Confirming Beijing's increasing influence over Hong Kong, a surprising number of clouds over the territory's aviation arena melted away within days of Cathay Pacific's shareholders approving the deal giving China National Aviation Corporation control of Dragonair.
Taiwan headed the list, with Hong Kong's Sino-British Joint Liaison Group giving final approval to the Hong Kong-Taiwan aviation accord negotiated last year. Cathay and China Airlines had been renewing their previous agreement on a month-to-month basis while the new accord languished.
By the end of July, Dragonair and EVA Air plan to join Cathay and China Airlines on this busy route, with Dragonair authorised to operate same-plane service between China and Taiwan as long as it switches flight numbers in Hong Kong. Approval of the five-year Taiwan agreement finally lays to rest long-running speculation about Beijing's willingness to allow Hong Kong to maintain aviation relations with Taiwan after July 1997.
Dragonair also received Beijing's approval for five new routes into China, including Tsingtao and Shantou, and more frequencies on its Chengdu route. Chinese authorities had frozen new Dragonair routes and frequencies for the last two years in an effort to pressure Hong Kong into either granting CNAC an operating licence or allowing CNAC to take control of Dragonair.
China also granted Cathay Pacific valuable new rights to overfly China en route to North America, Europe and Vietnam. British Airways also received clearance on the new European routings, which will trim up to two hours off flight times between Hong Kong and London.
Cathay is considering a resumption of flights to Hanoi with the 45 minute saving in flight time, and expects to apply soon to fly the new North American routings.
Chinese airlines also gained from this rapprochement. British and Chinese negotiators agreed that Beijing could designate five more Chinese carriers to serve Hong Kong, four of them on new routes. The four most likely to receive the nod with new routes are those already operating charters to Hong Kong: China Northern, China Northwest, China Southwest, and Xinjiang Airlines. This means there will be eight Chinese airlines with scheduled flights to Hong Kong.
Beijing has not yet designated the beneficiaries, but Chinese airlines also gained their first fifth freedom rights from Hong Kong, initially to Bangkok, Singapore and Manila with a fourth southeast Asian sector under discussion.
Wang Guixiang, head of CNAC, has become the new chairman of Dragonair's board. One of his first challenges will be to secure aircraft and slots at Kai Tak for Dragonair's new routes. CNAC has agreed to retain a long term shareholding in Cathay, but to help finance the Dragonair takeover it has sold half of its 4.2 per cent stake in Cathay to European institutional investors.
David Knibb
Source: Airline Business
