More Hong Kong Flights to Russia : Air pact to open up Russian routes
Keith Wallis, Hong Kong Standard

Hong Kong and Russian airlines will be able to operate more than twice as many flights between the SAR and Russia under a new air services pact hammered out early yesterday.

The deal includes an expansion of overflight rights by Hong Kong carriers which will provide more scope to increase the number of flights to western Europe and transpolar services to North America.

It will also allow Hong Kong and Russian carriers to codeshare on routes between Hong Kong and Moscow.

Wilson Fung, Deputy Secretary for Economic Development and Labour, said the agreement was reached at 1.30am yesterday after two days of discussions between Hong Kong and Russian government negotiators in Hong Kong.

Fung said the latest round of talks resulted in three main achievements. Under the agreement, which takes effect immediately, there is a 130 per cent increase in the number of flights between Hong Kong and most cities in Russia from 14 to 32 a week in each direction. These services cover both passenger and cargo flights.

Cathay Pacific and Hong Kong Dragon Airlines (Dragonair) do not currently fly to Russia. Aeroflot operates a three times a week return service while fellow Russian carrier TransAero Airlines has a weekly service.

There is also a 30 per cent rise in the number of flights permitted over Russian airspace. These are split equally between services to Europe including Britain, France and Germany, and over the North Pole to the east coast of Canada and the US.

This means that subject to agreement with governments in western Europe, Cathay Pacific and Dragonair will be able to expand the number of flights to cities such as London, Manchester, Paris and Frankfurt. It will also allow Cathay Pacific to operate daily non-stop services to New York.

While the agreement also allows airlines to codeshare, that arrangement is limited to the Hong Kong-Moscow route. It does not allow Cathay Pacific, for example, to codeshare with Aeroflot on services beyond Moscow to cities such as St Petersburg or Kiev, or to central and eastern Europe.

Fung said the pact was unusual because it included an expansion in the number of flights even though no Hong Kong carrier currently flies to any Russian city.

Cathay Pacific and Aeroflot have been discussing a codeshare pact, in which Cathay will be able to put its CX flight code on Aeroflot flights between Hong Kong and Moscow, for several months. The codeshare agreement is seen as the initial step in Cathay Pacific launching its own flights to Russia.

Speaking about the codeshare on Tuesday, Cathay Pacific chairman James Hughes-Hallett said the airline was "looking at it''.

Last year, the airline appointed Patrick Garrett to head Cathay's Moscow office. His responsibilities included talking to Aeroflot about commercial links between the two airlines and liaising with Russian authorities on overflight issues.

"The agreement between the Hong Kong and Russian aviation authorities is a welcome development and we thank the Hong Kong and Russian governments in their efforts to conclude constructive negotiations,'' Cathay Pacific said last night.

"The inclusion of more overflight rights and the establishment of codeshare arrangements can only strengthen Hong Kong's position as a global aviation hub.''

The Russian talks were the first of seven series of discussions Hong Kong air services negotiators will have with other governments to agree new air pacts in the next two months.

The coming talkes will be with representatives from the mainland, India, Thailand, Turkey, Spain and Malaysia.


12 February 2004 / 02:29 AM

is there really a big market for travel between HK and Russia ???

I know Virgin Atlantic want to fly from HK to SYD but then they will have to allow Qanats to fly from Shanghai to London.. so see what happens there..

British and Hong Kong regulators have approved Virgin to fly from Hong Kong to Sydney and Cathay was permitted to fly from New York to London, however, the EU still has to approve the deal, although their authority is being disputed right now. The pact was signed such that if anyone disagrees on any particular segment of the deal, the whole pact collapses. The EU discussions are ongoing.

it also depends on virgin being given permission from the Australian regulators... this will hinge on whether Qantas are able to fly to LHR from Shanghai... they have approval from Shanghai but not the EU yet..

qantas are starting up perth-hong kong direct flights this year:okay:

the new deal with Russia will allow Cathay Pacific to fly non-stop to New York!:happy:

yeah i think they are already flying. or its pretty soon anyways :P..
good news... .. I always fly Singapore Airlines or Cathay :D... but i am a big fan of Qantas
hopefully we can get some direct flights into China aswell..

Qantas is going to start up direct flights between India and SYD or Melbourne... also between Brisbane and LA

Originally posted by City of Life

the new deal with Russia will allow Cathay Pacific to fly non-stop to New York!:happy:

cool.. i assumed they already did :D... i thought theyd go across the pacific then stop over in LA and then on to NY

they currently stop over in Vancouver instead of LA!

Boeing to pitch its new plane to Asian carriers

Keith Wallis

Boeing is stepping up its promotion of its new 200 to 250-seat 7E7 Dreamliner plane after inviting a raft of Asian airlines, including Cathay Pacific and mainland carriers, to a meeting next week to discuss the latest development plans.

