CX no problem with Dragon Air routes: Approval by Xmas?
Cathay won't object to Dragonair routes
Keith Wallis The Standard
In a surprise move, Cathay Pacific Airways yesterday said it would not object to the recent application by Hong Kong Dragon Airlines (Dragonair) to fly to five Asian destinations. This is despite all five routes being key Asian services for Cathay Pacific.
Dragonair lodged its application to fly to Manila, Tokyo, Seoul, Bangkok and Sydney with Hong Kong's Air Transport Licensing Authority (Atla) on September 13. But it was only published in the Government Gazette last Friday, giving people three weeks to object.
Airline insiders told The Standard soon after Dragonair lodged its application with Atla, that Cathay Pacific would object in a tit-for-tat move against Dragonair's objection to Cathay's application for three mainland routes.
"We would drop our opposition if Dragonair would withdraw its objection, one senior Cathay executive told The Standard.
But in a statement yesterday, Cathay Pacific general manager international affairs Andrew Pyne said: "Two strong and respected airlines are now well established here, and we believe they should both be able to contribute to Hong Kong's future economic development by building more effective hub operations at Hong Kong International Airport. To do this they will both need to have the ability to expand operations to serve new destinations and markets.''
It was not immediately clear whether Cathay's move would put pressure on Dragonair to withdraw its objection against Cathay's application to fly to Beijing, Shanghai and Xiamen.
Justifying its opposition to Cathay Pacific's resumption of mainland services after a 12-year gap, Dragonair said its "ability to expand operations to primary destinations outside China has been constrained in the past, leading to its reliance on the Shanghai and Beijing routes''. The two routes have been critical in supporting Dragonair's ability to provide services to other secondary cities in China and the Asia-Pacific, enhancing Hong Kong's status as an aviation hub.
But one insider said: "It is clear Cathay Pacific has decided that its position is that both airlines should compete on all routes under the banner that increased competition would strengthen Hong Kong's position as an aviation hub.''
Another added: "Cathay's decision not to object is a smart move. First of all it avoids confrontation which would not be good for Hong Kong. Secondly, it throws down the gauntlet to Dragonair to withdraw its objection to Cathay's planned mainland services. Cathay is basically saying to Dragonair, `We are both big boys. We no longer need to protect our routes from each other.' It's now turned the tables on Dragonair.''
Backing its application to fly to the mainland, Cathay Pacific said it wanted to strengthen Hong Kong "as a gateway to the Chinese mainland''.
Cathay's decision not to fight Dragonair's application means the No2 carrier is likely to win Atla approval for the new routes quite quickly, probably before Christmas.
But there would then have to be government-to-government negotiations with each of the five countries - Philippines, Thailand, South Korea, Japan and Australia - to agree on the number of flights, frequencies and landing slots. This could be quite difficult in the case of Japan because Narita airport is effectively full.
No details of Dragonair's application have been released. But insiders said Dragonair would want to operate two return flights a day between Hong Kong and Manila, Bangkok and Seoul, with possibly a daily service to Tokyo and Sydney.
The new destinations would increase Dragonair's Asian route network by more than half.