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Qantas chief says Jetstar Hong Kong decision sends worrying signals about rise of protectionism

written by australianaviation.com.au | August 4, 2015

Qantas chief executive Alan Joyce speaking at the CAPA Australia Pacific Aviation summit in Sydney.
Qantas chief executive Alan Joyce speaking at the CAPA Australia Pacific Aviation summit in Sydney.

Qantas chief executive Alan Joyce says the Hong Kong government’s decision on Jetstar Hong Kong sends worrying signals about the rise of protectionism in the aviation sector.

Jetstar Hong Kong, a joint-venture between Qantas, China Eastern and Shun Tak Holdings, was left grounded in June when the Hong Kong Air Transport Licensing Authority (ALTA) ruled the proposed airline did not meet the territory’s principal place of business test.

Joyce said the decision showed a “blatant application of the rules to Jetstar Hong Kong that did not apply to the other carriers”.

“That is a distortion and shouldn’t be allowed,” Joyce told delegates at the CAPA – Centre for Aviation Australia Pacific Aviation summit in Sydney on Tuesday.

“We certainly went into a process, looking, as we always do, that the process was going to be legitimate, fair and balanced.


“If those rules and that decision was applied to Cathay or Hong Kong Express, they wouldn’t have qualified as a Hong Kong carrier. In fact those if those rules applied to Virgin and Tiger here in Australia they wouldn’t qualify to operate in this market.

“We are all about the same rules being applied to the carriers operating in the same market.

Moreover, the Qantas chief executive said he was “extremely worried about what that means in terms of protectionism”.

Qantas chief executive Alan Joyce during a question and answer session.
Qantas chief executive Alan Joyce during a question and answer session.

In its June decision, the ATLA said 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.”

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 and Joyce noted those airlines were able to be established on an even playing field.

“This is the first time setting up an airline that we have seen different rules apply to different people in the same jurisdiction,” Joyce said.

“That’s why it was a surprise to us and that’s why we don’t believe it is the right call and we think it is a very dangerous call for fair competition.”

Officially, the parties said the decision is under review. However, analysts say there is unlikely to be any way back for the proposed franchise.

In terms of Jetstar Hong Kong’s options following the ATLA decision, Joyce said in a statement after the conference: “Jetstar Hong Kong has to decide what its next steps are, but from a Qantas perspective we won’t be investing any more funds in this airline.”

Qantas said in June its investment in Jetstar Hong Kong was valued at $10 million in its latest financial accounts.

Meanwhile, Joyce said Qantas’s proposed partnership with China Eastern would hopefully make the Chinese carrier’s Shanghai hub more competitive with rival hubs such as Hong Kong.

“If we look at most of the traffic going over Hong Kong connecting into the rest of China, that’s what we want to offer more competition against,” Joyce said.

“The best way of doing that is with China Eastern.”

Qantas and China Eastern’s application for their proposed alliance is currently before the Australian Competition and Consumer Commission (ACCC). The competition regulator said in its draft decision it was inclined to reject the tie-up arguing it would give the airlines too much power on the Sydney-Shanghai route.

However, the two airlines have received strong backing from the Australian and Chinese governments, as well as tourism and industry groups.

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Comments (12)

  • Dante


    Don’t know what Joyce is complaining about. He would fight tooth and nail if a foreign airline tried to make Sydney it’s base airport in the region. What protectionism anyway? Hong Kong airport is one of the best airports in the world for the huge number of airlines that use it.

  • Peter


    Qantas has in the past, does Singapore Airlines being denied the rights to fly SYD-LAX last decade ring any bells ?

    Hypocrisy at it’s best.

  • Rumsey


    Caught with his pants down on this one, buying aircraft without any approval to operate and without sorting out the local Hong Kong partner carefully enough first. Blame yourself Mr Joyce. And of course Qantas bails him out for the losses yet again.

  • Alpha


    The loss of regional protection with such things as our Joining the WTO thus eliminating tariffs on imports that was a very good government revenue avenue..Was how our local manufacturing has been decimated ever since and many who were in our middle class now struggling to survive. Just like the efforts of the TPP now once more. So, anytime you hear a profit mandated publicly listed figure head mention protectionism there should be a bad gut feeling kick in. Regional control for the local inhabitants should be what it is all about not corporate profits.

  • Marc


    The China/Aus FTA has more clauses than Alaskan Santas.

  • Dave


    Why does Qantas fight against Cathay Pacific over the HKG hub but work closely with other airlines like EK and AA?

    I can see Jetstar making sense in Singagpore and Japan where their either isn’t a Oneworld hub or can work closely with another partner (JAL) to lauch a local airline.

    But in HKG they have the Cathay/Dragonair Oneworld group and choose not to work together, rather they actively fight each other. I would have thought working closely together would have mutual benefits for QF and CX/KA. I dont see how working with China Eastern has any more benefits than working with Cathay.
    Is it historical disagreeements between the two, or is it poor strategic decision making?

  • Kev


    So they were a victim of a ” blatant application of the rules”? Is Joyce going to explain to Qantas shareholders why he knowingly invested Qantas money in this venture that was not in accordance with rules of the country? A venture that was reliant on those rules not being enforced? My sympathy bucket is strangely empty. I also think the shareholders should take him personally to court to get their funds back.

  • PeterL


    Dear oh dear all this anti Joyce rhetoric is getting a little tiresome, give it a break.
    The institutional investors who own the majority of Qantas are backing the man and his choices. They are much more knowledgeable than a bunch of armchair experts. He is turning Qantas around and he is being backed by the big shareholders.

  • Matt


    Good to see commenter’s checking their common sense at the door when it comes to QANTAS.

    Some things never change.

  • Jason


    But it is ok for Hong Kong Airways to increase flights to Australia. So much for free trade and open skies. Regardless whether this was relevant to QANTAS or Virgin, when is the government going to impose similar constraints on foreign operators.

  • John Cox


    jGood reply. PeterL, The Joyce haters cant get it through there head that Joyce is doing a great job.

  • Geoff


    I do not understand AJ comments about, “If those rules and that decision was applied to Cathay or Hong Kong Express, they wouldn’t have qualified as a Hong Kong carrier”.ummmm, I would have thought both these carriers being HK based would indeed qualify, or maybe I am missing his point?

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