The event, hosted by Larry Dickenson, Boeing senior vice-president for sales and marketing, will be held at the InterContinental Hotel in Tsim Sha Tsui next Thursday.

Asked by The Standard if Cathay Pacific would be attending, Tony Tyler, the airline's corporate development director, said: ``Yes. Yes.''

Asked if the discussions about the 7E7 would continue outside Thursday's event, Tyler added: ``We will of course be talking to Larry as usual about a range of issues, and it's quite possible we will discuss the 7E7 among other things.''

Representatives from China Southern Airlines, China Eastern and Air China are expected to be at the Boeing presentations, including Wang Changshun, China Southern Airlines president. The meeting is being held to coincide with a two-day aviation conference organised by the Hong Kong-based Asian Aerospace Forum and Economist Conferences which executives from Asia's airlines and regulatory bodies will participate.

Boeing, through its Seattle office, is hoping to persuade Gao Hongfeng, Vice-Minister of the Civil Aeronautics Administration of China (CAAC), to attend the 7E7 briefing. This has caused some consternation within the Civil Aviation Department because they are paying Gao's travelling expenses to visit Hong Kong.

Boeing organised a visit to Seattle last November for about 50 airline representatives, including Cathay Pacific staff based in the US, when it gave presentations on twin-engined 7E7 aircraft. The meeting was intended ``to listen to customer requirements, share concepts to standardise and simplify the aeroplane and reveal the 7E7's state-of-the-art interior''.

The meeting at the InterContinental will further update potential customers, especially after the Boeing board formally gave its sales teams the green light to seek orders for the plane at the end of last year.

The Dreamliner, designed to replace ageing Boeing 757s and 767s and compete against the Airbus A330 series, should enter service in 2008.

Air pact to open up Russian routes

Keith Wallis

Hong Kong and Russian airlines will be able to operate more than twice as many flights between the SAR and Russia under a new air services pact hammered out early yesterday.
The deal includes an expansion of overflight rights by Hong Kong carriers which will provide more scope to increase the number of flights to western Europe and transpolar services to North America.
It will also allow Hong Kong and Russian carriers to codeshare on routes between Hong Kong and Moscow.

Wilson Fung, Deputy Secretary for Economic Development and Labour, said the agreement was reached at 1.30am yesterday after two days of discussions between Hong Kong and Russian government negotiators in Hong Kong.
Fung said the latest round of talks resulted in three main achievements. Under the agreement, which takes effect immediately, there is a 130 per cent increase in the number of flights between Hong Kong and most cities in Russia from 14 to 32 a week in each direction. These services cover both passenger and cargo flights.

Cathay Pacific and Hong Kong Dragon Airlines (Dragonair) do not currently fly to Russia. Aeroflot operates a three times a week return service while fellow Russian carrier TransAero Airlines has a weekly service.
There is also a 30 per cent rise in the number of flights permitted over Russian airspace. These are split equally between services to Europe including Britain, France and Germany, and over the North Pole to the east coast of Canada and the US.
This means that subject to agreement with governments in western Europe, Cathay Pacific and Dragonair will be able to expand the number of flights to cities such as London, Manchester, Paris and Frankfurt. It will also allow Cathay Pacific to operate daily non-stop services to New York.

While the agreement also allows airlines to codeshare, that arrangement is limited to the Hong Kong-Moscow route. It does not allow Cathay Pacific, for example, to codeshare with Aeroflot on services beyond Moscow to cities such as St Petersburg or Kiev, or to central and eastern Europe.
Fung said the pact was unusual because it included an expansion in the number of flights even though no Hong Kong carrier currently flies to any Russian city.

Cathay Pacific and Aeroflot have been discussing a codeshare pact, in which Cathay will be able to put its CX flight code on Aeroflot flights between Hong Kong and Moscow, for several months. The codeshare agreement is seen as the initial step in Cathay Pacific launching its own flights to Russia.
Speaking about the codeshare on Tuesday, Cathay Pacific chairman James Hughes-Hallett said the airline was ``looking at it''.
Last year, the airline appointed Patrick Garrett to head Cathay's Moscow office. His responsibilities included talking to Aeroflot about commercial links between the two airlines and liaising with Russian authorities on overflight issues.

``The agreement between the Hong Kong and Russian aviation authorities is a welcome development and we thank the Hong Kong and Russian governments in their efforts to conclude constructive negotiations,'' Cathay Pacific said last night.
``The inclusion of more overflight rights and the establishment of codeshare arrangements can only strengthen Hong Kong's position as a global aviation hub.''

The Russian talks were the first of seven series of discussions Hong Kong air services negotiators will have with other governments to agree new air pacts in the next two months.
The coming talkes will be with representatives from the mainland, India, Thailand, Turkey, Spain and Malaysia.

