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KarelXWB
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Jetstar Hong Kong Might Never Fly

Fri Aug 22, 2014 8:54 am

The Hong Kong unit of Qantas Airways's Jetstar Group has sold more of its A320 fleet in a bid to cut operating costs as it struggles with prolonged delays in getting off the ground in the city.

The airline remains uncertain about when Hong Kong's aviation regulator will decide on the license, which has faced strong opposition from Cathay Pacific.

Quote:
Jetstar Hong Kong, which since unveiling its planned venture has taken delivery of a total of nine Airbus A320 jets, sold three of them in April to a third party to reduce costs. The latest transaction leaves Jetstar Hong Kong with three jets parked at Airbus's headquarters in Toulouse, France, the person said.

Source:
http://tinyurl.com/pey8qu2

Background stories:
Jetstar Hong Kong Not Getting Off The Ground (by KarelXWB Jan 21 2014 in Civil Aviation)
Jetstar Hong Kong Story Continues (by KarelXWB Apr 23 2014 in Civil Aviation)


4 stored Jetstar Hong Kong A320s by DigitalAirliners.com, on Flickr

[Edited 2014-08-22 01:56:52]
What we leave behind is not as important as how we've lived.
 
mwh787
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RE: Jetstar Hong Kong Might Never Fly

Fri Aug 22, 2014 11:38 am

Thanks for posting this. Of course can't get through WSJ paywall.
Here is another link to story on this

http://www.channelnewsasia.com/news/...tar-hong-kong-sells-3/1325668.html

This really seems to be taking much too long. ..Politics!
 
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zeke
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RE: Jetstar Hong Kong Might Never Fly

Fri Aug 22, 2014 12:17 pm

This does not surprise me, Vietnam and Japan have not allowed Jetstar franchises based there to fly internationally either.

Australia does not permit foreign owned airlines to fly internationally. In Europe there have been many recent concerns in Europe over ownership and control as well. Latest was this week Darwin Airline.

Quoting mwh787 (Reply 1):

Just a correction to that article, HKG does not have a flag carrier. CX is a publically listed and traded in HKG.
Human rights lawyers are "ambulance chasers of the very worst kind.'" - Sky News
 
dynkrisolo
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RE: Jetstar Hong Kong Might Never Fly

Fri Aug 22, 2014 4:06 pm

Quoting Zeke (Reply 2):
Just a correction to that article, HKG does not have a flag carrier. CX is a publically listed and traded in HKG.

Incorrect. A flag carrier can be state or privately owned. Cathay uses the rights of air services agreements that HK has with other countries. By the definitions defined in ICAO's Chicago Convention, Cathay is a flag carrier of HK, namely, an airline with aircraft registered in HK engaging in international transportation.

Wikipedia is not always the best reference, but in this case, it is doing its job:

http://en.wikipedia.org/wiki/Flag_carrier
 
scottpilgrim
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RE: Jetstar Hong Kong Might Never Fly

Sat Aug 23, 2014 1:00 am

This is sad news for Hong Kong travellers. I've always felt air fares ex-HKG are much pricier than in Europe. Even LCC flights here are in general priced higher than Easyjet/Ryanair.

Quoting dynkrisolo (Reply 3):
Incorrect. A flag carrier can be state or privately owned. Cathay uses the rights of air services agreements that HK has with other countries. By the definitions defined in ICAO's Chicago Convention, Cathay is a flag carrier of HK, namely, an airline with aircraft registered in HK engaging in international transportation.

Wikipedia is not always the best reference, but in this case, it is doing its job:

http://en.wikipedia.org/wiki/Flag_carrier

De facto flag carrier according to wikipedia http://en.wikipedia.org/wiki/Cathay_Pacific
Flag carrier, asserts CX's parent company http://www.swire.com/en/our-business...irlines/cathay-pacific-airways-ltd

[Edited 2014-08-22 18:01:57]
 
Thomas_Jaeger
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RE: Jetstar Hong Kong Might Never Fly

Sat Aug 23, 2014 2:55 am

Quoting Zeke (Reply 2):
This does not surprise me, Vietnam and Japan have not allowed Jetstar franchises based there to fly internationally either.

Jetstar Pacific is majority owned by Vietnam Airlines and flies internationally from Da Nang to Macau. They will also launch Ho Chi Min City to Singapore soon and are looking at Bangkok and other international destinations.
Swiss aviation news junkie living all over the place
 
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zeke
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RE: Jetstar Hong Kong Might Never Fly

Sat Aug 23, 2014 3:56 am

Quoting dynkrisolo (Reply 3):

CX is hkg based, and does use the freedoms negotiated by the HKG government, however it has no preferential access to these and is not an extension of HKG Goverment policy. Any hkg carrier has equal access to these traffic rights, it was one of the main complaints voiced by all (not just CX as some claim) airlines based in HKG against Jetstar HKG as they were controlled by an Australian airline.

Quoting scottpilgrim (Reply 4):

The costs of operating in the region are a lot higher, in the EU you don't have aircraft sitting on the ground for hours for chinese airspace restrictions. Hkg is a busy airport, it is common to get arrival and departure delays, passengers pay for these costs. In the EU you will find LCC operating out of secondary airports, and flights within the EU often have no immigration requirements, they are like a domestic flight in the US.

Property in hkg is also very expensive compared to Europe.

Quoting Thomas_Jaeger (Reply 5):

Thanks I was not aware of those changes.
Human rights lawyers are "ambulance chasers of the very worst kind.'" - Sky News
 
81819
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RE: Jetstar Hong Kong Might Never Fly

Sat Aug 23, 2014 4:32 am

Quoting Zeke (Reply 2):
This does not surprise me, Vietnam and Japan have not allowed Jetstar franchises based there to fly internationally either.

I think this a little bit of a red herring.

Jetstar Vietnam for the most part has been majority owned by the Vietnamese government or Vietnamese interests.

Even with its independent board it has answered to the Vietnamese powers to be.

For what ever reason Jetstar Pacific has been stifled.

If you look at Vietnamese airlines flying internationally, there is no rhyme or rhythm to the logic behind the traffic rights. There isn't much that we could define as proper aviation policy.

For example Air Asia has a large presence in Vietnam. It is neither a Vietnamese controlled entity or an airline with Vietnamese investors. When compared to other airlines flying in and out of Vietnam it has excellent traffic rights and airport slot allocation. You have to question why and how?

On the same point Jetstar Japan will be flying internationally shortly. I think this is almost a certain. There have been delays, but this is a very different situation to that in Vietnam and Hong Kong.

Regardless of our opinions on Hong Kong basic law, the reality is Cathay Pacific is a protected airline. For a market as large as Hong Kong, you would think the government, on competition concerns alone would want as many airlines as possible to set-up shop. This doesn't seem to be the case.

Let's not use a very broad brush to paint Jetstar as a rogue entity and an enemy of the Asian states. It is a proper business based upon upon proper business principals and has a product offering in a defined market niche.

At the end of the day, why not let the market decide? Ultimately, Jetstar's success should be based upon the wills of the people, not some very opaque arguments that for the most part smell of protectionism!!
 
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zeke
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RE: Jetstar Hong Kong Might Never Fly

Sat Aug 23, 2014 4:43 am

Quoting travelhound (Reply 7):

Define the "protection" CX gets from the HKG government ? CX competes with over 100 airlines....

Why do consumers need additional local airlines when HKG already had more airlines competing than just about any other international hub in the world ?

