By Nicholas Ionides in Singapore
The air services market between Hong Kong and China is being thrown open to allow many more flights and operations by more airlines
Airlines have long complained that the air services regime between the two sides remains too restrictive, despite the fact that both have been opening up to services by more foreign airlines in recent years. The new agreement follows long-running negotiations between the two sides. Hong Kong became a Special Administrative Region of China in 1997, but retains autonomy over its air services policies.
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| Hong Kong will see more traffic to and from China thanks to new deal |
Full details are not being revealed, but the new agreement will allow for services on a further 11 routes between Hong Kong and China, increasing the total to 56 from the current 45. It will also allow more airlines to operate. Starting from winter 2007, each side will be able to designate up to three carriers to operate passenger and/or cargo services, as well as one to operate dedicated cargo services on most routes, up from the current two.
There will still be restrictions on services to major cities such as Beijing, Guangzhou and Shanghai, but the new agreement will allow for more flights to these destinations and will enable Hong Kong's Cathay Pacific Airways to launch passenger services to Shanghai, which it has been seeking for some time.
"Capacity constraints on most routes will also be relaxed," adds the Hong Kong government. "Between winter 2006 and summer 2007, the capacity limits for passenger services on 35 routes will be lifted completely in two phases. Capacity for the remaining routes will be substantially increased."
Cargo capacity allowances for Beijing and Shanghai will be "substantially increased", while restrictions for all other routes will be removed by summer 2007. This should allow dedicated cargo carrier Air Hong Kong, which is 60% owned by Cathay and 40% by DHL, to begin serving major cities.
The deal came soon after Cathay announced it plans to acquire fellow Hong Kong-based carrier Dragonair - which earns most of its revenue from China services - as well as doubling its stake in Beijing-based Air China to 20%. As part of the transaction, Air China, together with subsidiary China National Aviation, will in turn acquire a combined 17.5% of Cathay.
In a separate deal forged around the same time, China's Hainan Airlines acquired 45% of Hong Kong-based CR Airways, which operates to secondary destinations in China and other parts of Asia. It and another regional carrier, Hong Kong Express Airways, are now looking to expand their China services.
Seven Chinese airlines currently serve Hong Kong - Air China, China Eastern, China Southern, Shandong, Shanghai, Sichuan and Xiamen Airlines. At present four Hong Kong-based airlines serve China - Cathay, CR Airways, Dragonair and Hong Kong Express. ■
Source: Airline Business