Cambodian President Airlines resumes flights to HKIA

(HONG KONG, 9 January 2004) - The Airport Authority Hong Kong (AA) today welcomed President Airlines' resumption of direct service to Hong Kong from Phom Penh, the Cambodian capital.

The first flight landed at Hong Kong International Airport at 1325 hours local time. The airline first launched its service to Hong Kong last March, later suspended due to the outbreak of SARS.

AA Commercial Director Mr Hans Bakker said, "We are pleased to have President Airlines back on our network. The resumption of this service will offer additional frequencies, providing airport users with more options on connections."

President Airlines was established in 1997, initially operating domestic routes and expanding since 2002 to destinations including Taipei, Bangkok and Hong Kong.

"Hong Kong is a major international destination that cannot be missed in an airline's route map. By resuming this service we hope to bring more visitors to our country that is so rich in cultural and historical attractions," said President Airline Managing Director Mr Holik Tandijono.

Context
Until now Phnom Penh was served only by Hong Kong's Dragonair.

Holidaymakers bring surge in airport figures (HONG KONG 17 February 2004)

A surge in local residents going overseas for the Lunar New Year holidays boosted the passenger throughput at Hong Kong International to 3.012 million last month, up 6.2% from January 2003.

Outbound traffic was up 49%, which more than made up for a 13% drop in visitors compared with the same month last year.
The holiday mood was also reflected in cargo throughput of 197,000 tonnes, a 1,000 tonnes or 0.5% drop for the month.

A total of 19,310 aircraft movements were recorded, up 5.9%, with 16,900 passenger and 2,100 cargo flights.

TG plan for service frpm Bangkok - Moscow in the near future, too.

HK reached liberal air services deal with Spain

Delegations representing the Hong Kong Special Administrative Region (HKSAR) and Spain concluded yesterday (February 27) a set of very liberal air traffic rights after a two-day negotiation held in Hong Kong. The set of traffic rights, which is the first ever between the HKSAR and Spain, provides for unlimited passenger and cargo capacity on routes between Hong Kong and Spain as well as comprehensive code-share arrangements.

An air services agreement was also initialled but the two delegations will continue discussions to bring the agreement into force.

The Principal Assistant Secretary for Economic Development and Labour, Mr Danny Lau, head of the HKSAR delegation conducting the consultations, said that he was very pleased with the outcome of the negotiations. He explained that in pursuit of the Government's progressive liberalisation policy on air services, the two sides had agreed to a complete open capacity regime on air services between Hong Kong and Spain. He hoped that airlines of Hong Kong and Spain would make use of the very liberal regime and introduce new services between the two places to further expand Hong Kong's aviation network and enhance Hong Kong's status as an international aviation hub.

Ends/Saturday, February 28, 2004


Indian air pact talks back on
Keith Wallis, HK Standard

Hong Kong and Indian government negotiators are due to meet early next week for talks to agree on a new air services pact after last month's scheduled discussions were postponed because an official from the other side fell ill.

The latest talks, scheduled to start on Monday in New Delhi and last two days, will focus on expanding the number of flights between Hong Kong and New Delhi. They are also expected to cover the granting of traffic rights between the SAR and Bangalore. The Hong Kong delegation is likely to be led by Wilson Fung, Deputy Secretary for Economic Development and Labour and the SAR's chief air services negotiator.

Cathay Pacific has already expressed its interest in adding more flights on the New Delhi route. The carrier currently operates four flights a week to New Delhi.

By comparison, Air India operates a five-times-a-week service between New Delhi and Hong Kong via Mumbai. '

March 3, 2004

Hong Kong SkyMart officially opens after $600 million revamp to attract more tourists to fly via Hong Kong

(HONG KONG, 3 March 2004) – Hong Kong SkyMart officially opened today after a $600 million renovation, bringing a whole new shopping, dining and leisure concept to help attract more travellers to use the Hong Kong International Airport (HKIA) as a gateway of China.

HKIA now boasts 160 shops, including 25 top-line brand names lining a 200-metre boulevard in the East Hall, plus 40 restaurants catering to a variety of taste and budgets.

Chief Executive Officer of Airport Authority Hong Kong (AAHK), Dr David J Pang, said the airport plays a crucial role in welcoming visitors to Hong Kong.

"Hong Kong SkyMart has further strengthened HKIA as a destination in its own right, and as the destination to destinations. In this end, we are confident that more travellers, especially those from and going to the Mainland, will take advantage of our international connectivity and fly via Hong Kong."

At an event to launch the added facilities, Dr Pang said: "It is important that HKIA provides travellers with this unique airport experience, to complement our competitiveness in international connectivity and the distinctive multi-modal system integrating air, land and sea travel to and from the Pearl River Delta and beyond."