Look at the competition in HKG compared to SYD, LAX, LHR FRA ...
Human rights lawyers are "ambulance chasers of the very worst kind.'" - Sky News
 
lutfi
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RE: Jetstar Hong Kong Might Never Fly

Sat Aug 23, 2014 4:47 am

Hong Kong Airlines & HK Express are both growing faster than Cathay/ Dragonair, so plenty of local competition
 
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ADent
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RE: Jetstar Hong Kong Might Never Fly

Sat Aug 23, 2014 4:53 am

I thought it was obvious months ago JetStar HK wasn't going to happen.

Here is a thread from January: Jetstar Hong Kong Not Getting Off The Ground (by KarelXWB Jan 21 2014 in Civil Aviation) .
 
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RyanairGuru
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RE: Jetstar Hong Kong Might Never Fly

Sat Aug 23, 2014 5:20 am

Quoting ADent (Reply 10):
I thought it was obvious months ago JetStar HK wasn't going to happen.

The Hong Kong government still have ruled on whether Jetstar Hong Kong complies with the Basic Law or not, despite having had over a year to figure that out. While the delay makes it much more unlikely that Jetstar will ever take-off, it technically isn't over until their application is rejected. There is still a chance, albeit slight, that it could be approved. I have to say that I've lost a lot of respect for the Hong Kong government over this. If they came out and denied the application at least everyone can go home and Qantas can draw a line under the experience, but this bureaucratic inefficiency and delay isn't doing anyone any favours.
Worked Hard, Flew Right
 
jacobchoi
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RE: Jetstar Hong Kong Might Never Fly

Sat Aug 23, 2014 8:17 am

Quoting RyanairGuru (Reply 11):
but this bureaucratic inefficiency and delay isn't doing anyone any favours.

CX & HX
 
wowpeter
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RE: Jetstar Hong Kong Might Never Fly

Sat Aug 23, 2014 8:29 am

Quoting travelhound (Reply 7):
Regardless of our opinions on Hong Kong basic law, the reality is Cathay Pacific is a protected airline. For a market as large as Hong Kong, you would think the government, on competition concerns alone would want as many airlines as possible to set-up shop. This doesn't seem to be the case.

I love how everyone always say CX is a very protected airline when CX is competing against every airline in the world and almost 90% of them at some point in their history had recieve some form of government support, which CX had never recieve a single cents from any government. People often say CX get preferential government treatment, but the reality is that we don't, every time there is any bilateral negotiation with any foreign state, all airlines based in Hong Kong are consulted for their opinion and wishes, CX does not get any preferential treatment with government just negotiate just for their interests... Any airline in Hong Kong can open any routes rights that are negotiated... For routes where that is pre-exisiting route right with minimum frequency requirements, like Paris, CX often need to mount extra frequency at a lost to ensure their un-used slot are not lost and given to their competitor like Hong Kong Airlines... All Airlines in Hong Kong pay the same landing fees and all gates are assign by ATC with no preferential treatment, often you see CX aircraft are often park at the furthest gate from immigration... So I wouldn't say CX is a protected carrier... If it is, I will expect their get way more preferential treatments... All Hong Kong carrier get the same treatment as they should be...

So what people often complain about Hong Kong protecting CX are generally not looking at it from a local interests point of view... Any government in the world had an obligation to protect local business interests when compare to foreign competition... So the Hong Kong Government is not protecting CX, they are protecting ALL Hong Kong carries by protecting their interests in the international scene, just like any other government will do... But locally the Hong Kong government strongly encourage competition and will not give preferential treatment locally...

So someone is arguing that an Australian company should allow to set up an airline in Hong Kong and used the hard earned Hong Kong traffic rights... Then I think the Hong Kong government should do everything they can to ensure this Australian company is complying to local laws... And if not, reject their application... Hong Kong traffic right should be reserve for locals and local business and not be allows to be taken advantage by an overseas company.
 
jacobchoi
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RE: Jetstar Hong Kong Might Never Fly

Sat Aug 23, 2014 8:34 am

Quoting wowpeter (Reply 13):
all gates are assign by ATC with no preferential treatment

Just curious about this statement - Why are gates 1-4 ALWAYS used by CX aircraft? Is it due to the proximity with The Wing?
 
bill142
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RE: Jetstar Hong Kong Might Never Fly

Sat Aug 23, 2014 8:55 am

Maybe it's time for MU to get Beijing to step in.
 
Scanorama
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RE: Jetstar Hong Kong Might Never Fly

Sat Aug 23, 2014 9:13 am

Quoting bill142 (Reply 15):
Maybe it's time for MU to get Beijing to step in.

I would have thought if Beijing was to step in, they would have done so a long time ago.
 
wowpeter
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RE: Jetstar Hong Kong Might Never Fly

Sat Aug 23, 2014 11:22 am

Quoting jacobchoi (Reply 14):

Quoting wowpeter (Reply 13):
all gates are assign by ATC with no preferential treatment

Just curious about this statement - Why are gates 1-4 ALWAYS used by CX aircraft? Is it due to the proximity with The Wing?


Gate 1-4 used to be CX exclusive bay when the airport first open because CX pay for it when the airport first open... That is no longer the case for at least 10 years now... Gate 3-4 are generally reserve for North American departure / European Departure because it allow the airport authority to save cost by blocking off the area and have one separate security screening for those flight... You often see American Airlines, Air Canada, Lufthansa also park on those gate... Proportionally there are more CX aircraft at those bay because proportionally there are more CX aircraft in HKG... But by no mean are they exclusive for CX...

Although having said that the airport authority do assign planes to specific gate closest to their airline respective lounge... Like EK always around 60-64 something... Thai always around bay 40-48 something... SQ, always around 15-20... As they are closest to their respective lounge.. But by no mean any of those bay are exclusive to one airline...

One very good thing about ATC and HK Airport is that they don't pay favouritism... Never had any priority landing or take off for CX plane, they are always in the sequence they are arriving or departing... Unlike some places like Dubai or India or Indonesia, Phillipines, or many other places... Where they always favouritism for their local airlines...
 
aerokiwi
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RE: Jetstar Hong Kong Might Never Fly

Sat Aug 23, 2014 11:58 am

Quoting RyanairGuru (Reply 11):
I have to say that I've lost a lot of respect for the Hong Kong government over this.

I haven't at all. I think they see through they charade that is Jetstar's many Melbourne-controlled entities.

And we don't know what's going on behind the scene's. Perhaps the HK government is quite prepared to say no but JQ management keep stringing it out with more concessions. Who's to know You can't pass jugdement yet.
 
timtam
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RE: Jetstar Hong Kong Might Never Fly

Sat Aug 23, 2014 12:41 pm

The HK Government knows that Jetstar HK is good for the Hong Kong economy.

But its not so good for the British controlled CX and they have a lot of influence in HK and can apply a lot of "grease".

If Jetstar HK is not approved its Hong Kong's loss. The focus will shift to another hub somewhere else in China.
 
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RyanairGuru
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RE: Jetstar Hong Kong Might Never Fly

Sat Aug 23, 2014 2:04 pm

Quoting aerokiwi (Reply 18):
I haven't at all. I think they see through they charade that is Jetstar's many Melbourne-controlled entities

In which case deny the application

Quoting aerokiwi (Reply 18):
And we don't know what's going on behind the scene's. Perhaps the HK government is quite prepared to say no but JQ management keep stringing it out with more concessions

"Concessions" don't take a year. Even with negotiations, in Australia or New Zealand this would have been denied, and then appealed if necessary. Legal limbo ultimately achieves nothing on the long term, including for CX as they may well yet have an LCC competitor.
Worked Hard, Flew Right
 
aerokiwi
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RE: Jetstar Hong Kong Might Never Fly

Sat Aug 23, 2014 2:35 pm

Quoting RyanairGuru (Reply 20):
"Concessions" don't take a year.

