Jetstar to launch Hong Kong based carrier

[benttrees]

Titan Uranus,

The reality is, in my opinion, that crew should be accommodated in suitable hotels, and that's for numerous reasons. If you would like to discuss this, I'm happy to oblige.

I take it from your post that you'd be happy to stay in a caravan park in order not to be so "Qantas"

[Iron Bar]

"Don't worry, like Jetstars international arm it will be a sound business and highly lucrative from day one."

Green Goblin 4 Aug 11

You're still not very smart are you. I would be pulling my head right in about tits and gunja dick-head.

[goodonyamate]

At least there'd be plenty of cannabis and boobs to squeeze in the trailer park for the long haul lads

You are a disgrace. How could anyone make a joke out of such a serious issue regarding a female colleague. How would you feel if it was your daughter/wife that had experienced something similar.

Jetstar must have really been scraping the bottom of the barrell when they employed an idiot like you. Either that or they gave the psych testers the day off. I pity any female pilot/cabin crew member that has to work with you.

JQ HKG, Like JQ international, has a limited lifetime left before it withers and dies off. The future is now RED!

[neville_nobody]

$160mill AUD donated since 2011 and still making a loss of ~$7mill AUD/month

Yet they hammer international about their losses and demand pay concessions..........

Obviously things are not that tight if they can throw away that sort of money.

[The Green Goblin]

"Don't worry, like Jetstars international arm it will be a sound business and highly lucrative from day one."

Green Goblin 4 Aug 11

You're still not very smart are you. I would be pulling my head right in about tits and gunga dick-head.

You boys take yourself waaaay to seriously.

Probably why you didn't get the sarcasm in the original post. Lucrative hey?

You're the first to shrilly scream anything anti Jetstar, but qantas pilots are a protected species.

[AviatoR21]

Isn't the "enemy" or more respectfully competitor, Virgin/Tiger! We all work for the same group, control of which we have none in respect to managerial decisions. Instead of in house squabbles maybe just back each other up and be grateful you have "a well paying job" - Joe Hockey.

[ohallen]

Qantas (the business, not Longhaul, short haul, Link, ,FF etc) has made these minor investments along with substantial local partners who possess local knowledge and who are willing to stump up cash.

I think the jury might be out on these issues, because many suggest all may not seem as it appears. Guess we will find out soon. As Buffett says "you find out who is swimming naked when the tide goes out".

[Going Boeing]

longjohn, from your post, it appears that you believe the statements and financial figures that this management puts out verbatim - the huge majority of employees who are in a position to know what is really happening don't believe a word that is spoken or printed by this totally corrupt management.

Jetstar Asia, Pacific and Japan remain as strategic shareholder investments. Qantas (the business, not Longhaul, short haul, Link, ,FF etc) has made these minor investments along with substantial local partners who possess local knowledge and who are willing to stump up cash.
The board, as representative of the shareholders, makes these investment decisions.

No one who understands the cost of setting up a business believes that this is a "minor investment" - management say that, but there is no way you can set up the required infrastructure without outlaying large sums of money.

Why people would denegrate what Qantas is trying to do is beyond me.

Perhaps you should ask Joyce why he so publicly denegrated Qantas International!

Given the extensive losses sustained by QF international over many years (and government subsidisation prior to privatisation) I would have thought we would be a little more patient when it comes to relatively minor losses sustained in the name of future investment.

Most of the losses that have been attributed to QF International during Joyce's tenure have been "smoke & mirrors" to enable him to continue pouring funds into the various JQ franchises at the expense of the International division - he literally starved the division of the funds it needed to be competitive.

I think it's time you removed your rose coloured glasses and had a look at what has been really happening.

[AEROMEDIC]

I think Sunfish had a point when he posted quite some time ago, this post.

" Quote:
As we all know, the growth potential of the PRC is gigantic


NO! NO! NO!

The growth potential for Chinese owned and controlled businesses is gigantic.

The growth potential for non Chinese businesses that do not have ironclad control of their intellectual property or another barrier to entry is flat effing ZERO!!!!

How do I get this message through the thick heads around here? The only people in China allowed to make money out of other Chinese are Chinese!

Even if Jetstar HK was ever established, the chances of it (a) making a profit and (b) repatriating that profit to Australia are plain ******* zero! There is no way Jetstar HKG can ever make a profit for the Qantas group, at best you might get one dollar more than you invested."

