an application with a handful of routes and build on that is beyond me. What do you think CASA would had said to Virgin if they wanted an new international AOC with a handful of 777s to cover 250 routes ?
The difference between the requirements Australia works under (majority ownership and control), and what Hong Kong works on (PPOB) is even with majority local ownership, companies can offshore most of the operation, and there can be reduced local regulatory oversight of that operation. Money also leaves the state, and maybe taxed elsewhere. Classic example is Google only pays tax in Australia on a gross income of around $70,000, the billions of dollars of "operations" being generated in Australia are being "performed" elsewhere and the government misses out on that significant tax base. In an airline context it means money that could otherwise be used to pay for local aviation initiatives is going elsewhere.
ICAO identified this problem in the 1980s/1990s when complex financial instruments being used to structure airlines on paper appear to be show them as being locally controlled. They changed the recommendations from majority ownership and control to PPOB. The ICAO standard air service agreements used in Australia with the majority of countries now use PPOB.
With PPOB the requirement the local content is increased, so is the local regulatory oversight. It encourages foreign investment, while building the local industry.
I don't understand your doublespeak titan, you obviously are aware that foreign companies OWN Virgin Australia which in turn owns the international part of the business and is by an 'arms length' arrangement able to control Virgin Australia International's operation.
Qantas argued that it constitutes foreign ownership and control by means of foreign airline shareholders almost 100% of the domestic carrier and thereby owning and controlling the international airline operating out of Australia and got smacked down.
Now apply this same logic to Hong Kong, CX argued the same and won, albeit a new airline startup not one already in operation.
Dance around those 2 facts however you like, its hypocritical of one ultimately foreign owned company to be allowed operate an airline in Hong Kong whilst not allowing another ultimately foreign owned airline to operate in Hong Kong. Creative ownership and management structures aside, that's the fact and AJ called them out on it.
Qantas argued that it constitutes foreign ownership and control by means of foreign airline shareholders almost 100% of the domestic carrier and thereby owning and controlling the international airline operating out of Australia and got smacked down.
Now apply this same logic to Hong Kong, CX argued the same and won, albeit a new airline startup not one already in operation.
Dance around those 2 facts however you like, its hypocritical of one ultimately foreign owned company to be allowed operate an airline in Hong Kong whilst not allowing another ultimately foreign owned airline to operate in Hong Kong. Creative ownership and management structures aside, that's the fact and AJ called them out on it.
Originally Posted by 600ft-lb
Now apply this same logic to Hong Kong, CX argued the same and won, albeit a new airline startup not one already in operation.
The rejection was due to not meeting the PPOB requirements, the ownership structure was not raised.
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None of the objections I am aware of for Jetstar Hong Kong actually raised the ownership/control structure as an issue
ATLA Decision Regarding Licence Application of Jetstar Hong Kong Airways Limited
Full Written Decision (PDF File)
Summary of Decision (PDF File)
Have a look at the summary, point 6 (page 3).
600ft-lb
I suggest you do some research into company law before you lecture me about Virgins ownership. For the record Virgin Australia’s foreign ownership is as swh said, in it the domestic company. The international company might be owned by the domestic but under Australian company law is considered a separate entity and therefore meets the requirements of Australia’s “Air Navigation Act 1920 – Sect 11a”.
you obviously are aware that foreign companies OWN Virgin Australia which in turn owns the international part of the business and is by an 'arms length' arrangement able to control Virgin Australia International's operation.
Originally Posted by CurtainTwitcher
My (brief) scan of the decision summary AIR TRANSPORT LICENSING AUTHORITY decision suggests these are actually key criteria.
ATLA Decision Regarding Licence Application of Jetstar Hong Kong Airways Limited
ATLA Decision Regarding Licence Application of Jetstar Hong Kong Airways Limited
"In Hong Kong, airlines designations are still made for airlines that satisfy the criteria of “incorporated and principal place of business” in Hong Kong. "
Jetstar Hong Kong was incorporated in Hong Kong with foreign shareholders, it meets the incorporation test. There is no test on who owns shares in that company (unlike Australia).
The failure was purely on PPOB which is not required in Australia. They scrambled to get a local investor in, and played corporate games with the share registry so that a minority shareholder would have majority control. Whoever advised them had lost the plot, or maybe they just did not want to play, there is no such local majority control requirement in Hong Kong.
The PPOB test does not fit with the Jetstar franchise model which is to centralize the back end business operations in Australia under Qantas control. Jetstar sucks the cash out of the franchises for the services they perform so they end up reporting losses, which Qantas then lends funds back to them.
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Control, and where that control is exercised seems to be the key criteria. Your "ownership/control" conflates the two separate issues & is somewhat ambiguous. It was the "control" caught my eye in the summary.
You are correct with the JQ franchise model, control is at HQ. The HK test requires the local units management to be more than low level administrative functionaries.
You are correct with the JQ franchise model, control is at HQ. The HK test requires the local units management to be more than low level administrative functionaries.