You know this... how? Have you got some inside knowledge?

Quoting RyanairGuru (Reply 20):
Even with negotiations, in Australia or New Zealand this would have been denied, and then appealed if necessary.

Huh? 1. You don't know the behind-the-scenes machinations. 2. This is Hong Kong, a different jurisdiction. What happens in NZ and Oz systems is irrelevant 3. Lots of things take a while to go through the motions in NZ and Oz - airline cooperation approvals, for instance, via the NZ Commerce Commission and the ACCC.

Sounds like you're just trying to dump on the HK legal system. Maybe you should focus your angst at Jetstar management, who insist on Melbourne based revenue control (fares) and procurement. Without relitigating the issues all over again, seems like an almighty corporate "durrr" moment to me.

Quoting RyanairGuru (Reply 20):
Legal limbo ultimately achieves nothing on the long term

Now THAT depends on who you are.
 
81819
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RE: Jetstar Hong Kong Might Never Fly

Sat Aug 23, 2014 9:49 pm

Quoting Zeke (Reply 8):
Define the "protection" CX gets from the HKG government ? CX competes with over 100 airlines....

When one single airline can effectively control routes into its home base to the point no other airline can compete with it, you in essence have a protected airline.

Of the hundred airlines that fly into Hong Kong, how many of them them can on fly their passengers to their final destination. Not many!

In essence this means Cathay Pacific is in like a protected airline.

The arguments for Jetstar Hong Kong are a lot more substantive than the simple arguments of compliance to Hong Kong basic law. It is not just about about competition in and out of Hong Kong, but competition into other markets and countries where a good proportion of the international flying passengers only real choice is a transfer through Hong Kong.

Is there is a market for Jetstar type operation in Hong Kong? I'd suggest there are plenty of airlines who would love an alternative Jetstar option for on flying their passengers to their final destination and many locals who would love the opportunity to fly at lower fares.

Quoting wowpeter (Reply 13):
So someone is arguing that an Australian company should allow to set up an airline in Hong Kong and used the hard earned Hong Kong traffic rights...

Cathay Pacific has excellent Australian traffic rights. In fact Australia is Cathay Pacific largest market.

On the flip side QANTAS only fly into Hong Kong 4 times per week. One of the reasons why QANTAS don't fly more often is they can't on fly their passengers to their final destination.

In real terms this has nothing to do with Hong Kong basic law or hard earned traffic rights (and I question that premise), but everything to do with Hong Kong aviation and probably more importantly competition policies.

Jetstar are not asking Hong Kong for favourable treatment! They are not asking Cathay pacific to give up something they already have. They are simply trying to set up an airline, an airline that ultimately would be to the benefit of Hong Kong.
 
aerokiwi
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RE: Jetstar Hong Kong Might Never Fly

Sun Aug 24, 2014 12:48 am

Quoting travelhound (Reply 22):
Of the hundred airlines that fly into Hong Kong, how many of them them can on fly their passengers to their final destination. Not many!

NZ and QF can on-fly their pax to London, no? Both chose to pull out on their own accord, NZ because it was undermining their LHR services via LAX (and their lousy timing through HKG that all but ruled out local pax using the service) and QF to concentrate on its via-Dubai strategy.

Quoting travelhound (Reply 22):
On the flip side QANTAS only fly into Hong Kong 4 times per week. One of the reasons why QANTAS don't fly more often is they can't on fly their passengers to their final destination.

Uh, what? QF flies daily from Sydney. QF chose to end the LHR link. Frankly, the mess that is QF International has far more to do with it than any traffic rights. I don't see CX flying pax onwards from SYD, so it's kinda moot anyway.

I'm not even sure what the point is that you're trying to prove. CX is "protected" therefore this explains the Hong Kong government's reaction to Jetstar?

Quoting travelhound (Reply 22):
The arguments for Jetstar Hong Kong are a lot more substantive than the simple arguments of compliance to Hong Kong basic law.

Yes because why concern yourself with the trifling concept of complying with THE LAW? I mean, really, how silly in this day and age  
Quoting travelhound (Reply 22):
It is not just about about competition in and out of Hong Kong, but competition into other markets and countries where a good proportion of the international flying passengers only real choice is a transfer through Hong Kong.

It's nothing to do with that. And besides, name me a market that's only access to international connections is via HKG. A fair few other mega hubs exist in China alone that these substantial cities are already connected to.

Quoting travelhound (Reply 22):
Jetstar are not asking Hong Kong for favourable treatment!

That's exactly what they're asking for - the government to ignore their management control from Australia, unlike other airlines in Hong Kong.

Quoting travelhound (Reply 22):
They are simply trying to set up an airline, an airline that ultimately would be to the benefit of Hong Kong.

Oh yes, poor sweet innocent Jetstar, whose sole interest and concern is the poor downtrodden passenger. Please. If Hong Kong was so important to JQ, I don't see why they can't just cede operational issues like revenue and procurement to the HK office. Clearly they have no contingency for delays, which makes you wonder about the quality of JQ management.
 
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RyanairGuru
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RE: Jetstar Hong Kong Might Never Fly

Sun Aug 24, 2014 12:57 am

Quoting travelhound (Reply 22):
On the flip side QANTAS only fly into Hong Kong 4 times per week

QF fly to HKG 21 times a week, daily from SYD, MEL, BNE.

Quoting aerokiwi (Reply 23):
That's exactly what they're asking for - the government to ignore their management control from Australia

The problem isn't that cut-and-dried. The fundamental question basically is whether MEL will be pulling the strings, and it has taken them over a year and they still haven't worked that out. If it was so simple this farce would be over by now. Don't forget that, whatever else they might be, QF aren't so stupid as to not hire some very expensive lawyers to set this up for them. The situation might be very opaque, but it clearly isn't definitely not in conformity.

Quoting aerokiwi (Reply 21):
Sounds like you're just trying to dump on the HK legal system

I'm opposed to bureaucratic delay, not the legal system per se. Of course everything must comply with the Basic Law, nobody can deny that, but I fail to see why the decision either way is so difficult to make.

Quoting aerokiwi (Reply 21):
Maybe you should focus your angst at Jetstar management,

I haven't got any "angst", and really couldn't give a toss about whether JQHK ever flies or not.
Worked Hard, Flew Right
 
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VCEflyboy
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RE: Jetstar Hong Kong Might Never Fly

Sun Aug 24, 2014 2:34 am

Quoting Zeke (Reply 6):
CX is hkg based, and does use the freedoms negotiated by the HKG government, however it has no preferential access to these

Ha! Thanks for the laugh! The very reason why JetStar HK will never fly is because CX is the government's darling.
And the story that the new runway will not be built to save the dolphins? What a joke. Like the HK government care about the dolphins? Or they go out of their way to find creative excuses to protect CX's quasi-moopoly.
Oh yeah, you have HX which went almost bankrupt last year and that gets regular 5-6 hour ATC delays in China thanks to CX sleeping with CA. They just want to keep HX afloat to give the illusion there is some competition.
 
