Air Transport World

Lucky Dragon: Hong Kong's second airline finds opportunity, success in the China market. (Profile).(Statistical Data Included)(Company Profile)

At a time when many airlines are striving to get the right mix of routes, customers, market position, product and hub, one carrier has become the envy of the industry. Hong Kong Dragon Airlines Ltd., better known as Dragonair, enjoys an ideal combination of a booming marketplace, virtually unlimited access to the world's fastest-growing large nation, lean and dynamic management and a reputation for safety and service quality.

None of these advantages could have been foreseen when the airline was launched in 1985 by Hong Kong Macau International Investment Co. with a fleet of one 737-200 operating to Kota Kinabalu in Malaysia. A few more airplanes and several destinations in China followed over the next five years, but in a part of the world dominated by legendary Cathay Pacific Airways there was little room for an independent airline. In 1990, Dragonair Chairman K.P. Chao and his family accepted this reality and sold control of their carrier.

Cathay and parent company Swire Pacific acquired 43% of Dragonair while the overseas investment arm of the Chinese government, CITIC Pacific, which already owned 12.5% of Cathay, took 46% of Dragonair as well. Equally important to the future of the fledgling carrier was a 15-year contract under which Cathay took over management control. Among executives seconded to the smaller airline in the early 1990s was current Cathay Deputy CEO Philip Chen.

Except for complex political and mercantile maneuvering among different parts of the Chinese government, Dragonair's fate might have remained inextricably linked to that of its much bigger sibling with all that entailed following the return of Hong Kong to the mainland. …

Log in to your account to read this article – and millions more.