After more than two years’ of deliberations, Hong Kong’s Air Transport Licensing Authority (ALTA) has formally rejected Jetstar Hong Kong’s application for an operating licence.
In a 150-page finding published on Thursday, the authority deemed that Jetstar Hong Kong did not meet the legal requirement of Hong Kong being the planned low cost carrier’s principal place of business, obeserving that “JHK [Jetstar Hong Kong] cannot make its decisions independently from that of the two foreign shareholders.”
The application had been vigorously opposed by Cathay Pacific, Dragonair, Hong Kong Airlines and Hong Kong Express.
Continued the report: “Its business is mandated to be linked with the Jetstar Group by reason of the definition of Business within the SHA [shareholders’ agreement] and the requirement to enter into a business service agreement with the Jetstar Group… It has no freedom to operate and obtain licence from any other airlines to operate an LCC. Furthermore, when the BSA [business service agreement] is studied, it can be seen that it is not a mere licence of intellectual property relating to software and branding but actually a surrender of the right to determine its own network, fare structures and other flight-related matters to Jetstar Group and/or JET and/or the Jetstar Group CEO.”
Chief executive officer Edward Lau said Jetstar Hong Kong was “extremely disappointed” by the decision.
“We will take time to review and consider our next steps,” Lau said in a statement.
“We genuinely believe that Hong Kong is Jetstar Hong Kong’s Principal Place of Business. The carrier is chaired by Hong Kong business woman Ms Pansy Ho with a local CEO and management team who lead and manage the business.”
Jetstar Hong Kong is jointly-owned by Shun Tak Holdings, Qantas and China Eastern Airlines. Following a change to the shareholder voting structure in 2014, Shun Tak holds a majority 51 per cent of voting rights, with Qantas and China Eastern having 24.5 per cent voting rights.
It would have been the fourth Jetstar franchise in the fast-growing Asian region behind Singapore’s Jetstar Asia, Vietnam’s Jetstar Pacific and Jetstar Japan.
Speaking to reporters on the sidelines of the International Air Transport Association (IATA) annual general meeting in Miami on June 7, Jetstar group chief executive Jayne Hrdlicka acknowledged there had been some missteps in the application process.
However, Hrdlicka said she was still “very confident” about Jetstar Hong Kong’s prospects.
“We’ve learned the importance of patience in Hong Kong and not underestimating the importance of carefully and thoughtfully working through the process with the government,” Hrdlicka said.
“Our expectations were not lined up with the reality of the way this government’s making decisions in Hong Kong and we are perfectly comfortable with that.
“We’ve got two shareholders who have more experience being patient and long-minded than we do and we are learning through that process.”
As it waited on a decision on its operating licence Jetstar Hong Kong has gradually sold all bar one of the nine new Airbus A320s it had acquired.
Plans to launch a Jetstar affiliate in Hong Kong were first announced in March 2012, at which point flights were to begin in 2013.