81819
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RE: Jetstar Hong Kong Might Never Fly

Sun Aug 24, 2014 6:55 am

Quoting aerokiwi (Reply 23):
NZ and QF can on-fly their pax to London, no?

The London (Heathrow) market is a very small piece of the equation. We are talking about on flying passengers into China, Japan, Taiwan, etc.

Quoting aerokiwi (Reply 23):
Yes because why concern yourself with the trifling concept of complying with THE LAW? I mean, really, how silly in this day and age

This is a silly thing to say. Just because there is an argument that the Jetstar Hong Kong business entity does not comply with Hong Kong basic law, it doesn' t mean Jetstar is a rogue organisation. Why would Jetstar send an application to the government to start an airline if it new it did not comply with the law. Really!!!

At the end of the day it will be up to the government or the courts to decide how the law should be applied. Not Jetstar!
Quoting aerokiwi (Reply 23):
Oh yes, poor sweet innocent Jetstar

Who's crying "Poor Sweet Innocent Jetstar"? If there is merit to the Jetstar Hong Kong venture and it as at large compliant with Hong Kong aviation policy, why not give it the go ahead to start operations.
 
BestWestern
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RE: Jetstar Hong Kong Might Never Fly

Sun Aug 24, 2014 7:10 am

Quoting VCEflyboy (Reply 25):
Oh yeah, you have HX which went almost bankrupt last year and that gets regular 5-6 hour ATC delays in China thanks to CX sleeping with CA.

HX nearly went bankrupt last year???? source please.


CX causes ATC delays for HX.... Wow - the tin foil hat brigade are out in force today.

Quoting VCEflyboy (Reply 25):
ike the HK government care about the dolphins?

They don't - hence the runway will be built.

Quoting travelhound (Reply 26):
Why would Jetstar send an application to the government to start an airline if it new it did not comply with the law. Really!!!

Because they thought by bringing in the Stanley HO family they could get around the rules.

Because the thought by bringing in China Eastern they could get around the rules.

Quoting RyanairGuru (Reply 24):
really couldn't give a toss about whether JQHK ever flies or not.

HK needs a quality low cost operation, so we wont be saddled with HK Express - that sad attempt at a low cost carrier.


Quoting TimTam (Reply 19):
If Jetstar HK is not approved its Hong Kong's loss. The focus will shift to another hub somewhere else in China.

Its not like JetStar is the life or death of the city. Jet Star will not get a licence in China either.
Greetings from Hong Kong.... a subsidiary of China Inc.
 
Nouflyer
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RE: Jetstar Hong Kong Might Never Fly

Sun Aug 24, 2014 10:11 am

Quoting RyanairGuru (Reply 11):
The Hong Kong government still have ruled on whether Jetstar Hong Kong complies with the Basic Law or not, despite having had over a year to figure that out. While the delay makes it much more unlikely that Jetstar will ever take-off, it technically isn't over until their application is rejected. There is still a chance, albeit slight, that it could be approved. I have to say that I've lost a lot of respect for the Hong Kong government over this
Quoting aerokiwi (Reply 18):
I haven't at all. I think they see through they charade that is Jetstar's many Melbourne-controlled entities.
Quoting RyanairGuru (Reply 20):
In which case deny the application

It seems to me to be more complex than that.

We probably all agree that the Jetstar Hong Kong set-up is basically a figleaf for an Australian LCC to set up at Hong Kong and try to take part of the Chinese market.

We probably all also agree that this is a breach of the Hong Kong Basic Law.

But then it gets interesting.......

Quoting travelhound (Reply 22):
They are simply trying to set up an airline, an airline that ultimately would be to the benefit of Hong Kong.

I don't think that any of us - including Travelhound - really believe that Jetstar Hong Kong was an act of compassion and charity by Qantas' shareholders that was intended as a form of foreign aid to let the people of Hong Kong have cheap holidays.

But rather like the government of Singapore before it, the government of Hong Kong has to decide whether it is in the national interest to bend the law of the land to allow Jetstar Hong Kong to start up.

In other words, this has never been about a simple legal determination. It is a matter of national government policy.

To be honest, when viewed through that prism, the most sensible course of action by the Hong Kong government is to stall the process for as long as possible.

It is becoming abundantly clear now that the southeast Asian LCC explosion was not actually an economic miracle. There was a period of time - now passed - in which new capacity was put on to allow the newly-minted middle-class to take cheap leisure holidays (and VFR trips) comparable to the explosion in European package holidays from 1967-1985.

But this was a finite, low-yield market and as soon as capacity became excessive the southeast Asian LCC miracle turned into a LCC nightmare.

Qantas looked longingly at Air Asia and decided that they wanted a slice of the Asian action, without properly comprehending what it was that they were looking at or that it was a bubble which would burst if too much capacity was added.

Yes, of course it would be a good thing on several levels if Hong Kong's residents enjoyed cheaper flights.

But the government needs to weigh that against whether it would be detrimental to the region for this to weaken the existing Hong Kong-based carriers.

And ultimately we all know that the Qantas group's target market has never been 7 million Hong Kong residents but rather a much bigger market in the People's Republic of China, with Hong Kong simply a flag of convenience to access that otherwise off-limits market.

So we get back to where we started. Is it in Hong Kong's interests to bend the Basic Law in this case?

If Qantas have based their actions on a legal yes/no question they simply don't seem to understand who they are dealing with. Then again, in recent months they have seemed incapable of engaging the government in power in their own country, so it is perhaps too much to expect them to understand the complexities of Hong Kong SAR and Chinese government.
 
81819
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RE: Jetstar Hong Kong Might Never Fly

Sun Aug 24, 2014 12:01 pm

Quoting Nouflyer (Reply 28):
It seems to me to be more complex than that.

Hello Nouflyer,

Welcome to A-Net!

I enjoyed reading your post. A well thought out argument and response.

Your thoughts on the LCC phenomenon being a bubble are interesting. I have similar thoughts with my reckoning being the LCC's will probably need to re-invent themselves in the 2023-2027 period.

I don't think anyone is suggesting QANTAS is showing an act of charity by setting up the Jetstar Hong Kong franchise. To the contrary QANTAS are trying to take full advantage of growth in the SE Asian market. It's a capitalist world we live in and I for one am not going to delude myself into believing anything different.

I do disagree with you thoughts about the Jetstar Hong Kong business set-up being a "fig leaf" for the Australian operation. We only have to look at the components of the Jetstar Japan franchise to realise the business and its subsequent business units have been set-up on business fundamentals. The information we have on the Japan operation actually gives us a relatively good idea of how the Jetstar franchises work.

I come from a free market mindset, so from this perspective my argument is relatively simple. Let the market decide the fate of Jetstar Hong Kong. At the end of the day the arguments for or against the Hong Kong franchise should be based upon Hong Kong competition and aviation policy rather than components of Hong Kong basic law (which in essence is a pseudo constitution that allows Hong Kong to operate independently of China). Interestingly, a general principle of the law is to allow Hong Kong to continue to operate on capitalists rather than socialist ideals.

On the same point, and as you suggested in your post there is a degree of complexity to the Jetstar Hong Kong issue. Hong Kong basic law is one thing! How the law is applied and the knock on effect to China / Hong Kong relations is another. I'm not sure we are seeing the total picture here.

I look forward to reading more of your posts!

Travelhound
 
Nouflyer
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RE: Jetstar Hong Kong Might Never Fly

Sun Aug 24, 2014 12:29 pm

Travelhound, I largely agree with all your points.

