Cathay Pacific has filed a formal objection against the application of Jetstar Hong Kong to operate in Hong Kong, saying its approval would violate the territory’s law that a company should have its principal place of business in the state.
“Public statements previously made in Australia by Jetstar and its parent company Qantas Airways make it clear that Jetstar Hong Kong is a franchise of Jetstar in Australia and that management control of Jetstar Hong Kong would rest in Australia with Jetstar and Qantas Airways,” read a statement from Cathay Pacific. “This means that Jetstar Hong Kong’s principal place of business would be in Australia, not Hong Kong.”
Cathay Pacific said that the fact that a shareholder of Jetstar Hong Kong resided in the territory and held a number of shares did not determine management control or principal place of business under Article 134 of Hong Kong’s Basic Law.
“Nor does the fact that particular officers of Jetstar Hong Kong are residents in Hong Kong. Any local franchise operation has local managers,” it added. “This does not stop it from being controlled from overseas. Management control of the Jetstar Hong Kong franchise clearly rests in Australia.”
In addition to violating the Basic Law, it said that approval of the application “would set a dangerous precedent by granting control of Hong Kong’s hard-negotiated sovereign air traffic rights to a carrier that is nothing more than a franchise operation controlled by a foreign airline.”
In questioning the application, Cathay Pacific said, “We believe that action would undermine the Hong Kong economy and weaken its overall competitiveness.”
It stressed that it was not against competition per se. “We successfully compete with other airlines every day in Hong Kong and around the world. Cathay Pacific Airways supports increased choice for consumers in Hong Kong. However, such developments must abide by Hong Kong law and they must be in the best interests of the Hong Kong economy.”
Jetstar Hong Kong has rebutted its rival’s claims, saying it is a local entity with about 70 percent of its directors being Hong Kong residents, which gives it the right to secure an aviation license in the territory.