cxhk,
SQ was built up on the demise of many European carriers that use to fly down to Australia, nobody saw it coming when a small little fishing village placed the largest order in history at the time for 747s. Gradually all of those airlines ceased operating to Australia, and SQ went from a very small market share to over 20%. That 20% was a very big bucket, as that market has been growing. They even took market share away from QF. Since the increase ME carriers into Australia, they have mainly been gaining market share at the expense of SQ, MH, and TG. SQ has lost the most market share, around 6% if memory serves. Over the same period of time, despite operating more services, CX has maintained around 5% market share, it has no real growth or reduction in market share (the market has grown, hence the extra services). The market share has remained the same even with the introduction of many more services from China to Australia. The most amusing article I have seen regarding Jetstar Hong Kong came from September 2013 edition of Orient Aviation. On page 8 the CEO Edward Lau was saying the airline is HKG run, on page 12 they have a large article with a summary of an interview with Jayne Hrdlicka (Jetstar Group Manager). Jayne says in the interview she runs 6 airlines, including Jetstar Hong Kong. She said she will get their HK AOC in September 2013 and start operations by the end of the year. The article goes on to say she has "104 aircraft under her control and a network of more than 60 destinations in 16 countries". This really sums up the basic law point CX has been pressing, the control is not in HKG, and does not rest with any of the other local franchises either. |
@swh
I agree with most of your analysis, especially where SQ downfall is due to ME carrier. However, you never cover the cause behind it? What is the cause, SQ offer pretty good product and brand, so what went wrong? Partly this is due to ME carrier aggressive pricing, so why doesn't this impact CX as much as it impact SQ? This is because of a few key mistake made by SQ, as well as impact from Jetstar Asia. First of all, as I mention before, SQ is unable to offset their long haul pricing because of the reduce profitability from their regional flights due to Jetstar Asia. Jetstar compete with SQ on every one of their most profitable routes and completely taken out any margin out of those markets. This have a significant impact on SQ ability to cross subsidise their operations without making a loss at the whole airline. This have a significant impact on EY fare on SQ kangaroo route. Secondly, during the last product upgrade cycle, SQ went over the top on their J class upgrade. The results is a 20 to 25% seat reduction in J-Class. This also limits their ability to reduce J-Class pricing to compete with ME carrier and CX. In the same period, CX is very effective on their Y class pricing on their Kangaroo routes, matching ME carrier pricing when capacity is not constrained. While CX slightly more crammed herringbone and now reverse herringbone J-Class product (with less than 10% lost of seats count), allow CX to significantly undercut SQ and remain competitive with many ME carrier in J pricing. This is also the reason why CX managed to hold onto their 5% market share in the Australian market. As for Jetstar head office and control and reference to that in the media, if you do a search on Bloomberg terminals, you will notice over a dozen of comments made by Jetstar, Qantas, as well as Alan Joyce about their plan and control of Jetstar Hong Kong. Most of these can probably be use in the basic law argument if this is to ever go to court. I can't believe how stupid Qantas can be by making all these public statement. But anyway, that's another story. |
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Strewth
Joyce’s comment that Jetstar Hong Kong is more Hong Kong than CX or KA is laughable. It is blatantly BS but he is trying to play to the vote of public opinion rather than the regulator here in Hong Kong. The regulator here won’t be swayed by QF’s PR machine. Swire Pacific is a Hong Kong listed company. The management of Cathay is provided by John Swire & Sons (HK) Ltd which is owned by Swire Pacific. All decisions regarding the control of Cathay Pacific are made by management at Cathay City, 8 Scenic Rd, Hong Kong International Airport and at Pacific Place, Central, Hong Kong SAR. And for the record of QF CEO Joyce who clearly has a deficiency in arithmetic, CX is about 70% locally owned according to the Hong Kong Stock Exchange. Jetstar HK when it was originally announced was 0% locally owned but they have since scrambled to get only 33% to justify their legitimacy. |
JETSTAR group chief executive Jayne Hrdlicka remains undaunted by opposition from Hong Kong airlines to the Australian carrier's joint venture in Hong Kong, but concedes it is taking longer than expected, The Australian's Steve Creedy reports.
