Qantas Airways’ hopes of launching a new low-cost carrier in Hong Kong have been essentially quashed after waiting nearly two years for a decision, as the territory’s Air Transport Licensing Authority (ATLA) rejected on 25 June the application from Qantas to start a new budget airline – Jetstar Hong Kong – on the basis that the ultimate control of the airline would be in Australia and mainland China.
Expressing disappointment at the decision, CEO of the Qantas Group Alan Joyce said: “This is as disappointing for the shareholders as it is for the travellers Simon Large that Jetstar Hong Kong planned to serve.
It’s the travelling public who have lost out, because the message from this decision is that Hong Kong appears closed to fresh aviation investment even when it is majority locally owned and controlled.
“At a time when aviation markets across Asia are opening up, Hong Kong is going in the opposite direction. 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.”
Cathay Pacific and Hong Kong Airlines have been strenuously objecting to Jetstar’s application and a public inquiry on the issue was held in February.
The two carriers issued a statement following the decision saying it was a good result for Hong Kong as it ensured that important Hong Kong economic assets, its air traffic rights, are used for the benefit of the people and the economy of Hong Kong.
In its decision, the regulator said: “Having considered all relevant information including submissions and evidence Jetstar Hong Kong and the objectors presented at the public inquiry, the Authority decided that Jetstar did not comply with Article 134(2) of the Basic Law in having its principal place of business in Hong Kong and that Jetstar Hong Kong’s application be refused.”
Jetstar Hong Kong had formed a key plank of Qantas’s Asian growth strategy and would have joined its budget carriers operating under the Jetstar brand in Singapore, Vietnam and Japan. At the same time, Jetstar Group chief executive Jayne Hrdlicka admitted the airline had misjudged the ease of gaining regulatory approvals for the venture but remained “patient and long-minded” about its prospects.
Qantas, Chinese state-owned carrier China Eastern and Hong Kong’s Shun Tak Holdings each own one-third of the business venture, which was launched in March 2012 and expected to begin flying in 2013.
Meanwhile, the Qantas Group said in a statement that it will work with its fellow shareholders in Jetstar Hong Kong to review the enterprise, adding that it had invested, as at 31 December 2014, some A$10 million (US$7.71 million).