Airline News
Row over Jetstar Hong Kong AOC continues as city government amends framework
October 28th 2014
Cathay Pacific Airways (CX) is refusing to drop its opposition to Jetstar Hong Kong because it believes the grounded low-cost carrier (LCC) remains a “branch office of Qantas” and fails to meet the legal definition of a local entity needed to obtain an air operator’s certificate (AOC). Read More »
Speaking at a Sydney conference, CX’s head of corporate development, James Barrington, reiterated previous claims that Hong Kong’s constitution was clear in spelling out that an airline had to have its principal place of business in Hong Kong in order to gain regulatory approval to operate flights from there, The Sydney Morning Herald reports.
"It looks to us that Jetstar doesn't have its principal place of business in Hong Kong. It is a branch office of an Australian airline. All the legal advice taken has said it just doesn't meet the Basic Law," Barrington said.
"A franchise operation of McDonald's in Hong Kong with a 51% local partner is still McDonald's based in North America," he said.
"A franchise operation of Qantas in Hong Kong, albeit with a majority local partner, is still a franchise operation."
However, there is renewed hope for Jetstar Hong Kong. The city government’s Transport and Housing Bureau, which is in charge of designating the local carrier status, has issued a new statement saying it had “fine-tuned” the framework of designation by spelling out the factors it takes into account to now also include “public interests”.
China Eastern Airlines (CEA), Qantas Airways and Shun Tak Holdings – a Hong Kong-based casino conglomerate – all hold equally-sized 33.33% equity stakes in Jetstar Hong Kong, though Shun Tak’s voting rights have been increased to 51% to be able to appoint four out of seven board members and thereby meet the government’s requirement to be a “Hong Kong-controlled carrier”.
A final decision date has not been given, but a source close to Jetstar has told the South China Morning Post that it is not likely it will be in business for the upcoming Christmas and Chinese New Year peak travel season.
CX, meanwhile, says it will continue to stand by its objection, no matter the outcome.
The pressure continues to build, as rumours suggest that CEA has had enough and wants to pull out of the investment deal, while local heavyweight Shun Tak is said to have closed in on the city government, seemingly expecting its considerable influence will convince officials to make a decision in Jetstar’s favour.
