Air Transport World

Politics still hurting Dragonair; profits not in sight.

Politics still hurting Dragonair; profits not in sight Hong Kong--Dragonair has been a political animal since it was formed in 1985. This is due to Hong Kong's current intense political atmosphere stemming from the fact that the British colony will revert to Chinese sovereignty in 1977. Although this event is only 10 years away, China already exerts a strong influence over political and some economic issues in the colony.

The political bent of Dragonair was confirmed, in the eyes of many observers, by the fact that China itself owned nearly 50% of Hong Kong Dragon Airlines, its formal name, that the airline apparently planned to operate only from Hong Kong into China, and that from the beginning it presented itself as the airline of the (Hong Kong) people.

The airlinehs chief executive was Stephen Miller. A 23-year resident in Hong Kong, Miller's most recent positions were director-Asia/Pacific of Cargolux Airlines, then Asia chief executive for Guinness Peat Aviation. And then for a few months in late-1984/early-1985, he was with Hong Kong-based Oriental Pearl Airlines, which was seeking to get established as an airline flying to the U.S. Miller switched to Dragonair in April 1985, and Oriental Pearl subsequently vanished from the scene.

Although China was a substantial (40%) shareholder in the forming company, HongKong Macau International Investment-HKMII, the main mover along with Miller was Chao Kuang-piu. As chairman of HKMII-Chao also became chairman of its first major venture, Dragonair.

Cathay Pacific welcome

Miller and Chao were either naive or overly optimistic about the speed of growth for their new airline. There were no early opponents. Cathay Pacific Airways did not object to the creation of the airline, nor to most of its route applications, and as late as August 1985, was welcoming the airline as a potential partner for traffic feed.

The big obstacle for Dragonair was obtaining traffic rights for scheduled services--especially difficult was getting these rights for routes into China. Despite their stated intentions, the U.K. negotiating authorities have been unable to correct the imbalance in air services between Hong Kong and China. At present the Civil Aviation Administration of China (CAAC), has rights for nearly 60 scheduled services a week from various points in China to Hong Kong, yet Cathay Pacific is limited to six flights weekly to Shanghai and Beijing. …

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