Faced with the challenge of surviving Hong Kong's sovereignty transfer, UK-controlled Swire Pacific has again had to declare its long-term commitment to Cathay Pacific and post-1997 Hong Kong.
In the past, sceptics predicted Swire would bail out as the Union Jack came down, but the response became mantra-like with Swire and Cathay expounding optimistically over Hong Kong's future.
This time the speculation is not that Swire will bolt, but that Beijing will force it to cut its 51.85 per cent stake to, perhaps, 25 per cent - a level reflecting foreign ownership limits in other countries. This view comes from Dragonair's founder Stephen Miller, a Cathay sceptic since it took control of his airline.
'The concept of the Swire Group retaining control of Cathay after the 1997 handover is quite out of the question,' Miller told Hong Kong's US Chamber of Commerce. He also cast doubts over Cathay's position in bilateral negotiations post-1997: 'I cannot see a situation where China will give away valuable traffic rights to an airline which is owned and controlled by non-Chinese.'
Cathay dismisses foreign ownership limits elsewhere as 'irrelevant.' The Sino-British Joint Declaration contains no requirement for local ownership and control of an airline, Cathay notes. Instead, rights may be exercised by any airline 'that is incorporated and has its principal place of business' in Hong Kong. 'We are entirely comfortable with that wording,' says Cathay.
Even if China has no plans to place conditions on Cathay's designation as a Hong Kong carrier, it still has to rely on Beijing to state its case in bilateral talks.
Even if China has no plans to place conditions on Cathay's designation as a Hong Kong carrier, it still has to rely on Beijing to state its case in bilateral talks.
Source: Airline Business