Perhaps Alan and Jane simply ignored what others knew and carried on regardless.
The cost has been very high indeed.

[Captain Gidday]

What huge markets? Jetstar Japan says it has 60% of the LCC market. After four years or so in Domestic Japan it has 20 A320s. So the total Japanese Low Cost market, all carriers, fits into 33 A320s. Big deal.
That's roughly the same size as the domestic market of the other "Twin Pillar of the Pacific". New Zealand.

[Higs]

Could not agree more. The Chinese are only interested in the advancement of the individual first, then other Chinese.

[westjet]

I believe Alan Joyce and his team, some five years or so back, believed the "Legacy" Airline model. aka Qantas,was dead in the water!
Hence the almost paranoid focus on growing Jetstar, while leaving QF to wither, and as pointed out in an earlier post, to even denigrate QF International!

Well a lot has changed over that time, Jetstar OS has been a disaster, Jetstar International marginal at least, and jetstar domestic makes a profit, but at the expense of Qantas Domestic, since it entered routes it was never meant to serve, eg Melbourne Sydney/Brisbane etc
LCCs have lost their gloss, and smart Legacy carriers have adapted and thrived, eg the US3, who domestically are hybrid Legacy/LCC, now that they charge for bags and food/drinks.

So it is good to see the renewed focus on growing Qantas over Jetstar!

However Qantas could well learn from Cathay Pacific/Air New Zealand who have not gone down the in house LCC path, but concentrated on the core brand.

Borghetti is not operating a small fleet of 332s to/from perth for fun, he knows the numbers from his days at Qantas, and they must stack up pretty well for him to do it!

I fail to understand why the Qantas Group, have Jetstar operating 3 A320s a day Melbourne to Perth, on a route shown to suit A332s.

Thats 531 seats from Jetstar on 3 return legs, were as Qantas could operate an A332 on 2 return legs and offer 542 seats.
I am not sure of fuel burn comparison for 6 320 flights compared to 4 A332?
But the 332 ops needs only 4 pilots per day against 6 for the 320 schedule!

The big advantage for the Qantas Group is that a double daily 332 operation, provides Qantas with an even bigger frequency advantage over Virgin Australia, to better compete for high yielding business passengers!
I have no doubt that on say a 75% Load factor, those 400 odd seats occupied on Qantas would generate more yield to the group than same number on jetstar!

[Global Aviator]

Look at the population of Japan, Jetstar, Peach, AA tried...

It's a massive market not just 40 320s worth but 100's, it's educating the local population that it's cheap to fly* compared to old times. LCC Japan are cheaper than the Shinkansen (bullet train for the belligerent). It's a growing learning market.

I'm surprised there has been no Jestar India or Jestar Indonesua yet..... ::):):)

[Jetsbest]

it's educating the local population that it's cheap to fly* compared to old times. LCC Japan are cheaper than the Shinkansen

...and it will have to continue to be a lot cheaper because the Shinkansen is generally a lot more convenient when one considers that it generally goes from CBD to CBD rather than airport to airport, which usually entails:
- extra transit time just to get to/from the airport,
- huge cab costs if that's your preferred mode,
- time allowance for lengthier checkin procedures,
- time allowance for security procedures, and
- arguably greater likelihood of weather or other delays.

Time will tell if it's really a market for hundreds of LCC A320s. I think there is a lot of life in the Shinkansens yet! :ok:

[Iron Bar]

"LCC Japan are cheaper than the Shinkansen (bullet train for the belligerent)."

Yeah I've always had it in for the stinkin Shinkansen and I'll beat down on that MOFO any chance I get!!! Full FU(&!N noise!

Is that belligerent enough??

[Global Aviator]

Point taken Shinkansen is CBD to CBD, I've travelled in it many times instead of fly, comfortable = yes, fast = yes, get up walk around = yes.

However the S is not practical over longer distances or water, hence LCC.

Before LCC I paid around $400 USD one way Tokyo to Sapporo, now Ya can do for a quarter. Don't know what rates before LCC to Okinawa were but I'm tipping a lot cheaper now!

Like the old Ansett/Qantas days in AUS where it was a duopoly and flying was expensive. LCCs have changed that, wether it for the better or worse, but they have changed what is expected. Yes still costs money to put them in the sky but let's face it certainly not to the effect of the fares we used to pay.