Commercial Director Mr Hans Bakker said the revamp is the result of continuous surveys and passenger feedback aimed at providing still better customer service.

He said: "A good proportion of the expected 20 million visitors this year, of which more than half are from the mainland, will pass through the airport. Our new facilities will ensure they carry home a fulfilling and exciting airport experience."

"We can truly boast that SkyMart captures the best in East meeting West. Top international brands are brought in to satisfy the shopping needs of high-spending, brand-conscious customers from the Mainland, Taiwan, Japan and Korea."

"There is something for everyone who wants to dine, shop or be pampered. Our advice to departing travellers is to check in at least two hours early to enjoy what we have on offer; and for transfer passengers, browse the airport to enjoy what interests you."

Mr Bakker thanked business partners, construction and renovation contractors and travellers for their help in making this project a success. "The extensive reconfiguration project which took 20 months to complete was carried out with immaculate planning. This East Hall project has done HKIA proud. We have received a lot of acclaims from customers since the completion."

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Destination SkyMart Flies High Advertising Campaign

In celebration of the launch of the new Hong Kong SkyMart, a series of advertisements is produced. The objects in each ad represent not only the temptation, indulgence and desire in Hong Kong SkyMart, it also resembles the world famous roof line of Hong Kong International Airport.

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HK signs liberal arrangement with Thailand on air services

Delegations representing the Hong Kong Special Administrative Region Government and the Government of Thailand concluded two days of talks in Hong Kong today (March 19) to liberalise further the bilateral air services arrangement between the two places.

"The new arrangement with Thailand marks another major step to implement our progressive liberalisation policy in air services," a spokesman from the Economic Development and Labour Bureau said. Earlier last week, the Government also signed an arrangement with Malaysia to liberalise air services between the two places.

The new arrangement removes limitations on the direct air route between Hong Kong and Thailand. "With immediate effect, airlines of both sides can operate passenger services between Hong Kong and anywhere in Thailand without any limitation on routing or aircraft type," the spokesman said.

In addition, Hong Kong airlines will have the flexibility to combine a number of Thai destinations in their services and to allow passengers to stopover in cities in Thailand. The arrangement also provides for expanded fifth-freedom rights for passenger and cargo services.

"The bilateral code-share arrangement is further liberalised to provide more opportunities for airlines of both sides to code-share with partner airlines on services to and beyond Hong Kong and Thailand," the spokesman said.

Thailand is one of the most popular holiday destinations for Hong Kong residents, as well as an important source of in-bound tourists from the Southeast Asian region.

"We are pleased with the outcome of the talks. This is a win-win deal," the Government spokesman said. "The arrangement sets a liberal framework for airlines of the two sides to plan ahead and operate services in response to market demand. It also provides much improved flexibility for airlines to develop new products that suit the needs of the travelling public. The new arrangement will further enhance tourism and economic ties between Hong Kong and Thailand," he said.

Ends/Friday, March 19, 2004

Air Sahara may rope in Cathay Pacific for Colombo sorties

TIMES NEWS NETWORK

[ MONDAY, MARCH 22, 2004 11:59:24 PM ]

BANGALORE: Though it is not yet official, Air Sahara is said to have tied up with Cathay Pacific from Colombo,Sri Lanka for onward movement of traffic from India to the Far East and the US, said market sources. Air Sahara’s CEO, UK Bose, refused to divulge the new partner airline’s name, saying it can be announced only after some fine-tuning. Jet Airways is also said to be in the market for an alliance, but its partner is not confirmed.

http://economictimes.indiatimes.com/articleshow/575829.cms

Korean Air seeks more HK flights
Keith Wallis

Korean Air is hoping to secure additional passenger and freighter capacity between Hong Kong and South Korea in the next round of air talks between the jurisdictions.

Simon Yang, the airline's recently appointed regional vice president for Hong Kong and Southeast Asia, said: ``We are eager to increase the number of flights to Hong Kong.'' The airline had reached the maximum number of flights permitted under the existing air services pact.

The only way Korean Air can increase the number of services is by operating special charter flights during Easter and the summer peaks. Yang said between three and five extra flights a week would be operated during the summer. Most of these would be flown at midnight.

Yang said the airline is also keen to expand the number of flights to China following last week's pact between the mainland and South Korean government negotiators.

He said the Seoul administration has still to allocate the additional frequencies among Korean Air and Asiana, but the airline is hopeful of ending the imbalance between the two and winning the lion's share of flights.

Asiana and Korean Air each operate 16 routes between the two countries, but while Asiana has 87 weekly frequencies, Korean Air has just 67, Yang said.

The Shanghai-Incheon route is especially coveted by Korean Air, although there is no indication when it will receive approval to fly.

Yang said route allocations is a "sensitive issue''.

