The accord was signed in Beijing on 2 February and took immediate effect. Hong Kong's secretary for economic services, Stephen Ip, says airlines from both sides "enjoy equal opportunity to operate scheduled services".
Although it has not been stated in writing, Hong Kong industry insiders have long known that unofficial terms stated that Hong Kong-based airlines could only operate around one-third of the flights operated by mainland Chinese airlines.
The new arrangement does not detail specific capacity allowances, but observers say that Hong Kong-based carriers can substantially increase services - some estimate by as much as 50%.
Six mainland-based airlines operate to Hong Kong - Air China, China Eastern, China Northern, China Northwest, China Southern and China Southwest - while just one Hong Kong-based airline - Dragonair - operates to mainland China.
Dragonair says it is planning to boost services to China as a result of the new arrangement. The carrier, Hong Kong's second airline after Cathay Pacific Airways, also says its regular charter flights to five Chinese cities will immediately be converted to scheduled services, meaning it can carry cargo on the routes for the first time.
The accord may have wider ramifications, however. Hong Kong has had a policy for years of restricting one locally registered airline to a single route, but analysts predict that it will eventually be lifted to allow the expanding Dragonair to compete directly with Cathay on routes within the Asia-Pacific region.
Dragonair operates to 25 Asia-Pacific destinations, with all but nine being Chinese points. Those outside China are to secondary cities in the region.
Observers believe that if the "one airline, one route" policy is dropped and Dragonair is free to compete on routes to major Asia-Pacific cities, Cathay is likely to start operating to mainland China.
Cathay operated to China until it and its parent, Swire Pacific, took control of Dragonair a decade ago. In 1996, however, China National Aviation, the commercial arm of the regulatory Civil Aviation Administration of China, won control of Dragonair. The carrier has since been steadily forging its independence from Cathay.
Industry sources in Hong Kong say Dragonair has finalised a deal with Airbus Industrie to purchase up to three more A330-300s and five more A320-family aircraft.
The carrier is also known to be in talks with lessors over the addition of more of the Airbus types as part of a plan to boost the size of its fleet substantially over the next five years.
Source: Airline Business
