Air Transport World

Subtle Chinese squeeze.(Cathay Pacific, includes related article on Cathay Pacific order for Boeing 777)

HONG KONG--For Cathay Pacific, Hong Kong's de facto national carrier, the writing is on the wall. Analysts are advising stockholders to sell as the airline prepares to deal with a long-term threat.

The threat comes in the form of a bid by the China National Aviation Corp. to set up an airline in Hong Kong (ATW, 6/95), a move that adds piquantly to a list of problems that Cathay must deal with in the near future.

However, wisdom warns against overstating this threat, despite that the fact that so far, CNAC's only step has been to apply to the Hong Kong government for an air operator's certificate--a measure of the technical competence of applicants to operate air-transport services safely. The application is processed against established technical criteria and requires 6-8 months for approval, which should come between October and December.

The second phase of the 4-step process probably is the more important, as the company that has the AOC secures designation as a Hong Kong airline. Then, in the third and fourth stages, the government allows it to operate, first charter services, then routes under terms of airservice agreements.

While anyone can apply for an AOC, the fact that CNAC has chosen to do so in Hong Kong has raised eyebrows. CNAC is a 100%-owned subsidiary of the Civil Aviation Authority of China, based in Beijing.

CNAC has been operating in Hong Kong since before 1947, as the ticketing agent for CAAC. However, since April, it began to offer limited airline services via chartered flights to Chongging and Chengdu, using aircraft leased from China Southwestern Airlines.

The nub of the latest move is that it is seen as a challenge to two of the key concepts of the Joint Declaration: That after Hong Kong is returned to China by the British in 1977, the two will remain separate entities, with aviation being no exception. …

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