He added that Asiana flies 18 times a week between Shanghai and Incheon. He believed that while it was "most important'' for Korean Air to be given access to Shanghai, the carrier expected to be granted most if not all the 11 additional frequencies that were agreed last week. The air services pact also raised the number of fifth freedom rights available to both sides.

Chinese airlines have seen the number of flights they can operate beyond South Korea to the US increase from four to seven a week. South Korean carriers can also operate three extra flights through Beijing to Europe.

Yang said this marked the continuing "step-by-step'' liberalisation of air services between China and South Korea. He said "both countries gain''.

Korean Air has recently announced plans to spend more than US$9 billion (HK$70.2 billion) over the next 10 years on new planes, inflight services and equipment.

As part of this investment the airline has placed firm orders for five 555-seat, double-deck, ultra long-range A380 super jumbo jets that will be delivered from 2007.

Korean Air has options for three more aircraft.

Yang said the airline is also studying the possibility of converting some of its older Boeing 747-400 passenger planes into freighters to take advantage of the continuing boom in world trade.

Korean Air is acknowledged as the world's third largest cargo airline, although Yang believed it moved up to second place last year. This is expected to be confirmed in May when the 2003 airline tonnage figures are released.

26 March 2004 / 02:15 AM


Dragonair's new jet is Tokyo-bound
Keith Wallis

Hong Kong Dragon Airlines (Dragonair) is putting its latest twin-engined 284-seat Airbus A330-300 into service this week after modification work that included the installation of a cabin surveillance system.

The Rolls-Royce powered aircraft arrived in Hong Kong last Saturday after a 12-hour non-stop delivery flight direct from the Airbus assembly plant in Toulouse, France.

The new plane, the tenth A330 in Dragonair's fleet, will be be used on mainland and regional routes. Chief executive Stanley Hui said it will operate on the Tokyo route to be inaugurated April 2.

Dragonair is expected to launch services to Manila later this year, although it has yet to confirm these flights. Services to Sydney and Seoul could begin in 2005. However Dragonair needs to be made a designated carrier on the routes after winning licences in April 2003.

Hui said Dragonair had no immediate plans to expand its services to Malaysia following the recent air services pact. The agreement ended all restrictions on the number of flights, destinations and types of aircraft flown between Hong Kong and all cities in Malaysia.

Hui said two smaller two A320s will be delivered in July with a third next year. These are part of an order for five A320s Dragonair placed with Airbus four years ago.

The extra planes, together with the new leased aircraft will boost Dragonair's passenger fleet to 33 aircraft by 2006, Hui said.

Dragonair also plans to expand its freighter network this year with flights to Frankfurt and Stansted, north-east of London, starting in July. Hui would not comment on whether Dragonair was interested in acquiring some of the nine Boeing 747-400 passenger planes that Singapore Airlines is hoping to sell or lease.

He said: "We will look at what's available in the market and who has aircraft available.''

Asked if Dragonair would use conversion specialists other than Taikoo (Xiamen) Aircraft Engineering (Taeco), in which Swire Pacific and Cathay Pacific have stakes, Hui said the airline would consider all options.

"We look at different possibilities. I can't say whether it would be Taeco or elsewhere. It is driven by aircraft availability and conversion slots. I wouldn't say we were close to any possibilities,'' he said.

Dragonair's fourth freighter, a Boeing 747-200, is currently being upgraded at the Taeco facility in Xiamen and Hui said it would enter service in July. "We are actively expanding our freighter fleet,'' Hui added, with plans for nine or 10 planes by 2008.


26 March 2004 / 02:16 AM

HK signs air services agreement with Kuwait

The Secretary for Economic Development and Labour, Mr Stephen Ip, today (April 7) signed an Air Services Agreement on behalf of the Government of the Hong Kong Special Administrative Region (HKSAR) with the Government of the State of Kuwait in Kuwait.

Representing the Government of the State of Kuwait at the signing ceremony was the Minister of Telecommunications, Minister of Planning and State Minister for Administrative Development, Mr Al-Sabah.

"The Air Services Agreement signed today provides a legal framework for the establishment of air links between Hong Kong and Kuwait. It marks a new chapter in the development of aviation relations between the two economies," Mr Ip said at the signing ceremony.

"To further develop Hong Kong's position as the preferred transportation and logistics hub, we will continue to negotiate and conclude more air services agreements with new aviation partners," Mr Ip added.

During his stay in Kuwait, Mr Ip met with Prime Minister Al-Sabah to convey the Chief Executive of the HKSAR, Mr Tung Chee Hwa's best wishes to the Government and people of the State of Kuwait. Both Prime Minister Al-Sabah and Mr Ip looked forward to closer ties between Kuwait and Hong Kong in areas like trade, air services and tourism. Mr Ip also met with the Ministry of Tourism, General Directorate of Investment and the Public Authority of Ports of Kuwait to discuss promotion of tourism in Hong Kong and Kuwait and investment opportunities in infrastructure projects and port operations in both places.

