Qantas Airways Ltd. (QAN) has received an objection from Cathay Pacific Airways Ltd. on the Australian airline carrier's newest venture to date. Qantas has planned to start a low-cost carrier in Hong Kong. In an exchange statement today, Cathay insisted that the new venture would be violating certain laws. The Hong Kong flag airline carrier also argued that should Hong Kong grant Qantas access, the budget carrier proposal would cause harm to the interests of the city.
Cathay also said in its statement, "The application would set a dangerous precedent by granting control of Hong Kong's hard-negotiated sovereign air traffic rights to a carrier that is nothing more than a franchise operation controlled by a foreign airline."
Last month, a story about the budget airline venture was published in Hong Kong's public journal. The airline carrier proposal was a venture between Australia-based Qantas, China Eastern Airlines Corp., and one of gambling tycoon Stanley Ho's companies. According to a Bloomberg report, Hong Kong's airline traffic is 50% controlled by Cathay, and that the move was done to protect its dominance as the economic growth of China slows down.
Bloomberg was unable to get comment from parties included in the objection statement, Jetstar and the Hong Kong Transport and Housing Bureau. Jetstar is a wholly-owned subsidiary of Qantas.
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