Yes using the word belligerent was a little out of line, I should have said for those of you unlucky enough to have not been to Japan and played on the bullets!

Me thinks LCC in Japan there to stay, be it J*, Peach, etc. When you have a pool of traveling millions......

Like I said before surprised no J* India or Indo 🙈🙉🙊!

[CamelSquadron]

Ohhhh.....Global Aviator....

You have stumped the recalcitrant's now!!!! You have used real world experiences to counter their desktop driven conspiracy theory skepticism.

What are they going to base their whining and moaning on now? Maybe they can mutter about the quality of their company provided meals?

LOL

[1A_Please]

Like I said before surprised no J* India or Indo

LCCs in Indonesia and India are both currently bottomless money pits. Even JetStar isn't stupid enough to get involved in these markets at the moment....on second thoughts!!!

[Alloyboobtube]

Jobs in China pay double anyway ,
Good for pilots Jetstar not creating a new bunch of pilots in poverty.

[CurtainTwitcher]

Qantas chief says Jetstar Hong Kong decision sends worrying signals about rise of protectionism
August 4, 2015 by Jordan Chong

Qantas chief executive Alan Joyce says the Hong Kong government’s decision on Jetstar Hong Kong sends worrying signals about the rise of protectionism in the aviation sector.

Jetstar Hong Kong, a joint-venture between Qantas, China Eastern and Shun Tak Holdings, was left grounded in June when the Hong Kong Air Transport Licensing Authority (ALTA) ruled the proposed airline did not meet the territory’s principal place of business test.

Joyce said the decision showed a “blatant application of the rules to Jetstar Hong Kong that did not apply to the other carriers”.

“That is a distortion and shouldn’t be allowed,” Joyce told delegates at the CAPA – Centre for Aviation Australia Pacific Aviation summit in Sydney on Tuesday.
“We certainly went into a process, looking, as we always do, that the process was going to be legitimate, fair and balanced.

“If those rules and that decision was applied to Cathay or Hong Kong Express, they wouldn’t have qualified as a Hong Kong carrier. In fact those if those rules applied to Virgin and Tiger here in Australia they wouldn’t qualify to operate in this market.

“We are all about the same rules being applied to the carriers operating in the same market.

Moreover, the Qantas chief executive said he was “extremely worried about what that means in terms of protectionism”.

In its June decision, the ATLA said Jetstar Hong Kong did not meet the legal requirement of Hong Kong being the planned low cost carrier’s principal place of business, obeserving that “JHK [Jetstar Hong Kong] cannot make its decisions independently from that of the two foreign shareholders.”

It would have been the fourth Jetstar franchise in the fast-growing Asian region behind Singapore’s Jetstar Asia, Vietnam’s Jetstar Pacific and Jetstar Japan and Joyce noted those airlines were able to be established on an even playing field.

“This is the first time setting up an airline that we have seen different rules apply to different people in the same jurisdiction,” Joyce said.

“That’s why it was a surprise to us and that’s why we don’t believe it is the right call and we think it is a very dangerous call for fair competition.”

Officially, the parties said the decision is under review. However, analysts say there is unlikely to be any way back for the proposed franchise.

In terms of Jetstar Hong Kong’s options following the ATLA decision, Joyce said in a statement after the conference: “Jetstar Hong Kong has to decide what its next steps are, but from a Qantas perspective we won’t be investing any more funds in this airline.”

Qantas said in June its investment in Jetstar Hong Kong was valued at $10 million in its latest financial accounts.

Meanwhile, Joyce said Qantas’s proposed partnership with China Eastern would hopefully make the Chinese carrier’s Shanghai hub more competitive with rival hubs such as Hong Kong.

“If we look at most of the traffic going over Hong Kong connecting into the rest of China, that’s what we want to offer more competition against,” Joyce said.
“The best way of doing that is with China Eastern.”

Qantas and China Eastern’s application for their proposed alliance is currently before the Australian Competition and Consumer Commission (ACCC). The competition regulator said in its draft decision it was inclined to reject the tie-up arguing it would give the airlines too much power on the Sydney-Shanghai route.

