Cathay Pacific doesn't know whether to laugh or cry. On the one hand, it has avoided sharing its Hong Kong-Taiwan route with a Chinese-backed aspiring new entrant, China National Aviation Corporation, but it must still contend with two new entrants on the lucrative route.
The thorny issue of a new Taiwan bilateral bracketing China's takeover of Hong Kong has been one of several aviation issues giving the UK dependency and its flag carrier heartburn, especially since CNAC, wholly owned by the Civil Aviation Administration of China, applied for an Hong Kong operating licence in March, amid speculation that it was eyeing the Hong Kong-Taiwan route.
The ongoing wrangling over financing for Chek Lap Kok airport has been another key issue. Beijing has now smoothed the way on both, but questions persist about further changes once China assumes responsibility for Hong Kong in 1997.
In Taiwan, Eva Airways has finally succeeded in its demands for an end to the single designation of China Airlines on the route. But both EVA and TransAsia Airways remain candidates with Taipei delaying its decision until it concludes talks with Macau, when it will pick airlines for both routes.
While Taipei seemingly favoured the dual designation, Cathay, Hong Kong's representative in the talks, dragged its feet. No doubt it was trying to protect its position and Hong Kong has consistently shunned multiple designations, but uncertainty over Beijing's plans for CNAC is a more likely explanation. 'Beijing would like to nominate one of its own airlines [for the route],' one Taiwan legislator observed earlier this year.
CNAC fuelled this speculation when it launched charter flights to Hong Kong in April, and in May took delivery of a new B757 in its own livery. It has also appointed Li Zhao, the deputy director of the CAAC who had declared China's assent to multiple carriers, as general manager.
Hong Kong and Taiwan finally settled on two carriers each, with Dragonair designated the second Hong Kong carrier. However, Beijing has not publicly endorsed this though the prevailing view is that Cathay would never have agreed to two carriers and Hong Kong would never have given Dragonair the nod without Beijing's 'behind the curtain' blessing.
But the CNAC spectre has not gone. When Li Zhao originally announced China's multiple carrier policy, he added that 'the Taiwan-Hong Kong air route will definitely have further development' after 1997. Dragonair's licence may yet not last the full five years of the new accord slated to take effect from the end of October.
Meanwhile, negotiators must agree on capacity levels and resolve the touchy subject of who will sign the Hong Kong-Taiwan accord. Beijing only wants a commercial pact between airlines; but Taipei insists its airline association, which negotiated on Taiwan's behalf, should sign.
Separately, the agreement between Chinese and UK negotiators over Chek Lap Kok financial guarantees has ended seven tedious months of talks and cleared the way for the establishment of a new government corporation that will borrow $1.5 billion from banks and investors to complete the airport.
Chep Lap Kok's opening has been postponed to April 1998, leading officials to relax Kai Tak's curfew, and give the airport 26 more slots.
Source: Airline Business