The Air Services Agreement with Kuwait is Hong Kong's 51st Air Services Agreement with foreign aviation partners.

Hong Kong has also signed Air Services Agreements with Australia, Austria, Bahrain, Bangladesh, Belgium, Brazil, Brunei, Cambodia, Canada, Croatia, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, India, Indonesia, Israel, Italy, Japan, Luxembourg, Malaysia, Mauritius, Mongolia, Myanmar, Nepal, the Netherlands, New Zealand, Norway, Pakistan, Papua New Guinea, the Philippines, the Republic of Korea, Oman, Qatar, Russia, Singapore, South Africa, Sri Lanka, Sweden, Switzerland, Thailand, Turkey, the United Arab Emirates, the United Kingdom, the USA and Vietnam.

Speech by SEDL at HKSAR/Kuwait Air Services Agreement signing ceremony

Following is the speech by the Secretary for Economic Development and Labour, Mr Stephen Ip, at the signing ceremony of the Hong Kong Special Administrative Region (HKSAR)/Kuwait Air Services Agreement in Kuwait today (April 7) (English only):

Minister Al-Sabah, distinguished guests, ladies and gentlemen,

I am glad to be here in Kuwait to sign the Air Services Agreement between the Government of the Hong Kong Special Administrative Region of the People's Republic of China and the Government of the State of Kuwait. I would like to thank Minister Al-Sabah for your warm welcome and hospitality. I would also like to thank Mr Al-Zawawi, the Consul General of the State of Kuwait in Hong Kong, for his thoughtful arrangements.

The Air Services Agreement between Hong Kong and Kuwait is an important step forward in our bilateral relationship. It provides a legal framework for the establishment of air links between Hong Kong and Kuwait. It opens a new chapter in the development of aviation relations between the two economies.

The Hong Kong SAR Government has been implementing a policy of progressive liberalisation of our air services to enhance Hong Kong's position as an international and regional aviation centre. Hong Kong has an extensive air services network. Each week some 70 international airlines operate about 4,100 flights between Hong Kong and 130 destinations worldwide. I look forward to welcoming airlines of Kuwait to the Hong Kong International Airport in the near future.

At the moment there are no direct air services between Hong Kong and Kuwait. However, I believe the market will mature for such services before long. Kuwait, being the gateway to the Middle East, is a perfect choice for the entrepreneurial Hong Kong businessmen to explore the many business opportunities in the region while Hong Kong, the gateway to China and the most popular tourist destination in the region would be equally attractive to the people of Kuwait. We welcome you to visit us and we will continue to work closely together towards strengthening the economic ties between Hong Kong and Kuwait.

Thank you.

HKIA wins the Airport of the Year title for the fourth consecutive year

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(HONG KONG, 13 April 2004) - Hong Kong International Airport (HKIA) is again voted as the world's best airport, according to the survey results of a global study announced today.

The Airport of the Year Survey was conducted over a 10-month period (June 2003 to March 2004), attracting a total of 4.85 million eligible survey nominations as compared to 1.69 million valid votes collected last year. Conducted at a global level, the survey represents a worldwide study with participation of over 86 different nationalities of travellers.

This is the fourth consecutive year that HKIA has won this prestigious award from Skytrax, an independent aviation research institution in the United Kingdom.

Commenting on the survey results, Chief Executive of SkyTrax Edward Plaisted said: "It reflects a considerable achievement for Hong Kong International Airport (HKIA) to take the Airport of the Year title in 2004 - this now being the 4th consecutive year for HKIA."

Details of the survey findings can be found at the website of Skytrax (http://www.airlinequality.com/index.htm).

After HKIA, airports named as the top five in the world were Singapore Changi Airport, Amsterdam Schiphol, Seoul Incheon Airport and Kuala Lumpur KLIA Airport.

AA Chief Executive Officer Dr David J Pang said it was extremely encouraging for HKIA to have repeatedly won the award in spite of the very challenging operating environment.

"We are delighted to be awarded such an honour. This is an achievement that everyone in Hong Kong should take pride in. Over the past year, we have improved our efficiency and customer services, and enhanced HKIA's shopping and dining facilities for our passengers. We are glad to know that these efforts have paid off."

"We could not have achieved this without the concerted hard work of our business partners and the unfailing support of various government departments, particularly those serving passengers in the frontline."

"It is gratifying that our efficiency and customer service quality have been recognised worldwide. Winning the heart of the passengers is perhaps the most important aspect of modern day aviation business. "

"Looking ahead, we are committed to providing an enjoyable and memorable airport experience for our customers. I very much hope that everybody working at HKIA would put in extra efforts in exceeding ever growing expectations of passengers," said Dr Pang.

