They say that if the law is not on your side, argue the facts; when the facts won’t co-operate, argue the law. So it would seem with Cathay Pacific’s objection to plans by Qantas to launch its low-cost carrier, Jetstar, in Cathay’s native Hong Kong. Also involved: Macau mogul Stanley Ho and two state-backed Chinese airlines. The future of low-cost travel in Asia could be at stake.
Cathay’s argument is based on a Hong Kong law mandating that local airlines have their principal place of business in the city. Jetstar Hong Kong is owned jointly by Qantas, China Eastern Airlines and Mr Ho’s Shun Tak Holdings. But Cathay – which is part-owned by China Eastern’s rival, Air China – says it will be run from Sydney. An antitrust filing by Qantas in Australia last year seems to back that up: it won approval for co-ordination, including scheduling and resources, between Qantas and the various Jetstars.
Joint ventures mixing a local owner with foreign operational control have been a popular format in Asia. Should Hong Kong play the heavy, other jurisdictions could reconsider what they allow.