Cathay, Jetstar trade blows over Hong Kong

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Cathay Pacific Airways has said Jetstar should not be given a licence by the Hong Kong Air Transport Licensing Authority to operate as a Hong Kong (China) airline, and Jetstar, which has begun the licence application, has rejected the demand. 

Cathay’s case is that Jetstar Hong Kong, which is applying for the licence, is a, “branch office of an Australian airline”. Cathay argues that Jetstar Hong Kong is in breach of Hong Kong law that requires airlines to have their “principle place of business” in the region. Jetstar is part of the Qantas Group and it provides cargo services through Qantas Freight. According to Cathay, Jetstar’s documents, its business agreements, show that, “core business functions for JHK [Jetstar Hong Kong] will be carried out in Australia by their parent airline, Jetstar.” Jetstar denies this, claiming the principle place of business is Hong Kong. Cathay also points to documents filed in Australia by Qantas which the Hong Kong airline claims confirm that, “the whole purpose of the Jetstar business model is to create a single fully integrated organisation with integrated management of all major operational, commercial and procurement activities that can effectively circumvent regulatory requirememts as to foreign ownership and control of airlines in Asia.”

Jetstar tells Air Cargo Week that it denies the Cathay claims and, “Jetstar Hong Kong believes that since we are still in the [public] inquiry process, it will therefore be unsuitable to make specific comment at this juncture about the proceedings outside the official hearing.”

In Jetstar’s fact sheet about itself, it says: “Jetstar Hong Kong is backed by three shareholders including Shun Tak Holdings, China Eastern Airlines and the Qantas Group.” It adds that, “Our local shareholder is a locally listed Hong Kong company which nominates majority of the board members and holds 51 per cent of the shareholding voting rights.” It explains that Qantas has a 24.5 per cent shareholding and related voting rights and does, “not have comparatively greater veto powers.” Jetstar says that its Hong Kong International Airport-based carrier will pay Hong Kong taxes and have more than 600 employees. Its goal is to have a fleet of 18 aircraft flying to destinations within five hours of the Chinese region. 

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