Hong Kong rejects Jetstar application for local license

Hong Kong has rejected an application by Jetstar Hong Kong Ltd. for a license that would allow it to become a local airline.

In its decision, the Air Transport Licensing Authority said the budget carrier does not comply with the requirement in the Basic Law that Hong Kong should be its main business location, the Hong Kong Economic Journal reported on Friday.

The regulator also took into consideration concerns that the airline is controlled by two non-Hong Kong airlines.

The carrier is owned by Shun Tak Holdings Ltd. (00242.HK), China Eastern Airlines Corp. Ltd. (00670.HK) and Qantas Airways Ltd.

The authority noted that the appointment of the airline's chairman has to be approved by China Eastern and Qantas, which is one of the 17 items that it considered in arriving at the decision.

Jetstar Hong Kong's chief executive Edward Lau voiced disappointment with the authority's decision, noting that the company's operations are based in the city.

Lau said the company will review the decision before planning its next move.

Law Cheung-kwok, director of aviation policy and research center at the Chinese University of Hong Kong, said the airline last year raised Shun Tak's voting rights to 51 percent from 33 percent.

But Sydney-based Qantas usually controls decisions of overseas subsidiaries even if it doesn't hold a majority stake, Law said.

Jetstar Hong Kong's bid for a local license has been opposed by Hong Kong's four airlines, namely Cathay Pacific Airways Ltd. (00293.HK), Hong Kong Dragon Airlines Ltd., Hong Kong Airlines Ltd. and Hong Kong Express Airways Ltd.

Cathay Pacific welcomed the authority's decision, saying it protects Hong Kong's rights to its airspace, which is an important economic asset.

Hong Kong Airlines also said the decision is in line with the territory's economic interests and has sufficiently taken into consideration the long-term development of its aviation industry.

Translation by Vey Wong

[Chinese version中文版]

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