HKSAR reaches liberal deal with Australia on air services

Delegations representing the Hong Kong Special Administrative Region (HKSAR) and Australia reached a landmark agreement today (April 15) which substantially liberalises the bilateral air services between Hong Kong and Australia.

"Australia is an important aviation partner for Hong Kong. The liberal arrangement we have just concluded provides enormous opportunities for airlines of the two sides to expand their services on a route that is extremely popular to both the people of Hong Kong and Australia," said Mr Wilson Fung, Deputy Secretary for Economic Development and Labour who led the negotiation on the Hong Kong side.

The new arrangement provides for a completely open regime for air services between Hong Kong and all regional points in Australia (e.g. Adelaide and Cairns). It also provides for a 100% increase over two years in the capacity for services between Hong Kong and the four Australian gateway cities (i.e. Sydney, Melbourne, Brisbane and Perth). "The much expanded capacity will enable an additional Hong Kong carrier to launch services to Australia. This will enhance competition on this popular route and the travelling public will certainly benefit from the deal," said Mr Fung.

Mr Fung was pleased to announce that the HKSAR Government had taken the opportunity to designate Dragonair as the third Hong Kong airline to operate services between Hong Kong and Australia.

The new arrangement also includes a comprehensive code-share facility for airlines to co-operate with their aviation partners which will enhance their marketing capability and will offer better connected services to the travelling public.

Mr Fung added that the new arrangement would facilitate Australian carriers to establish their hub in Hong Kong for their traffic to and from Europe. "This is an important step for Hong Kong to compete with other regional hubs to attract more traffic to hub through Hong Kong on the Kangaroo Route. This will further strengthen Hong Kong's position as an aviation hub in the region," he said.

Ends/Thursday, April 15, 2004

Double digit increase for passenger and cargo flow in March

(HONG KONG, 18 April 2004) - The growth of cargo throughput at Hong Kong International Airport remained strong last month, with a total of 270,000 tonnes being handled. This was 13.9% higher than March 2003.

Passenger traffic for March also sees double-digit increase when compared with a year ago. A total of 2.83 million passengers travelled through the airport, up 12.5% compared with the same period last year, when SARS began to impact on air traffic from the latter half of the month.

A total of 19,120 aircraft movements were recorded, up 5.6%. There were 16,245 passenger and 2,600 cargo flights.

Over a rolling 12-month period from April 2003 to March 2004, passenger throughput fell by 19.2% to 27.6 million. Cargo throughput rose by 7.5% over the same period to 2.74 million tonnes. Total aircraft movements dropped by 10.1% to 190,600.

14 April 2004

Cathay Pacific orders eight new regional aircraft

Cathay Pacific Airways today announced it has placed firm orders for eight more wide-body regional aircraft as part of its plan to grow the airline and further enhance Hong Kong as a leading international aviation hub. The order will expand the airline's operating fleet to 94 aircraft.

Orders have been placed for two Boeing 777-300 aircraft and six Airbus 330-300 aircraft, all of which will be deployed on the airline's short- and medium-haul regional services. Three of the Airbus aircraft will be leased through the International Lease Finance Corporation (ILFC).

The aircraft will be delivered from 2005 to 2007. The Boeing aircraft will be in a two-class configuration and will be powered by Rolls-Royce Trent 800 engines. The Airbus aircraft will use Rolls-Royce Trent 700 engines. Five of the Airbus aircraft will be in a two-class configuration, while the A330-300 due for delivery in August 2006 will have a three-class cabin.

In conjunction with the arrival of the new aircraft and Cathay Pacific's continued growth, the airline also aims to hire more operating crew and ground staff over the next three years. In line with its recent expansion of services, including the addition of a new daily non-stop service to New York from 1 July, the airline is currently in the process of recruiting 600 flight attendants and 70 ground staff to be based at Hong Kong International Airport.

Cathay Pacific Airways Deputy Chairman & Chief Executive David Turnbull said: "The acquisition of eight more aircraft reflects our plan to grow the airline and demonstrates our continued commitment to Hong Kong. The aircraft will enable the airline to increase services and strengthen our network and at the same time help to further develop Hong Kong as a leading global aviation hub. Our expansion will also help us to provide more job openings for local people."

Mr Turnbull added that Cathay Pacific has plans to expand its long-haul fleet and will make an announcement to this effect in due course. The airline currently operates a fleet of 86 wide-body aircraft.