However, the two airlines have received strong backing from the Australian and Chinese governments, as well as tourism and industry groups.

source Australian Aviation (https://archive.is/nRMOB#selection-495.0-555.85)

[404 Titan]

Oh please. Joyce is still spewing the same BS that he’s continuously spewed. Cathay Pacific, Dragon Air, Hong Kong Airlines and Hong Kong Express are all majority owned by shareholders that have their “Principal Place of Business” here in Hong Kong. Hong Kong doesn’t have a citizenship rule like Australia and most other countries because there is no such thing as Hong Kong citizenship, hence the “Principal Place of Business” in the Basic Law. Unlike Australia, Hong Kong doesn’t have domestic air services either. All flights including to mainland China are International requiring negotiated agreements. Maybe if Australia allowed Hong Kong Carriers to set up an international carrier based in Australia but majority foreign owned then he may have a point. Until then he is a hypocrite that needs to crawl back into the hole he’s stuck his head out of. Hong Kong is no more “Protectionist” than Australia. Infact being an Australian who’s lived in Hong Kong for 15 years, I would argue Hong Kong is less “Protectionist”.

[swh]

Majority local control - ICAO 1940
Australia

PPOB - ICAO 1990
Hong Kong
Europe

[busdriver007]

Now let me get this straight. No longer invest in the Hong Kong venture or the lot? If he is talking about not investing in Japan then it is dead in the water. Qantas has invested $100 million over the last two years(2x$50million) in Japan and his words not mine was the business is stable but "losing money" at a rate of between A$8-12 million a year which means it is heading for bankruptcy. Due diligence is a basic board member's prime responsibility and again this is not their money! Remember this is not our sandpit! The IPPB rules were always there, nothing has changed!

[cx134]

Because CX and KA won't block this attempt as well...

[Sunfish]

If it was possible to compound Joyce's error in Asian aviation markets he has just done so.

By complaining in public about the treatment Qantas has received in respect of Jetstar Hong Kong (which was totally predictable from the very beginning of all the Asian adventures) he has broken an unwritten Asian rule.

Breaking that rule, instead of copping it sweet, is now going to cost Qantas mainline big time in Chinese markets. I predict main line access to Chinese markets is now about to receive "The death of a Thousand cuts".

I didn't think it was possible for someone to be stupider than Dixon, but by publicly complaining about the Chinese treatment of Jetstar, Joyce has overtaken Dixon.

To put that another way: Joyce has just declared that the Qantas Group is the sworn enemy of China - at least that is how the Chinese will see it and react accordingly.

[wheels_down]

Sunfish I doubt It matters, and I doubt QF care either.

The Rapid chinese expansion is coming from Chinese carriers only (Xiaman Air next) I do note either Alan or Jayne quoted a few months ago that China was low yield and they were not overly interested long haul or ex Singapore (Tiger got in early). It's as simple as Chinese Passengers sticking with Chinese Carriers. A lot of group tour/packages are all bundled together ex China, working alongside Chinese carriers. Jetstar is going Cooly to Wuhan, but it's a paid agreement, so they wouldn't last if it was on their own two feet.

China expansion is probaly done for the short/medium and possibly long term for Qantas. Some opportunities to Japan, any expansion will come from Asian carriers. Jetstar Pacific is done (about to get hammered by Vietjet), Jetstar Singapore is done (Scoot/Tiger might pose a problem shortly) which leaves Jetstar Japan (AirAsia about to join the fray).

[Sunfish]

"I doubt it matters"?????? It matters to the shareholders! All that management time and capital wasted!

What will they do next??????

[Meet the Fokker]

Sunfish

I couldn't agree more but will try. By choosing a megaphone as his means of communicating he can be assured that the only response he will get will be the echo of his own voice.

As to busdriver007's comments, I believe the total committed capital to GK by QF to date is about AUD 165m at current exchange rates. Current cash bleed is between AUD 6-7m per month. There will need to be an additional cash injection by the end of this calendar year. JL is not keen to pour more money into the hole so there appears to be a Mexican standoff. I do agree with the conclusion that if there is no further investment, the business is headed for insolvency.

[PoppaJo]

Since when does Qantas care about Shareholders?

Qantas wouldn't last 5 minutes in China. Eaten alive.

[cessnapete]

As an observer from afar why is Jetstar loosing so much money? Most flights I've done with them pretty full, in last 18 months.
Similar locos Ryanair and Easyjet in Europe make a big profit, with similar low fares.
Is it just high Oz crew costs etc. or poor utilisation.?
Easyjet and FR pilots good salary just under BA rates, and probably work less hours than BA.(BA Airbus shorthaul pilots 85/90 hrs per month)
Cabin crew low pay, but no shortage of recruits. (3 cc on Airbus 4 on FR 737)

[Ollie Onion]

cessnapete, who said Jetstar is losing money?