In fact, I think that Jetstar Hong Kong was a reasonable gamble for Qantas to take, I just think that it has been really badly executed.

Firstly, I have this awful feeling that they obtained high-level legal advice about the potential legality of Jetstar Hong Kong as a HK-domiciled business, but failed to do the political groundwork that was actually more important to the outcome of their application. I think that they have allowed themselves to be frozen out.

That doesn't make the Hong Kong government's delaying and/or inertia acceptable, but it does mean that the Qantas Group has got itself into this pickle.

Secondly, it seems that both Jetstar HK and Jetstar Japan have ended up prematurely committed to fleet sizes they are not in any position to utilise. I'm not sure whether this is because the wider Qantas Group thought that they were hedging their bets, and that the first choice destination for those aircraft was intended to be Red Q, with the Jetstar Asian franchises as a back-up plan. I just don't know enough about the orders to be certain, because both sets of orders seem quite reckless on the surface.

For reasons that I have never fully understood, Red Q was half-announced prematurely, which gave Singapore Airlines and Malaysia Airlines and anyone else potentially threatened plenty of time to ensure that it was stillborn. But given that Jetstar HK and Jetstar Japan appear to demonstrate that in the Qantas group you get a fleet when you are still a twinkle in your parent's eye, I suspect that a fleet was already lined up for Red Q. And I think it's sitting on the tarmac at Toulouse and in Japan in Jetstar colours.
 
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par13del
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RE: Jetstar Hong Kong Might Never Fly

Sun Aug 24, 2014 12:48 pm

Quoting KarelXWB (Thread starter):
The Hong Kong unit of Qantas Airways's Jetstar Group has sold more of its A320 fleet in a bid to cut operating costs as it struggles with prolonged delays in getting off the ground in the city.

Taking delivery of so many a/c before getting approval to fly, does that say anything about management?

Quoting Nouflyer (Reply 28):
To be honest, when viewed through that prism, the most sensible course of action by the Hong Kong government is to stall the process for as long as possible.

It should never be the sensible course of action for any government to shirk its responsibility and sit on the sidelines, as you even state below:

Quoting Nouflyer (Reply 28):
So we get back to where we started. Is it in Hong Kong's interests to bend the Basic Law in this case?

Who is charged with maintaining the integrity of the laws of the country, if the government bends them they are complicit, if they do not bend them they are functioning as expected, if they allow it to fester, are they now looking for the best deal to bend the law?
Limbo is not good, especially when dealing with governments who can pass and change laws mostly at will.
If they are giving the airline time to get their house in order then clarify for them what is needed and set a deadline, if the airline is just trying to get around the existing laws then drop a ton of bricks on them, I'm sure rules and laws exist to allow these options.

Money wasted doing nothing does no one any good, especially when it is not just the lawyers who are involved.
 
BestWestern
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RE: Jetstar Hong Kong Might Never Fly

Sun Aug 24, 2014 12:56 pm

Quoting par13del (Reply 31):
if the government bends them

If the government bends the law they will be sued. By both CX and HX and airlines that are competing against them.

If find the choice of Pansy Ho as chairperson of Jet Star to be amazing - ties between her and organised crime were raised by the US senate committee.
Greetings from Hong Kong.... a subsidiary of China Inc.
 
Nouflyer
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RE: Jetstar Hong Kong Might Never Fly

Sun Aug 24, 2014 1:21 pm

Quoting par13del (Reply 31):
Who is charged with maintaining the integrity of the laws of the country, if the government bends them they are complicit, if they do not bend them they are functioning as expected, if they allow it to fester, are they now looking for the best deal to bend the law?

Limbo is not good, especially when dealing with governments who can pass and change laws mostly at will.

If they are giving the airline time to get their house in order then clarify for them what is needed and set a deadline, if the airline is just trying to get around the existing laws then drop a ton of bricks on them, I'm sure rules and laws exist to allow these options.

As I wrote earlier, my understanding is that Jetstar Hong Kong was primarily designed to pick up part of the mainland Chinese market. And Hong Kong SAR's legal system is much more similar to the Australian one than the People's Republic of China's.

But when you deal with the Hong Kong government you are ultimately dealing with the Chinese government. Only half the seats in what passes for parliament are democratically elected, and the Chief Executive is effectively appointed by Beijing and basically doesn't have to adhere to the wishes of the legislative council.

So we are not talking about a western-style government. You can take your pick between whether you consider it to be a British Empire-style system of imposed colonial governance or simple Chinese rule by proxy, but either way, it's not what we in the west are used to dealing with.

So the finer points of whether the law is being bent are almost irrelevant. As Best Western writes, the law only really matters to the extent that the government wouldn't want to be sued by Cathay Pacific, but even there, that's not how business is done there. It's much easier just to delay and delay and delay until the applicant decides to give up and withdraw his application!
 
81819
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RE: Jetstar Hong Kong Might Never Fly

Sun Aug 24, 2014 8:12 pm

Quoting BestWestern (Reply 32):
If the government bends the law they will be sued. By both CX and HX and airlines that are competing against them.

I don't think the Hong Kong government has to bend any part of the basic law to approve the Jetstar franchise.

The reality is, on face value the Jetstar Hong Kong operation complies with the requirements of the basic law. The arguments that it does not or probably more accurately may not comply with basic law is based on the premise that the Hong Kong franchise will simply act in a role of rubber stamping Jetstar Melbourne (, Australia's) operational wishes.

So the argument is not about the basic law, but how Jetstar proves the Hong Kong business will comply with basic law requirements as an operational entity.

Interestingly Wikipedia has a piece on the topic of "domicile". The case of Hertz Corp. v. Friend concluded that “principal place of business refers to the place where corporations high level officers direct, control and coordinate the corporations activities.”

We have to understand the process here. Jetstar submitted an application for a Hong Kong AOC, other businesses (Cathay Pacific) replied or made comment to the application (which they are entitled to do). The government in making a decision considers the application and submissions (in response to the application) form other businesses and either rejects the application or asks Jetstar to provide more information.

What we have here is the government not approving the application or asking Jetstar to provide more information. The process has been stalled.

If the process has been stalled, than we have to ask why?
 
PVG
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RE: Jetstar Hong Kong Might Never Fly

Mon Aug 25, 2014 12:05 am

Quoting TimTam (Reply 19):

Air China is a major shareholder in CX and vice versa. So, Beijing is already involved. CX fares on international business class are too high! I find that they are often 50 to 70 % more expensive than the competition. So, clearly, there isn't enough competition or their operating costs are too high. or, maybe i need a new agent
.
 
HKG212
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RE: Jetstar Hong Kong Might Never Fly

Mon Aug 25, 2014 1:28 am

Quoting travelhound (Reply 22):
In fact Australia is Cathay Pacific largest market.

No it isn't. The US is, by a large margin if you consider seat count, with 68 77W + 1 744 weekly frequencies, vs. 67 A330 frequencies to Australia.

Quoting travelhound (Reply 22):
On the flip side QANTAS only fly into Hong Kong 4 times per week. One of the reasons why QANTAS don't fly more often is they can't on fly their passengers to their final destination.

Others have commented on your gross factual error here. As to onward flights, if QF had better relations with their OneWorld partner CX/KA, they would have lots of final destinations to take their passengers to. But to be fair, I don't know the history of that bad blood.
 
Sydscott
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RE: Jetstar Hong Kong Might Never Fly

Mon Aug 25, 2014 1:29 am

Quoting Zeke (Reply 2):
This does not surprise me, Vietnam and Japan have not allowed Jetstar franchises based there to fly internationally either.

