Airline News
Qantas boss Joyce rules out more investment in Jetstar Hong Kong
August 10th 2015
Addressing delegates at the CAPA Australia Pacific Aviation Summit in Sydney last week, Qantas Airways chief, Alan Joyce, said the Hong Kong authorities’ decision to deny Jetstar Hong Kong an air operator’s certificate (AOC) sent worrying signals about the rise of protectionism in the city’s aviation sector. Read More »
Joyce said the Hong Kong Air Transport Licensing Authority’s (ATLA’s) June decision showed a “blatant application of the rules to Jetstar Hong Kong that did not apply to the other carriers,” adding this was “a distortion that shouldn’t be allowed”, given that in a fair and level market the same rules should be applied to all carriers.
“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 were applied to Cathay or HK Express, they wouldn’t have qualified as a Hong Kong carrier. In fact if those rules applied to Virgin and Tiger here in Australia they wouldn’t qualify to operate in this market.”
Jetstar Hong Kong’s AOC was vigorously opposed by Cathay Pacific Airways and Hong Kong Airlines and budget carrier, HK Express. They largely argued the budget carrier did not comply with Hong Kong law, which requires airlines to have their principal place of business in Hong Kong. In its ruling, ATLA essentially agreed with the objectors, and said the submissions and evidence presented showed that ultimate control of the airline would be in Australia and Mainland China. “Even though there is no dispute that the day-to-day management would be conducted in Hong Kong, and managed by the Jetstar Hong Kong CEO in Hong Kong, as the cases unequivocally indicate, that is not sufficient to establish and meet any principal place of business criteria,” the regulator said in its 153-page ruling.
Joyce said “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”. Joyce added Qantas would focus on China Eastern Airlines to offer more connections into the rest of China.
Qantas and China Eastern are continuing their efforts to persuade the Australian Competition and Consumer Commission (ACCC) to approve their joint venture on services between Australia and China. China Eastern is said to have offered to launch a new year-round Brisbane-Shanghai route, while Qantas last month said China Eastern planned to move to double-daily A330 flights from Shanghai to Sydney and Shanghai to Melbourne by November. It was later clarified that the services would only operate between September and February each year, but could be extended to year-round operations if the joint venture stimulated sufficient demand.
Qantas has told the ACCC that without the joint venture, China Eastern would have less incentive to expand on Australian services and Qantas would become increasingly marginalised on Australia-China routes. A decision is expected by August 31.