The low-cost joint-venture was originally expected to begin operating in the middle of this year and now looks as if it will miss a second target of year's end. The airline's application for an air transport licence was gazetted in August but has yet to jump the regulatory hurdle amid strong opposition from incumbent airlines such as Cathay Pacific. The local airlines argue the joint venture between Jetstar, China Eastern and locally based company Shun Tak Holdings does not meet the city's principal place of business requirements and would effectively be controlled from Australia. Jetstar has rejected the argument and Hrdlicka yesterday expressed confidence it would still succeed. She said Jetstar Hong Kong was a "strong local, very independent business" led by a capable local chief executive and a chairman, Pansy Ho, with a long and deep history in tourism and transportation infrastructure in Hong Kong. The airline was trying to give regulators confidence it should be designated a Hong Kong carrier and granted a licence to operate. "We are pushing for as much speed as we can get through the process, but it's not in our hands," Hrdlicka said during the delivery flight of Jetstar's first 787 from Seattle. "It's definitely taking longer than we would like. We are very hopeful we will get an expedient execution of the process." Hrdlicka said that, assuming it cleared the regulatory hurdle, Jetstar Hong Kong could be up and running in a few months. She said the airline was ready to go with a full team on the ground. "We're ready to go once we've got a licence. There will be a process we'd need to work through with the regulator, proving flights and so on, so it's going to take more than a few weeks, but it won't take more than a couple of months," Hrdlicka said. Qantas Group chief executive Alan Joyce said Jetstar's operations had developed at different paces and the company had to remain flexible. He said Ho was running the process because she knew it better than anyone else and was judging the pace as well as what needed to happen. b. |
Strewth
Totally irrelevant.
A LegCo member claiming that competition is good is hardly groundbreaking news. An LCC is no bad thing for the people of HK. There is already LCC operations based at HKIA, and many more operating in and out. The point is, under its current management infrastructure, it violates the HK legal constitution - Basic Law. Until that happens, Jokestar HK will remain a stillborn. Now, I appreciate you have difficulties understanding why or how CX principle management adheres to Basic Law, and the corporate structure isn't exactly straightforward. However, worry not about where the CX business and management wield their swords - they exist in HK already; rather, worry more about the fact that this isn't Fair Work Australia. Love or loathe them, CX are highly combative, very influential, very closely allied (through many avenues) with highly influential figures on the Mainland, and most importantly, they do have a case in Law. As has been mentioned already, there are an awful lot of very influential folks in HK and on the Mainland who want J* crushed. These are folks over whom CX have influence, directly and indirectly. Joyce, the imbecile that he is, has already put plenty of noses out of joint with his charade, so J*'s position will not get any easier. There's a reason they've already delayed J* by a year, and it has nothing to do with competition. Incidentally; How long did Oasis last? Have HKA managed to scrape together enough cash to clean their aircraft and pay their HAECO bills? |
Strewth
Opinions are like a**e holes. We all have one. Dennis Kwok is expressing his own opinion which he is entitled to but it is obvious from the article that he has been lobbied by Qantas and the Ho’s. It should be pointed out that Stanley Ho started Hong Kong Express in 2004. In 2006 he sold 45% of the airline to Hainan Airlines. Hong Kong Express now has the same ownership as sister airline Hong Kong Airlines. There has never been any argument from CX about LCC’s setting up in Hong Kong as long as they comply with the Basic Law. The Basic Law was structured the way it was to protect Hong Kong airlines not just from Mainland Chinese airlines like China Eastern from setting up shop in Hong Kong but also any other foreign airline like Qantas or Jetstar from setting up shop here. In the same manner a Hong Kong airline can’t set up shop in Australia or China and operate an international airline, why do you think we should let them do it here when it is against the law. Irrespective of where they have their shares listed the fact is China Eastern’s headquarters are in Shanghai and its principal place of business is Mainland China. Qantas’s headquarters are Sydney and its principal place of business is Australia. They represent 66% of Jetstar shareholding. Qantas are on the record for saying in 2012 Jetstar Hong Kong will have local management but command and control will lie with Qantas. Swire Pacific is headquartered in Hong Kong where its principal place of business is. Air China’s headquarters are in Beijing with its principal place of business Mainland China. The remaining shareholders, 25%, are local investors. 70% of CX is locally controlled, fact. Hong Kong Airlines is 55% owned by local businessman Mr Mung Kin Keung. His business interests are headquartered in Hong Kong where control lies. The remaining 45% is owned by Hainan Airlines through its holding company Grand China Air. |