Another poster has corrected you on Vietnam so I won't comment on that but for Jetstar Japan they have not yet started International Services for two very important reasons:

1. Jetstar Japan has an issue with its Engineers following company procedures in completing maintenance. The maintenance mandated was at a higher standard than that requried by law in Japan however the engineers were not following the higher standard which meant that the KIX base and expansion was delayed. (And quite rightly so)
2. Jetstar Japan is, for JAL, acting in the same way Jetstar Australia/NZ acts for Qantas. It is, in effect, JAL's LCC carrier and, as such, it doesn't want to compete with JAL where JAL already has a substantial network. JAL has a much smaller domestic Japan position than ANA Group does and is about the same size as ANA Internationally. So the initial focus for Jetstar Japan is domestic.

Jetstar Japan is also, finally, growing. This year so far we've seen the KIX base officially opened and in October we're going to see daily KIX-OIT, twice daily NRT-KMJ, twice daily KIX-KMJ and twice daily NGO-KMJ added into the network. Eventually we'll see Intenational services and they're tentaively scheduled in for Summer 2015 now but there is no rush to it and other Jetstar Airlines have added Japanese International capacity in places JAL doesn't fly over the last 12 months anyway. (3K BKK-FUK and JQ MEL-NRT)
.

Quoting RyanairGuru (Reply 24):
I'm opposed to bureaucratic delay, not the legal system per se. Of course everything must comply with the Basic Law, nobody can deny that, but I fail to see why the decision either way is so difficult to make.

I entirely agree with you but it's got the point now that either a no or a yes brings a loss of face. The Hong Kong Government has created a lose/lose situation for itself in that if it says yes it knows every airline in Hong Kong will sue. If it says no it risks reputational damage along with not getting any further traffic rights from Australia which it, and CX, desperately want. The reality is that what the Hong Kong Government should have done is said yes to Jetstar Hong Kong and then allowed CX/Dragonair to absolutely clobber it into financial oblivion. That way this whole issue would be over by now, the status quo would be preserved, QF would have a bloody nose and CX would have more traffic rights. The Singaporeans are smart enough to know this which is why Australia and Singapore are so close both economically and politically. (As an example of that, as the hosts of the 2014 G20 meeting Australia gets to invite 2 non G20 members to attend the meeting. We have invited Singapore and New Zealand) It's also why SQ is seen as a de-facto national carrier by many Australians. Unfortunately Hong Kong in its history of Air Rights negotiations with Australia has always had a highly adversarial relationship and this decision is merely an extension of that. (I posted a whole lot of links to various disputes in previous discussions with Zeke on this board)

Quoting par13del (Reply 31):
Taking delivery of so many a/c before getting approval to fly, does that say anything about management?

Not really. Arguably the most successful LCC in the region, AirAsia Group, has signficiantly reduced utilisation on its fleet while looking to sell aircraft due to over-deliveries. I don't see anyone questioning their management competence?
 
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VCEflyboy
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RE: Jetstar Hong Kong Might Never Fly

Mon Aug 25, 2014 2:25 am

Quoting wowpeter (Reply 13):
I love how everyone always say CX is a very protected airline when CX is competing against every airline in the world and almost 90% of them at some point in their history had recieve some form of government support, which CX had never recieve a single cents from any government.

They may not have got money, but they got a huge 5* airport designed specifically for them.
If you recall the original airport was supposed to be built by the China border to serve both HK and SZ, which would have been much more efficient and cost effective as the transportation infrastructure would be already there, yet CX got the govt to scrap the plan and build the airport in the furthest possible location from the border to prevent Chinese airlines from having a foot in the door to HK's lucrative market.
 
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zeke
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RE: Jetstar Hong Kong Might Never Fly

Mon Aug 25, 2014 2:44 am

Quoting RyanairGuru (Reply 11):
The Hong Kong government still have ruled on whether Jetstar Hong Kong complies with the Basic Law or not, despite having had over a year to figure that out.

The basic law is the equivalent of the constitution in HKG. It a a question that falls at the very heart of the makeup of HKG. Remember it too the Australian courts around 10 years to decide the Marbo case, they went to the very heart of the way Australia was setup.

Quoting jacobchoi (Reply 14):
Just curious about this statement - Why are gates 1-4 ALWAYS used by CX aircraft? Is it due to the proximity with The Wing?

It is not. The far bays around gate 69/70 and bays 3&4 are often used by flights to Australia and the US as they provide an area where passengers can be LAG screened before the board gate. Where this cannot be done, the LAG screening is done on makeshift tables within the aerobridge.

Quoting travelhound (Reply 22):
When one single airline can effectively control routes into its home base to the point no other airline can compete with it, you in essence have a protected airline

CX does not control the routes, that is a false statement.

Quoting travelhound (Reply 22):
Of the hundred airlines that fly into Hong Kong, how many of them them can on fly their passengers to their final destination. Not many!

I would say most.

Quoting travelhound (Reply 22):
The arguments for Jetstar Hong Kong are a lot more substantive than the simple arguments of compliance to Hong Kong basic law. It is not just about about competition in and out of Hong Kong, but competition into other markets and countries where a good proportion of the international flying passengers only real choice is a transfer through Hong Kong.

What market only allows for transfer through HKG ?

Quoting travelhound (Reply 22):
Is there is a market for Jetstar type operation in Hong Kong? I'd suggest there are plenty of airlines who would love an alternative Jetstar option for on flying their passengers to their final destination and many locals who would love the opportunity to fly at lower fares.

There are lots of LCC operating into HKG, in fact HKG was one of the first destinations operated by Jetstar out of Singapore.

Quoting travelhound (Reply 22):
On the flip side QANTAS only fly into Hong Kong 4 times per week. One of the reasons why QANTAS don't fly more often is they can't on fly their passengers to their final destination.

I am trying to understand the point you are making here. Do you realize that Australian carriers have regional rights for onward s carriage from HKG however they have not used them for as long as I can remember ?

Quoting travelhound (Reply 22):
In real terms this has nothing to do with Hong Kong basic law or hard earned traffic rights (and I question that premise), but everything to do with Hong Kong aviation and probably more importantly competition policies.

It has everything to do with the HKG Basic law, and who has the right to call itself a HKG airline.

Quoting VCEflyboy (Reply 25):
Oh yeah, you have HX which went almost bankrupt last year and that gets regular 5-6 hour ATC delays in China thanks to CX sleeping with CA. They just want to keep HX afloat to give the illusion there is some competition.

The reasons for running into difficulties I think had more to some very low loads on long haul flights. Any airline in HKG either directly or via their handling agent has access to the HK ATC slot control system. The allocation of departure and arrival slots is very transparent. You cannot jump the queue, what you can do is horse trade your own aircraft in the system. I have only had this once when we were looking at hitting 18 hours of duty, a CX aircraft up the front of the queue was swapped for us, and we made it to the gate with 5 minutes to spare. I have heard of similar elsewhere as well.

HKG does not issue Chinese slots, aircraft call ready in HKG, the HKG ATC contacts the Chinese ATC for a slot. I have had all passengers onboard, door closed called ready to be told our slot for PVG was 12 hours away. These delays have made the news Quoting travelhound (Reply 26):
Who's crying "Poor Sweet Innocent Jetstar"? If there is merit to the Jetstar Hong Kong venture and it as at large compliant with Hong Kong aviation policy, why not give it the go ahead to start operations.
In my view there is no merit, by your own admission it is a franchise of a Australian entity, that is taking the xxxx out of the HKG government.

