Cathay Pacific Airways` witnesses today gave testimony at Hong Kong`s Air Transport Licensing Authority (ATLA) hearing into the airline`s application for licences to fly to Beijing, Shanghai and Xiamen that Cathay Pacific believes Hong Kong can be the prime aviation gateway to China. They strongly rejected arguments by Hong Kong Dragon Airlines, which objects to the licence applications, that Hong Kong`s geographic position rules this out.

Underlining the urgency of the need to strengthen Hong Kong`s status as an aviation hub, Cathay Pacific Director Corporate Development Tony Tyler, giving testimony at the ATLA hearing, said: “It is very important that this application is approved Hong Kong needs to protect and develop its position as a hub.”

He explained to the ATLA panel that many competing airlines and airports within the region and elsewhere in the world are rapidly building capacity and their hubs` flight connections. “Traffic is bypassing Hong Kong,” he said.

“We still have something that is very wrong with our network and that is we are not operating to a major market right on our doorstep,” Mr Tyler said, adding that without that “access the airline has to compete with one hand tied behind its back”.

Mr Tyler pointed out that closer cooperation with other airlines that already fly from Hong Kong to the Chinese Mainland would not replicate the benefits of Cathay Pacific mounting its own operation.

“Code sharing does not overcome basic structural deficiencies,” said Mr Tyler, and would not provide a long-term solution to increasing flight frequency and building hub strength.
Cathay Pacific Director Corporate Planning Augustus Tang, in testimony to the ATLA tribunal, said that claims made by Dragonair about the negative impact it may suffer if Cathay Pacific operates services to Beijing, Shanghai and Xiamen were greatly exaggerated.

“There is a huge market out there,” Mr Tang said. “What we are trying to do is to attract the passengers who are travelling via other hubs, like Singapore for example, from Sydney via Singapore to Shanghai. There are a lot of passengers who are doing it.

“What we are trying to do is to do everything possible, everything under our control, to get these passengers, some of these passengers, to fly via Hong Kong,” Mr Tang said. “Dragonair will be losing some passengers but they will by no means lose as many as they have claimed.”

Mr Tang said that Dragonair had not taken the opportunity to develop markets on its network. Referring to Dragonair figures submitted to ATLA, Mr Tang said that from 1997 to 2002, Dragonair added 91 flights to its schedule to the Mainland. Sixty-five of those were to Beijing and Shanghai. The other 26 flights were spread between its other 17 points,” he said.

He also pointed out that Dragonair has not made use of a licence and rights it has to operate services between Hong Kong and Pusan, South Korea, a service that Korean Airlines now operates four times each week.

Also in testimony to the ATLA tribunal, Cathay Pacific General Manager Revenue Management, Sales & Distribution Ian Shiu said that Cathay Pacific being granted the ability to offer services to the Chinese Mainland would empower the airline`s 100,000 sales agents worldwide to sell China more aggressively and promote Hong Kong as a hub.

Mr Shiu said Hong Kong has “most of the features` of a strong hub except single airline online connection. “Once we get that Hong Kong I think will be a very competitive hub into China,” Mr Shiu said. “It would be good for Hong Kong and good for China.2

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