View Full Version : Virgin's Plans to Fly to Australia Via H.K. Mired in Politics

12th Feb 2003, 00:17
Wed, 12 Feb 2003, 6:51am EST

Virgin's Plans to Fly to Australia Via H.K. Mired in Politics
By Sonia Tsang

Hong Kong, Feb. 12 (Bloomberg) -- Plans by Richard Branson's Virgin Atlantic Airways to link flights between the U.K. and Australia with a stop in Hong Kong may fall victim to political squabbling in Belgium.

The U.K.'s second-largest carrier needs so-called fifth freedom rights to operate the route, now flown mainly by Qantas Airways Ltd. and Cathay Pacific Airways Ltd. Analysts say that won't be easy because of the increasing power wielded by the European Commission, based in Brussels, over member countries' aviation treaties.

"There's the uncertainty about the U.K.'s ability to designate just one U.K. carrier to get those rights,'' said Peter Harbison, managing director of Centre for Asia-Pacific Aviation, a Sydney-based aviation consultancy. "Progressively, the E.U. will take control of all international trade issues.''

Virgin Atlantic wants to fly from Hong Kong, the busiest airport in Asia outside Japan, to Australia because of the city's status as a regional aviation hub. About 1 million people flew between Hong Kong and the U.K. and 1.18 million people between Hong Kong and Australia in the year ended March 31, 2002, according to Hong Kong's Civil Aviation Department.

Europe's highest court, the European Court of Justice, in November said parts of "open skies'' agreements between the U.S. and eight countries violate EU free-trade laws because they favor national carriers in each country.

European Transport Commissioner Loyola de Palacio at the time called on Europe's national governments to give the European Commission the power to negotiate aviation agreements between the EU and other countries so that carriers would be recognized as European rather than national.

Making Requests

Branson said in November Virgin Atlantic had held preliminary talks with Hong Kong to operate the route. The carrier will persist with its request, Mackenzie Grant, the airline's regional general manager for Asia Pacific, said in an interview.

"We have no rights to pick up passengers from Hong Kong to go to Australia,'' said Grant. "We need that to complete the circle.''

The carrier requires the U.K. to negotiate on its behalf with Hong Kong for fifth freedom rights, or the right to carry passengers to one country and then continue to another country.

Hong Kong though is unlikely to reach an agreement with the U.K. unless it receives similar rights in return, analysts said.

"I don't think that (Hong Kong) will just give it to Virgin without anything in return,'' said Philip Wickham, an analyst with ING. "Hong Kong is asking for the same fifth freedom rights out of London and the U.K. is very restrictive on that.''

Competing on Routes

An alternative route from London to Australia would be via Singapore. The airline may be reluctant to fly that route because it would be extra competition for Singapore Airlines Ltd., which owns 49 percent of the U.K. carrier.

"Since Singapore Airlines is already flying this route, Virgin probably doesn't want to compete with one of its shareholders,'' said Eckes. "Singapore Airlines can't fly Australia-Hong Kong-U.K. They both would benefit.''

Flying via Hong Kong would create more competition for Sydney- based Qantas and Hong Kong's largest carrier Cathay Pacific, which dominate the Hong Kong-Australia routes.

The current bilateral air services agreement doesn't mean Cathay Pacific and Qantas have a protected duopoly because it also allows for other airlines to operate on the route, said Kevin Bubel, a Cathay spokesman. Ansett Holdings Ltd. also flew to Hong Kong from Australia until it collapsed in 2001, he said.

Considering Flights

Cathay has 35 services a week between Australia and Hong Kong, Qantas has 60 and Qantas's all-economy class Australian Airlines unit three, according to the current schedule on Australia's Department of Transport and Regional Services Web site.

Australian Airlines, which started flying in October, operates a Cairns-Hong Kong service. Rival Virgin Blue, based in Brisbane, has said it's also considering flights to Hong Kong.

In the case that Virgin Atlantic is granted permission to fly to Australia, it may work with Virgin Blue.

"If Virgin Atlantic is successful in getting into Australia, maybe we'll cooperate,'' Grant said. "Right now, our routes don't connect. What we share in common is the Virgin brand name.''

Branson owns 51 percent of Virgin Atlantic. The U.K. billionaire also owns 50 percent of Virgin Blue Airlines Pty, Australia's No. 2 airline.

Hong Kong and the U.S. reached a civil aviation agreement in October, giving airlines such as Cathay Pacific and AMR Corp.'s American Airlines greater access to each other's skies.

"We remain hopeful that in the present environment where liberalization of air services is seen as a positive development which will bring increased traffic to Hong Kong, we can win these rights at least within the next year or so,'' said Virgin Atlantic's Grant.

12th Feb 2003, 06:02
Jobs for poms.

Why cant VirginBlue be expanded to encompass such ambitions?

Jobs for Aussies.

