NICHOLAS IONIDES / SINGAPORE
Carrier aims to have licence award overturned, stating Hong Kong-China market is too small to sustain another airline
Hong Kong's second carrier, Dragonair, is taking legal action to try to overturn the award of licences from the Air Transport Licensing Authority (ATLA) in April to Cathay for Beijing, Shanghai and Xiamen routes.
Dragonair opposed Cathay's request for the China licences, because Dragonair makes most of its money from operations to the three cities.
Dragonair's lawyers are seeking to have Cathay's ATLA licences declared "null and void", and a Hong Kong court has granted it leave to formally apply for a judicial review of the ATLA ruling. Among several arguments, the carrier claims ATLA had no right to award the licences because only mainland Chinese authorities could do so.
Although Cathay is not expected to launch China services soon because the Chinese government must still grant rights after consulting the Hong Kong government, the award was a major victory. Cathay has since taken a second step toward launching services by being formally designated by Hong Kong's Economic Development and Labour Bureau as a carrier on the Hong Kong-Beijing route.
Dragonair is nearly one-quarter owned by Cathay and its parent, Swire Pacific, but has become more independent from the larger carrier since Chinese interests won control in 1996. It formally objected to Cathay's licence application, forcing ATLA, an independent statutory body, to hold 11 days of hearings at Hong Kong's high court in January and March - the first public route licence hearings in Hong Kong for more than a decade.
The smaller carrier argued that the market was not big enough to sustain another competitor on routes between Hong Kong and China, while Cathay said the China market was growing faster than any other.
Source: Flight International
