MATT O'SULLIVAN August 06, 2012
A closer alliance between Cathay Pacific and Qantas seems unlikely. Photo: Joe Armao
CATHAY Pacific has shown that it will be a thorn in the side of Qantas as it attempts to establish a budget airline in Hong Kong, after highlighting the likelihood of regulators imposing conditions on the venture.
The dominant Asian airline has previously refrained from publicly revealing its stance on Jetstar Hong Kong but in a submission to Australian regulators it has raised numerous questions about the plans for a new joint venture in the Chinese territory and Jetstar's other Asian offshoots.
Qantas is seeking approval from the Australian Competition and Consumer Commission to work more closely with Jetstar's offshoots in Japan, Hong Kong, Vietnam and Singapore. It wants to be able to co-ordinate networks, pricing, purchasing and resourcing decisions.
Apart from signalling that it will aggressively defend its home turf from Jetstar's advances, the submission from Cathay is notable because it gives an insight into the likely friction with Qantas despite the pair being key partners in the oneworld airline alliance.
The Hong Kong-based Cathay has frequently been cited over the years as an ideal bedfellow for Qantas but a long history of strained relations makes a closer alliance between the pair appear unlikely.
Jetstar has to gain approval from regulators in Hong Kong for its new venture there, but Cathay has used the latest application from Qantas to highlight the hurdles the new airline will face.
Cathay has hinted to the ACCC that it should delay making a decision on whether to allow Jetstar Hong Kong to be included in any closer co-ordination of services between Qantas and the Jetstar offshoots until it has gained the green light from regulators in Hong Kong.
"It is also possible that conditions may be imposed on any approval given in Hong Kong," Cathay said.
"Accordingly, it may be difficult for the ACCC to authorise the proposed conduct in relation to Hong Kong if it is unclear whether Jetstar will be granted approval to operate flights within Hong Kong and, if it is granted approval, what the conditions of that approval may be."
Qantas unveiled plans early this year to launch a low-cost airline in Hong Kong as part of a joint venture with China Eastern. The new airline plans to begin flying by the middle of next year.
In its application to the ACCC, Qantas has made it clear that its expansion into Asia via the setting up of Jetstar ventures will be threatened unless the airlines are allowed to work more closely.
But Cathay has highlighted the lack of clarity in Qantas' application and questioned its claims that approval for closer co-ordination with Jetstar will result in more tourists flying to Australia.