Quoting travelhound (Reply 34):
I don't think the Hong Kong government has to bend any part of the basic law to approve the Jetstar franchise.

The basic law does not have provisions for overseas airlines operating an airline in HKG.

Quoting travelhound (Reply 34):
The reality is, on face value the Jetstar Hong Kong operation complies with the requirements of the basic law. The arguments that it does not or probably more accurately may not comply with basic law is based on the premise that the Hong Kong franchise will simply act in a role of rubber stamping Jetstar Melbourne (, Australia's) operational wishes.

I suggest you look at the Jetstar ACCC submission, where they have told the Australian regulator that do control the overseas entities.
Human rights lawyers are "ambulance chasers of the very worst kind.'" - Sky News
 
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par13del
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RE: Jetstar Hong Kong Might Never Fly

Mon Aug 25, 2014 2:57 am

Quoting Sydscott (Reply 37):
Arguably the most successful LCC in the region, AirAsia Group, has signficiantly reduced utilisation on its fleet while looking to sell aircraft due to over-deliveries.

They are already flying right, the airline we are talking about do not have permission to fly, so somewhat different.
 
Sydscott
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RE: Jetstar Hong Kong Might Never Fly

Mon Aug 25, 2014 3:22 am

Quoting Zeke (Reply 39):
The basic law is the equivalent of the constitution in HKG. It a a question that falls at the very heart of the makeup of HKG. Remember it too the Australian courts around 10 years to decide the Marbo case, they went to the very heart of the way Australia was setup.

All I will say to this statement is this, the Mabo decision was an unprecedented case in Australia with no similar cases in our jurisdiction before this decision. It was a ground breaking decision which, along with the Wik decision, gave a legal framework for something that had not existed before.

The application of Hong Kong Basic Law to a commercial Enterprise should be a straight thing for a Government Department to decide on. It's not earth shattering or ground breaking.

Quoting par13del (Reply 40):
They are already flying right, the airline we are talking about do not have permission to fly, so somewhat different.

Not different at all. An airline, in start-up or expansion mode, works to an expected timetable and orders aircraft to that timeline with some flexibility built in to defer or delay deliveries. Jetstar Hong Kong expected to be flying mid 2013 after announcing their intention mid 2012 and the fact they managed to only have 9 aircraft on property and not the originally slated 18 with no further ones planned to be delivered is testament to good fleet management. As I said the AirAsia Group, Tiger and others all have excess aircraft at the moment but you don't see people criticising AirAsia for significantly reducing utilisation and parking aircraft.
 
aerokiwi
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RE: Jetstar Hong Kong Might Never Fly

Mon Aug 25, 2014 3:40 am

Quoting Zeke (Reply 39):
In my view there is no merit, by your own admission it is a franchise of a Australian entity, that is taking the xxxx out of the HKG government.

Absolutely agreed.

Quoting travelhound (Reply 34):
The reality is, on face value the Jetstar Hong Kong operation complies with the requirements of the basic law.

You can't just state that and walk away as though it's fact. Clearly, that is the disputed issue - whether Jetstar HK does comply with the Basic Law.

Quoting Zeke (Reply 39):
I suggest you look at the Jetstar ACCC submission, where they have told the Australian regulator that do control the overseas entities.

Boom. There it is. Which raises the question, if Hong Kong is oh-so important to Jetstar, why don't they just cede more control to the local entity? Seems to me JQ management thought they were gonna get the cushy welcome and rule bending they got from the Singaporeans, and they grossly miscalculated.
 
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777Jet
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RE: Jetstar Hong Kong Might Never Fly

Mon Aug 25, 2014 3:51 am

Quoting Zeke (Reply 2):
Australia does not permit foreign owned airlines to fly internationally.

Sorry, but EK has been flying between Australia and NZ and on the BKK-SYD route for ages - long before the alliance with QF. But I bet you will come up with some technicality to make an exemption for Australia allowing the foreign owned EK to fly internationally between Australia and NZ / Thailand  
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zeke
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RE: Jetstar Hong Kong Might Never Fly

Mon Aug 25, 2014 8:24 am

Quoting PVG (Reply 35):
CX fares on international business class are too high! I find that they are often 50 to 70 % more expensive than the competition. So, clearly, there isn't enough competition or their operating costs are too high. or, maybe i need a new agent

The majority of premium seats in CX are not retail sales, the are long term corporate contracts that is what the airline counts on for bread and butter. Retail sales are a "bonus", only a small number of those seats are sold. Other airlines rely on retail sales as they do not have established long term contracts.

Similar happens with economy seats, the majority of them are sold much lower prices well in advance, so the airline will know they have the cost of operating the aircraft covered. If you turn up last minute at the airport and want a seat, you will pay the full published fare, which could be 5 times higher than an internet fare.

Amex travel tend to get good rates with CX.

Quoting Sydscott (Reply 37):
2. Jetstar Japan is, for JAL, acting in the same way Jetstar Australia/NZ acts for Qantas. It is, in effect, JAL's LCC carrier and, as such, it doesn't want to compete with JAL where JAL already has a substantial network. JAL has a much smaller domestic Japan position than ANA Group does and is about the same size as ANA Internationally. So the initial focus for Jetstar Japan is domestic.

Jetstar Japan is not allowed to compete with JAL, there is a ring fencing agreement in place that stops competition with JAL, China Eastern etc.

What is not also mentioned is that Jetstar in Australia, Singapore, Japan, and Vietnam have ownership requirements to fly internationally. Jetstar HKG at the time of application was 100% foreign owned, not the 30 something percent of Vietnam and Japan.

Quoting VCEflyboy (Reply 38):
They may not have got money, but they got a huge 5* airport designed specifically for them.
If you recall the original airport was supposed to be built by the China border to serve both HK and SZ, which would have been much more efficient and cost effective as the transportation infrastructure would be already there, yet CX got the govt to scrap the plan and build the airport in the furthest possible location from the border to prevent Chinese airlines from having a foot in the door to HK's lucrative market.

I dont recall that at all.

Quoting Sydscott (Reply 41):
The application of Hong Kong Basic Law to a commercial Enterprise should be a straight thing for a Government Department to decide on. It's not earth shattering or ground breaking.

How can it be a straight forward decision ? At the same time as the application in HKG, QF/JQ had an application into the ACCC for collusion, where they had already included Jetstar HKG into that entity. That was the smoking gun which showed that control was not in HKG. The Application to the ACCC was not brought forward by Jetstar HKG, it was brought forward by QF/JQ. http://registers.accc.gov.au/content/index.phtml/itemId/1063283

The Jetstar Joint Venture Coordination Agreement (JVCA) set the network, pricing, scheduling, marketing, customer service, loyalty programs, purchasing and resourcing for the Jetstar brand, including its regional offshoots. That is not local control.

The ACCC approved the collusion, so we have the Australian competition regulator giving Jetstar HKG to ability to collude with QF/JQ, and also for the fares to be set by QF/JQ, and the Jetstar franchisees are not permitted to compete with "ring fenced" airlines.

So where does the HKG government sit ? You already have an overseas government giving what is supposed to be a locally controlled airline that it does not need to be locally controlled, as Canberra okayed it ?

