Jetstar’s entry into Hong Kong may be less smooth than anticipated. Cathay Pacific opposes the bid by Jetstar Hong Kong to launch flights by the end of this year, claiming that the fledgling low-cost carrier is actually controlled by Qantas.
Cathay claims the new entrant does not meet Hong Kong’s constitutional law requiring airlines to have their principal place of business in the city, according to reports yesterday.
Jetstar Hong Kong, a joint venture that initially involved Qantas and Shanghai-based China Eastern Airlines, plans to begin flights towards the end of this year, flying short-haul routes in China and to Japan, South Korea and southeast Asia.
Shun Tak Holdings, the conglomerate run by Hong Kong shipping and gambling billionaire Stanley Ho, is also involved. In June, Shun Tak took an equal third share in Jetstar Hong Kong along with existing partners Qantas Group and China Eastern.
As the new partnership was cemented, Jetstar Hong Kong chief executive Edward Lau said: “We are pleased to welcome Shun Tak to the new venture.”
The initial vision was for Jetstar Hong Kong to offer fares about 50% less than existing full-service carriers – such as Cathay. Jetstar Hong Kong plans to start with a fleet of three new Airbus A320-200 aircraft, seat-configured for 180 passengers in a single class on all short-haul international routes. It intends to expand this to a full fleet of 18 A320s in 2015 and employ a Hong Kong team of 600 people, plus local suppliers to create hundreds more jobs.
But its entry into the market may not be that easy.
Hong Kong-based Cathay has warned that the local economy and aviation industry would be hurt by putting “valuable and limited air-traffic rights into the hands of a carrier controlled by a foreign airline”, a report in the Melbourne Age stated.
A statement by Cathay said the fact remained “that Jetstar Hong Kong is a carrier that is a franchise of and controlled by Jetstar Australia and its parent, Qantas Airways”.
Putting some of Hong Kong’s “valuable and limited air-traffic rights into the hands of a carrier that is controlled by a foreign airline would also be very damaging to the local aviation industry and the Hong Kong economy”, Cathay’s statement continued.
Jetstar remains confident that its Hong Kong offshoot will overcome the Cathay objections and take to the skies as planned. On Friday, Jetstar Hong Kong named Shun Tak’s managing director, Pansy Ho, as its chairman. She is one of the richest women in Hong Kong and the daughter of Stanley Ho. She succeeds China Eastern vice-president Tang Bing, appointed Jetstar Hong Kong chairman last year.
Jetstar Hong Kong intends to fly to destinations within five hours of Hong Kong and is considering various points in Southeast Asia, Japan, South Korea and mainland China.
Written by : Peter Needham