From the summary: "The nerve centre (of the business) has to be in Hong Kong". Clearly that was not the case and never would be with the Jetstar model, or pretty much any other subsidiary model really.
Great news for Tennis fans if these reports are true because no-one knows business in Asia better than Jayne!
Nocookies | The Australian
Tennis Australia is on the verge of announcing Jetstar chief executive Jayne Hrdlicka as one of the new directors on its board as the sport looks to expand in the lucrative Asian markets.
Hrdlicka’s appointment is likely to be announced next week, and TA is also talking to other businesswomen to fill board vacancies.
TA has been besieged by expressions of interest from many fields after the surprise resignations of three directors on the eve of the Australian Open, including former professional tour players and Fed Cup members Janet Young and Kerryn Pratt. The third director to resign was Tasmanian businessman Peter Armstrong.
Fellow director Scott Tanner, who was believed to be aligned to the recent resignations, left the nine-person board in October.
Those four vacancies are now due to be filled. A fifth director, media buyer Harold Mitchell, retired also in October but returned in December amid a tumultuous time for the board.
TA president Stephen Healy has conceded there had been a rift at board level.
It is understood the split in part came with TA keen to expand the business and lobbying expertise of the board at a competitive time for the board.
The board members who departed are believed to have been unhappy that Mitchell’s return was facilitated by an amendment to the board’s constitution in early December that gave the president, Healy, a casting vote.
But state bodies around the country voted in support of the amendment and were supportive of Mitchell’s return.
Hrdlicka’s expected appointment comes at a time when TA is expanding its Asian business interests, with an office recently set up in Hong Kong.
Korean car company, Kia Motors, has been the Australian Open’s major sponsor since 2002. It extended its partnership in 2013 for another five years, in a deal reportedly worth $50 million.
Other major sponsors Rolex and ANZ Bank have significant interests in Asia. Other businesswomen TA is keen to recruit include former Westpac chief Gail Kelly, current AFL Commissioner Sam Mostyn and chair of Telstra Catherine Livingstone.
TA wants board members not only to have a love of tennis but to have sizeable business acumen.
Former Davis Cup champions and Wimbledon winners John Newcombe and Pat Cash agreed they wanted to see two businesswomen appointed to the board as the gender balance was crucial. The Australian Sports Commission is also keeping an eye on the gender issue.
While the ASC has no problems with the governance and procedures of the TA board, as part of its review of all Olympic sports post-London 2012, there was a recommendation that national associations are more equal-opportunity at their executive level and staff structures.
The Victorian government, which has invested heavily in improvements to the infrastructure at Melbourne Park, has also taken an interest. But it too is satisfied with the direction the TA board is moving.
Hrdlicka’s appointment is likely to be announced next week, and TA is also talking to other businesswomen to fill board vacancies.
TA has been besieged by expressions of interest from many fields after the surprise resignations of three directors on the eve of the Australian Open, including former professional tour players and Fed Cup members Janet Young and Kerryn Pratt. The third director to resign was Tasmanian businessman Peter Armstrong.
Fellow director Scott Tanner, who was believed to be aligned to the recent resignations, left the nine-person board in October.
Those four vacancies are now due to be filled. A fifth director, media buyer Harold Mitchell, retired also in October but returned in December amid a tumultuous time for the board.
TA president Stephen Healy has conceded there had been a rift at board level.
It is understood the split in part came with TA keen to expand the business and lobbying expertise of the board at a competitive time for the board.
The board members who departed are believed to have been unhappy that Mitchell’s return was facilitated by an amendment to the board’s constitution in early December that gave the president, Healy, a casting vote.
But state bodies around the country voted in support of the amendment and were supportive of Mitchell’s return.
Hrdlicka’s expected appointment comes at a time when TA is expanding its Asian business interests, with an office recently set up in Hong Kong.
Korean car company, Kia Motors, has been the Australian Open’s major sponsor since 2002. It extended its partnership in 2013 for another five years, in a deal reportedly worth $50 million.
Other major sponsors Rolex and ANZ Bank have significant interests in Asia. Other businesswomen TA is keen to recruit include former Westpac chief Gail Kelly, current AFL Commissioner Sam Mostyn and chair of Telstra Catherine Livingstone.
TA wants board members not only to have a love of tennis but to have sizeable business acumen.
Former Davis Cup champions and Wimbledon winners John Newcombe and Pat Cash agreed they wanted to see two businesswomen appointed to the board as the gender balance was crucial. The Australian Sports Commission is also keeping an eye on the gender issue.
While the ASC has no problems with the governance and procedures of the TA board, as part of its review of all Olympic sports post-London 2012, there was a recommendation that national associations are more equal-opportunity at their executive level and staff structures.
The Victorian government, which has invested heavily in improvements to the infrastructure at Melbourne Park, has also taken an interest. But it too is satisfied with the direction the TA board is moving.