Quoting 777Jet (Reply 43):
Sorry, but EK has been flying between Australia and NZ and on the BKK-SYD route for ages - long before the alliance with QF. But I bet you will come up with some technicality to make an exemption for Australia allowing the foreign owned EK to fly internationally between Australia and NZ / Thailand

EK is not an Australian airlines using the Australian ASA. The Jetstar HKG application was for a 100% foreign owned entity, 50% owned by Qantas, 50% owed by China Eastern. No local ownership at the time of application, and part of a wider "Pan Asian Strategy" of Qantas. Jetstar HKG is not an airline that is being setup from HKG, it was "negotiated" outside of HKG by Qantas and China Eastern. Sure they incorporated a company in HKG (anyone can for that same day very cheaply), and office space, and employees. However these are just "puppets" under the JVCA.

China Eastern has lost its appetite, they have now plans for their own LCC.
Human rights lawyers are "ambulance chasers of the very worst kind.'" - Sky News
 
hz747300
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RE: Jetstar Hong Kong Might Never Fly

Mon Aug 25, 2014 10:08 am

There is room / desire in the market for a LCC in Hong Kong. When compared to our rival SG, it's not fair how many of my friends can do cheap & cheerful getaways, and I'm left hoping Air Asia flies there, or hoping I'm first in line for Fun Fares.

While this venture may be as dead as Molly Ringwald's career, that does not close the door on someone else starting the business. I have no capital, otherwise, I think I would give it a go as I am a perm resident now. I'm sure I can find a brochure from the CAA on how to set up an airline. I think terminal 2 has some room, but the part that concerns me is the baggage claim. I spoke to a board member of the airport authority, and I expressed how ridiculous it is to sometimes have 5 flights coming off one baggage claim. The only solution I see is putting one under terminal 2, but I don't know if this logistically practical (though it just as easily can connect to ground transportation).
Keep on truckin'...
 
81819
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RE: Jetstar Hong Kong Might Never Fly

Mon Aug 25, 2014 11:57 am

Quoting aerokiwi (Reply 42):
You can't just state that and walk away as though it's fact. Clearly, that is the disputed issue - whether Jetstar HK does comply with the Basic Law.

You are taking us around in circles.

The view that the Jetstar Hong Kong entity does not comply with Hong Kong basic law, is not a fact. It is an argument!

My post expressed the view that in essence and on face value the Jetstar Hong Kong entity complies with Hong Kong basic law. The basis of this claim relies on the simple facts that the entity is a Hong Kong registered business, it has an independent functioning board, its CEO resides in Hong Kong and the company has majority local ownership. All of these facts (which should be undisputed) would, and again on face value, suggest the Jetstar Hong Kong entity complies with Hong Kong basic law.

The argument that the entity does not comply with the basic law is a little more obscure.

It is based upon the premise that the Hong Kong entity is not an independent company, but in essence the local office for the Jetstar Australia entity. There could be merit to the argument , but it is a little harder to test than that of the Jetstar Hong Kong business entity.

So in this case the proponents arguing that the Jetstar Hong Kong entity does not comply with the basic law are the ones who have to provide the proof.

On the same point, the Hong Kong government is obliged to ensure a company complies with not only the Hong Kong basic law, but other laws that relate to aviation, competition, etc. In this case it is also obliged to consult with industry.

It has done this and as we know Cathay Pacific has objected to the application (using the above argument). At the end of the day and after considering the application and submissions by industry the government has the right to place conditions on the Jetstar Hong Kong entity to ensure it remains, in essence, a Hong Kong based and operated business. I don't have a problem with this. In reality this is good practice and what should be expected of government.

...... but, if the Jetstar Hong Kong business does not comply with Hong Kong basic law (absolutely) it should have been rejected years ago. Since it hasn't been rejected, we can only assume it does comply with Hong Kong basic law, but there are other factors that have delayed the application being approved.

What these are other factors are and why after two years the application has neither been approved or rejected is the perplexing question. It suggests the process of government is not working "as desired".

So on this basis, arguing about compliance to Hong Kong basic law is really a moot point. There are other and more significant factors at play here!!
 
Nouflyer
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RE: Jetstar Hong Kong Might Never Fly

Mon Aug 25, 2014 2:07 pm

Travelhound, I think your last post is factually unsound.

You really cannot simply brush off the legal consequences in Hong Kong of the submissions that Qantas and Jetstar (Australia) provided to the ACCC. I had not seen their submissions until today, but now that I have I can no longer defend Jetstar Hong Kong, or more precisely the Australian management of Qantas and Jetstar, which allowed a submission to go to the ACCC which contained these disclosures.

They have at great length explained that the Jetstar Pan-Asian strategy is to have local investors as flags of convenience while contractually requiring all Jetstar's Asian airlines to submit to full managerial control by "the applicants", that is Qantas and Jetstar Australia.

They have left themselves without a leg to stand on with their application in Hong Kong. They have effectively admitted that Cathay Pacific's objections are valid and correct.

There is nothing to stop Justin Bieber from setting up a shell company in Hong Kong, so the place of incorporation is almost irrelevant. The real issue is control, and the Qantas/Jetstar ACCC submission is unfortunately tantamount to a signed confession in terms of the Jetstar Hong Kong application.

There could be any number of reasons why the Hong Kong government has not yet rejected the application. They might be trying to allow Qantas or even "Australia" to save face by withdrawing a doomed application before it can be rejected, especially as they appear to have been lying in either the ACCC application or the Hong Kong one, as the claims they have made to each body cannot be reconciled.

They might be trying to keep Cathay Pacific on its toes.

They might be delaying to try to avoid setting a precedent for the future.

But however you look at this, now that I have read the submission to the ACCC I can only say that I have increasing doubts about the competence of the people running Qantas and the directors who are charged with overseeing their work.

[Edited 2014-08-25 07:36:33]
 
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zeke
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RE: Jetstar Hong Kong Might Never Fly

Mon Aug 25, 2014 2:40 pm

Quoting travelhound (Reply 46):
The basis of this claim relies on the simple facts that the entity is a Hong Kong registered business

Please quote the FULL article of the HKG basic law which says that is the sole test to establish a HKG airline, as that is not the test.

Looking at the low quality of the facts provided in this thread, I wonder how many of the contributors are part of the 250 “young Qantas Angels” trained in using social media to make QF and its associated companies look fabulous. This hit the headlines in the AFR earlier this month.

http://www.afr.com/p/business/compan...r_its_media_e5uAwPECylzhKXqqreQQzM

Quoting Nouflyer (Reply 47):
They might be trying to allow Qantas or even "Australia" to save face by withdrawing a doomed application before it can be rejected, especially as they appear to have been lying in either the ACCC application or the Hong Kong one, as the claims they have made to each body cannot be reconciled.

I am not sure if lying is the correct term. The process in HKG had made the basic assumption that persons applying were HKG based in the first place, the application process in itself was somewhat "innocent" thinking "proper" applications would only be made.

HKG is not against new airlines, eg Oasis Hong Kong Airlines. The only problems is it is not the money printing machine people try and portray. Competition is tight in HKG, even CX only has a small net profit margin of something like 3%.
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SInGAPORE_AIR
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RE: Jetstar Hong Kong Might Never Fly

Mon Aug 25, 2014 3:28 pm

Quoting Zeke (Reply 48):
I wonder how many of the contributors are part of the 250 “young Qantas Angels” trained in using social media to make QF and its associated companies look fabulous

Oh I think those contributors here and on other boards / blogs were way ahead of this latest Qantas social media strategy !... by a long shot.
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