[cessnapete]

Ah sorry, am i misreading the posts, Jetstar Aus is profitable, its the Asian subsidiaries that are not?

[600ft-lb]

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.

[404 Titan]

600ft-lb

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.

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.

[600ft-lb]

For starters, I'm no fan of Jetstar I'll just put that out there.

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.

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.

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.

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

[404 Titan]

600ft-lb

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.

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.

Let us in or else ? Don't protect your local market or else ? Shoe, other foot, etc.

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.

"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

Totally irrelevant to this debate. Ivan was making a comment about the building of the third runway in Hong Kong.

[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.

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]

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!

[404 Titan]

600ft-lb

You had best tell SQ, AirNZ and EY that I'm sure they'll be interested.

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.

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.

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

Like Alan Joyce said, if the same rules were applied to everyone, CX and KA would be shut down tomorrow.

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.:ugh:

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!

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 (http://www.austlii.edu.au/au/legis/cth/consol_act/ana1920148/s11a.html)

[busdriver007]

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.

[swh]

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!

Only domestic airlines may be foreign owned in Australia, international airlines need to be majority Australian owned. Hence Virgin domestic AOC is majority foreign owned, and Virgin international AOC is majority Australian owned. Two airlines, one brand.

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.

[600ft-lb]

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.

[swh]

Now apply this same logic to Hong Kong, CX argued the same and won, albeit a new airline startup not one already in operation.

None of the objections I am aware of for Jetstar Hong Kong actually raised the ownership/control structure as an issue, that is not the law in Hong Kong. The objections were based upon PPOB and current capacity constraints.

The rejection was due to not meeting the PPOB requirements, the ownership structure was not raised.

[CurtainTwitcher]

None of the objections I am aware of for Jetstar Hong Kong actually raised the ownership/control structure as an issue
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
Full Written Decision (http://www.thb.gov.hk/eng/boards/transport/air/Full%20written%20decision%20(Eng)%2025062015.pdf) (PDF File)
Summary of Decision (http://www.thb.gov.hk/eng/boards/transport/air/Summary%20of%20decision%20(Eng)%2025062015.pdf) (PDF File)

Have a look at the summary, point 6 (page 3).

[404 Titan]

600ft-lb

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.

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”.

[swh]

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

Keep reading, page 132

"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.

[CurtainTwitcher]

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.

[Sunfish]

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.

[Buckshot]

Great news for Tennis fans if these reports are true because no-one knows business in Asia better than Jayne!

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.



Nocookies | The Australian (http://www.theaustralian.com.au/sport/tennis/jetstar-chief-hrdlicka-to-join-board-of-tennis-australia/news-story/04ff754e209708d99f69d54866475041)

[wheels_down]

Plus running the Jetstar group....plus being a Woolworths Board member (which is a mess)

Now this one.

She must work 24/7. What's the priority here?

[C441]

What's the priority here?

I thought it was pickin' the kids up from school! :roll eyes: :hmm:

[CaptCloudbuster]

She must work 24/7

Nope, Nope, Nope

She said 80 per cent of the time she wants to drop her kids at school and get home by 6pm.

She said Joyce told her. "I'm offering you the job of a lifetime. . . I don't want you to do the job the way it was done in the past.

http://www.pprune.org/australia-new-zealand-pacific/494474-jetstar-models-new-type-chief.html#post7391235

[Popgun]

Ah yes, the old work-life balance at Jetstar.

At the top, perhaps...for the workers, not so much.

The only way employees at Jetstar can achieve a healthy work-life balance is to go part-time. Quite difficult given the less than stellar remuneration and the high cost of living in most JQ bases.

[neville_nobody]

It's more of a figure-head CEO role than a real hands on one. Generally they surround themselves with onerous layers of managers and outsource any actual decision making to some group think tank so when it all screws up they just say they were acting on advice of some report that a 'committee' came up with.

I agree with the sentiment above. How can anyone hold two board positions and be a CEO of an airline and suggest that they are on top of everything.

That is unless they are about to resign and just teeing up a few retirement jobs.