12th Feb 2003, 07:52
Maybe a way around would be for VS to lease an aircraft to DJ, who would then operate it Aus-HK to link in with the VS a/c. Or lease a couple, and the same aircraft operates right through, just happens to change flight numbers in HK and crew has a different uniform on.

12th Feb 2003, 17:15
Sorry had to "bite" on this even though it is irrelevant to the post;

Gnadenburg, What is your problem with jobs for pohms, jobs for anyone qualified and experienced should be the case. I do not have a problem with Aussies in the UK earning a living from "our" aviation industry, which lets face it is a global one. Don't forget it was a "pohm" who started up Virgin Blue which does employ a fare few people, perhaps you would prefer all investment in Oz to be from within as well. Also doesn't BA have quite a large stake in Qantas?

Kwaj mate
12th Feb 2003, 23:55
Has VirginBlue the ability to fly into HKG?
Is there any shelf capacity available ? - there should be as Ansett left the market with seats to spare.
Is the company structure such to allow international services (>50% owned by Australian shareholders).
Politics in Europe has little to do with this current matter.

The Messiah
13th Feb 2003, 02:04
Hey snap off what's with the spelling 'pohm'????

13th Feb 2003, 03:12
POHM=Prisoner of Her Majesty. This is one of the many explainations of the term POM. Macquarie Dictionary of Slang (http://www.macquariedictionary.com.au/p/dictionary/slang-p.html) insists that this is not correct and the the true derivation is from rhyming slang for imigrant.

The Messiah
13th Feb 2003, 07:21
My understanding is the shortening of the word pomegranate which was the same color as their cheeks as they came off the ships.

Certainly not any of the 'prisoner of......' explanations.

13th Feb 2003, 07:35
snap off

The problem is, you pommy bastard ( a good adjective in jest ), is that an extension of Virgin Atlantic is not a serious foreign investment into this country.

Would much prefer to see some serious capital put into Virgin Blue with consequential expansion and more jobs for Australians.

One Australain international airline is not enough. We are quick to give up our lucrative air rights. The hundreds of foreign tails at our airports a testament to that.

Forward CofG
13th Feb 2003, 08:02
Wouldn't Virgin Blue be better off sorting out its expansion in Australia, before it attempts to introduce a new aircraft type and a whole different target market of passengers on international routes.
Not to mention not having traffic rights from the Hong Kong government.
If Vigin picks up the rights into Hong Kong Australia then the Australian government would be required to give Cathay or even Dragonair some more acess to Australian ports, which means more competition for a new starter.

13th Feb 2003, 18:57
Gnad....Any airline that flies into a country usually brings in tourists which = $$$$$ which is a good investment for an economy either way. Look what happened to the UK during foot and mouth. Anyway wasn't RB "brave" enough to invest some serious capital in Oz. It might be the case as well that if VS did start flights that they would employ local staff. I would have thought as well that VS would have to increase their flight deck crews to fly such a labour intensive route and there is nothing stopping anyone of any nationality applying for a position, even Aussies. If there was a big enough demand for another Oz International airline someone should be getting in there and doing what needs to be done, which means more jobs for all.

PS I prefer whinging to bastard !!!

20th Feb 2003, 04:19
POME, pronounced "pommie" in the correct Queen's English, is the original acronym dating from the time when the deportees could still speak proper English.

They looked longingly back toward their beloved country which had recently kicked them out and referred to their deporters as the prisoners as a way of cheering themselves up: Prisoners Of Mother England.

I hope this intimate knowledge of Aussie history will support me in my application for Australian citizenship. Any advice on this administrative mire gratefully accepted - so long as its free.

Eastwest Loco
20th Feb 2003, 10:51
VS has been trying to get into Aus for years, attempts predating Lauda Air's successful application.

One can only consider BA through QF is the major block, still carrying sh!t on the liver after Bransons successful and very public exposure of their dirty tricks campaign and subsequent winning court case.

CX should not be a player in the block as they operate more 5th freedom services than any other carrier I have seen, so that just leaves the Rat as the alleged mouthpiece.

More interesting times.


20th Feb 2003, 21:22
Eastwest, VS has had the 'approval' at the Australian end for years, it has always been the 'bit in the middle' that has been the stumbling block.

Eastwest Loco
21st Feb 2003, 08:08

The number of 5th freedon CX holds, you would hardly see them in a position to whinge about VS.

One can pick ug a CX fight between most Asian, Sub continent and middle Eastern destinations without a problem - some of the extremely obscure ports.

There must be a One World oar in the canal here somewhere.



The Messiah
21st Feb 2003, 08:55
Awakevortice nice try no cigar.

For one 'pommie' is slang, not 'proper' English, by which I'm sure you mean correct English.

I have researched the origins of this 'derogatory' term extensively due to many a discussion over a pint or two. Any dictionary will give the answer.