Hong Kong air transport authorities reject application by Jetstar

HONG KONG – The Hong Kong Air Transport Licensing Authority has rejected an application by Qantas subsidiary Jetstar to establish operations in Hong Kong, saying that its principal place of business is not Hong Kong. 
“Jetstar Hong Kong cannot make decisions independent from (its) two foreign shareholders,” the Authority said, adding that Jetstar’s principal place of business was not Hong Kong.
Qantas restructured Jetstar Hong Kong in March 2012 in a bid to comply with local aviation regulations, bringing in Stanley Ho’s Hong Kong-based Shun Tak Holdings as a third partner in joint venture with China Eastern Airlines and the Qantas Group.

The original joint venture was between Qantas and China Eastern. In the new structure, Shun Tak held one-third of the equity but 51 per cent of the voting rights, and was said to have ultimate control, an argument rejected by the Authority.

Cathay Pacific, which operates Dragonair largely on Mainland China routes, vigorously opposed the Jetstar application. Air China, which has equity in Cathay Pacific, was also believed to be opposed.

Qantas Chief Executive, Alan Joyce, criticised the ruling, saying Hong Kong appeared closed to fresh aviation investment.

“At a time when aviation markets across Asia are opening up, Hong Kong is going in the opposite direction,” he said in a statement. “Given the importance of aviation to global commerce, shutting the door to new competition can only serve the vested interests already installed in that market.”

Hong Kong’s international airport is close to saturation, with landing slots at a premium and completion of a third runway not expected until 2023 (ATI).