Strewth
You are deliberately twisting your argument to try and win favour. The point is 66% of the owners of Jetstar Hong Kong aren’t headquartered in Hong Kong and don’t have their principal place of business here. The fact that those two major/majority shareholders are foreign airlines trying to circumvent the Hong Kong Basic Law is where they will come unstuck. The very intent of the Hong Kong Basic law being written the way it was, was to prevent foreign airlines doing just this. Have you ever sat down and thought why every single airline that is/was headquartered in Hong Kong since 1997 has/had a majority of its owners headquartered in Hong Kong with their principal place of business here? |
titan uranus
Titan: I just love it when pilots play expert in legal and business affairs; however, just a typo on your part I'm sure, Qantas don't in fact own 66%, they own 33%. The Basic Law argument is far more complex than discussed so far on here. Poorly written legislation, penned in a different era - not a good place for HK Government to be as it is now placed in a zone it hates to be - the decision & precedent setting zone! Hong Kong has and always will dance to its own tune. To say Hong Kong finds itself in a place it would rather not be is an indication you don’t understand Hong Kong or for that matter this region. |
titan uranus
I’ll refrain from personal insults. They only weaken ones argument. If as you claim you are so knowledgeable about how Hong Kong works and your interpretation of the “Hong Kong Basic Law” please enlighten me. I would genuinely like to know. After all, Andrew Pyne who advised Chris Pattern, who was the last English Governor of Hong Kong with the drafting of Chapter V Section 4 of the Hong Kong Basic Law, has already stated its intent. Andrew Pyne has also stated: My guess is that Qantas and China Eastern are trying to railroad the government of the Hong Kong Special Administrative Region (SAR) into coming out in early support of the plan: it all sounds good – Hong Kong has a huge, relatively new, airport to fill; it lacks a true low cost airline in its otherwise broad and impressive aviation portfolio. Just one snag: allowing Jetstar Hong Kong to set up in the territory doesn’t just require a tweak in policy direction. It actually requires a change in Hong Kong’s constitution – the Basic Law. |
titan uranus
How about debating the debate rather than debating the man. You haven’t provided any evidence to support I’m wrong. |
titan uranus
Again you resort to personal insults rather than debate the debate. If you have nothing to contribute then why bother posting at all? |
TU...having followed Titan 404's posts for almost a decade I rather trust him than you.
He (assuming he is indeed a male) has asked you several times now to explain WHY you think you are right and present your evidence. From the sidelines I think he is keen to have a proper and mature debate not a childish Aussie GA style argument discussing if a Baron is better than a Shrike - maybe you should have left the latter "Down Under". |
titan uranus
Dude, let the courts debate. Still don't believe me. This was in "The Australian" on the 27th Sept 2013. Jetstar faces long haul in Hong Kong |
Originally Posted by Strewth
Jetstar Hong Kong Airways Limited is also headquartered in Hong Kong the place of incorporation and its principle place of business. Its board and management principally operate out of CNAC House, 12 Tung Fai Road, HK International Airport, Hong Kong.
When you have Jayne Hrdlicka in the press saying how she runs all the franchise airlines, when you see how Jetstar is directing how aircraft and staff are being moved between franchises in Singapore, you must question where the command and control is. Orient Aviation |
At present, Hrdlicka has a fleet of 104 aircraft under her control and a network of more than 60 destinations in 16 countries. |
There is a strong argument to say simple branding and minimum operating standards as dictated in a franchise arrangement does NOT constitute 'control' Read the Orient Aviation article again and tell me where control will lie! Look at their website and see the 'Group Structure' |
Strewth
The spokesman said that when the Government considers an airline's application, the requirements of being incorporated and having its principal place of business in Hong Kong and the airline's shareholding structure are the factors that would be taken into account, but those are not the sole determining factors. 1. Incorporated in Hong Kong. No problem here. 2. Principal Place of Business in Hong Kong. Jetstar Group CEO is quoted as say she is running 6 franchise airlines. She is also quoted as saying our airlines. The terms “Running”, “Franchise”, and “Our” are very damming words for Jayne Hrdlicka to use. They go to the heart of the issue of where control lies. In all franchises the franchisor is involved in securing protection for the trademark, controlling the business concept and securing know how. The franchisee is obligated to carry out the services for which the trademark has been made prominent or famous. The franchisee is also responsible for 100% of the startup costs and ongoing fees to the franchisor. This puts in doubt whether it is a franchise or infact a subsidiary which is even more damming for Jetstar’s application. 3. The airlines shareholding structure. There is a very good reason why every single airline that is/has been based in Hong Kong since 1997 has had majority Hong Kong ownership. With only 33% local ownership it would appear Jetstar Hong Kong will fail this test as well. 4. Other determining factors. What was the intent of the Basic Law? Does it provide a long term or short term benefit to Hong Kong? Does granting Jetstar an AOC in Hong Kong set a dangerous precedent by opening the flood to any foreign airline wanting to set up an airline in Hong Kong, something that the Basic Law suppose to prevent? Not to discredit the gentleman’s opinions. However, regarding Andrew Pyne, you have mentioned one but their is another elephant in the room. |
titan uranus
The more I look at the Jetstar Groups structure the more it becomes obvious it doesn’t fit the accepted definition of a “Franchise”. As I have said in my previous post in all franchise situations the “Franchisee” is responsible for 100% of the setup costs and 100% of the financial risk. This clearly isn’t the case here. By any definition what we really have here is a partnership in a Jetstar subsidiary, not a franchise. |
Strewth,
It is pretty obvious that you are not a professional pilot, and therefore are posting on here under false pretenses. It sounds like you are running professional spin. Jayne Hrdlicka is the Jetstar Group CEO, the OA article accurately reflects what she has in her own linkedin page Jayne Hrdlicka - Australia | LinkedIn CEO Jetstar Group Qantas Privately Held; 10,001+ employees; Airlines/Aviation industry August 2010 – Present (3 years 3 months) Melbourne Area, Australia Group CEO Jetstar, responsible for all Jetstar Branded airlines. Currently this includes Australia, New Zealand, Singapore, Vietnam, Japan and Hong Kong. Business Week has her Total Compensation as Total Annual Cash Compensation A$1,497,000 Total Short Term Compensation A$1,434,000 Other Long Term Compensation A$287,000 Total Calculated Compensation A$1,721,000 Has everyone in the press got the same "misinformation" you claim ??? "Managing the budget subsidiary's operations, which reach from Australia and New Zealand to Japan, Vietnam and Singapore, will be no easy task. It will involve numerous long-haul flights to Asia and hours spent juggling relationships with joint-venture partners, governments, investors, unions and employees Read more: http://www.smh.com.au/business/jetstar-chief-charts-steady-course-20120907-25kcj.html#ixzz2hhtv6zot" "Investors already lining up for stakes in JetStar HongKong: Qantas CEO 06MAY2013 Qantas (QF, Sydney Kingford Smith) has been approached by investors looking for a shareholding in its planned LCC joint venture with China Eastern Airlines (MU, Shanghai Hongqiao), dubbed Jetstar Hong Kong (Hong Kong Chep Lap Kok). Qantas Chief Executive Officer Alan Joyce told a Macquarie Group conference that "unnamed investors" had already offered more for their stakes in JetStar Hong Kong than Qantas had invested, despite the airline still awaiting regulatory approval. Both Qantas and China Eastern will each invest up to USD 99 million over three years to set up a JetStar Hong Kong. Jetstar Airways (JQ, Melbourne Tullamarine), run by Jayne Hrdlicka, now accounts for 20% of revenue and 31% of operating income at struggling Qantas, who are now seriously pushing to tap Asian demand for budget flights, which has more than doubled low-cost carriers’ share of regional traffic since 2007." Investors already lining up for stakes in JetStar HongKong: Qantas CEO - ch-aviation.ch Why are there so many comments in the press from Alan Joyce and Jayne Hrdlicka regarding the delay in the startup of the airline in Hong Kong if it is being run out of Hong Kong ? why is it not the Hong Kong CEO making these statements ? As for the reference to the staffing, look at the J* SIN - People "management" thread. "My contact is a current A330 J* Capt SIN base. Moved family to SIN, $5000 per month accom lease well into 2014. He was advised last week he and others are now surplus to requirements and are being redeployed to Aus as A320 Capts. J* Management have said his lease costs are his problem. I understand if you do a deal with the devil expect to get burnt. Are we really happy that the QF Group trading on a long history of aviation safety can treat employees in such a manner to cause extreme stress which will undoubtedly have an effect on the safe conduct of their duties? An absolute disgrace!" |
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