Cathay Pacific Airways fleet profile

Aircraft operated by CX: 86
10 Boeing 777-300
5 Boeing 777-200
19 Boeing 747-400
5 Boeing 747-400 freighters
6 Boeing 747-200 freighters
15 Airbus A340-300
23 Airbus A330-300
3 Airbus A340-600

Average age of passenger aircraft in service: 7.0 years

Number of aircraft due for delivery: 8

HK urgently needs air traffic controllers: aviation chief

Hong Kong's newly appointed civil aviation chief says the city could face a shortfall of air traffic controllers within the next decade if air travel in the region continues to boom and retirements reduce the current crop of experienced staff.

This will have serious implications for the efficiency and safety of air transport in the Pearl River Delta area, director-general of Civil Aviation Norman Lo Shung-man said yesterday as he held his first news conference in his present role.

Mr Lo, a 27-year veteran of the department, was selected last month to replace the retiring Albert Lam Kwong-yu as its head. He was previously Mr Lam's deputy.

Mr Lo said he anticipated a marked increase in demand for air services over the next several years with accelerated liberalisation and the launch of low-cost airlines.

At the same time, "slightly more than 50 experienced air traffic control staff will be out of the system" due to retirements among 140 controllers, he said.

"Their knowledge and experience will be difficult to replace. So we need to emphasise training for replacements," Mr Lo said.

He said there was a need to train about 60 new controllers over the next six to eight years.

"But that's a very demanding schedule because we can only train seven to eight new personnel each year ... and we have to anticipate about a 10 per cent failure rate" for new recruits, Mr Lo said.

The department was also considering proposals to radically upgrade its air traffic management system for the first time since 1992, when the system in use in Hong Kong was designed.

Mr Lo said it would take the department three years to have a definite proposal in place.

He said a new system should last for 15 to 20 years.

One key issue of a new system will be its compatibility with air traffic management systems on the mainland.

Macau-Bangkok for $200
Zach Coleman, HK Standard

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Hong Kong people will soon be able to fly to Bangkok and Kuala Lumpur for around HK$200 one way - but only if they are prepared to set off from Macau.

Malaysian budget airline AirAsia will start flying from Macau to Bangkok on June 15 and to Kuala Lumpur by the end of June, group chief executive Tony Fernandes announced yesterday.

"We believe this will open up a whole new way of travel, not just to Macau, but to Hong Kong and southern China,'' Fernandes said.

The new cut-price service follows news that Singaporean start-up budget airline Valuair will begin selling tickets on Saturday for a Hong Kong-Singapore service beginning May 7.

Macau will be the first destination beyond Southeast Asia for AirAsia, which started international flights only last December.

"Macau saw the potential of AirAsia,'' Fernandes said. "It's earlier than we had planned. They chased us.''

Fernandes said AirAsia had also talked to Hong Kong, but added: "I haven't seen a lot of interest from Hong Kong airport.''

Macau International Airport offered AirAsia volume discounts and will also give the airline a break for not using air bridges from the terminal gates, but Fernandes declined to give details.

AirAsia is negotiating a tie-up with ferry operator Turbojet to allow passengers to bypass Macau immigration and customs. Once AirAsia is established in Macau, Fernandes hopes to persuade Macau airport to fulfil its plan to build its own ferry pier.

Both AirAsia and Valuair promise to beat Cathay Pacific Airways on fares, but will make rather different sales pitches.

AirAsia plans to emulate Richard Branson's Virgin carriers and no-frills Southwest Airlines of the United States. Valuair is taking a middle path with some frills like JetBlue in the United States.

AirAsia is betting Hong Kongers will be willing to take a little more time and spend a bit more cash on a ferry to Macau instead of a train to Chek Lap Kok if they can save on the air fare. The airline will offer an introductory price of 999 baht (HK$197) each way for the Bangkok-Macau flights and 99 ringgit (HK$203) for Kuala Lumpur-Macau.

Fernandes, a former Virgin and Warner executive, said he was confident the new routes will be immediately profitable. AirAsia will only have to fill about half the seats on its flights to break even.

It made a profit of 20 million ringgit in 2003. Fernandes said the company plans to hold an IPO to list in Kuala Lumpur in September. A source familiar with the company's forecasts put estimated profits this year at 70 million ringgit.

Fernandes said he expects to add flights from Macau to the Thai island of Phuket as well as Malaysia's Kota Kinabalu, Kuching, Penang, Langkawi and Miri.

"In due course, we can do a million passengers a year out of Macau,'' he said.

AirAsia has adopted the strategy of offering services to airports a bit removed, or over a border, from its target markets to take advantage of lower airport charges.

AirAsia will initially operate a once-daily service out of Macau, at midday for Bangkok and late night or early morning for Kuala Lumpur. Much like traditional airlines, AirAsia will offer a range of fares on each flight but maximum will be US$120 (HK$936) each way. Cathay offers discounted tickets from Hong Kong to Bangkok priced from HK$1,850 roundtrip and to Kuala Lumpur from HK$2,250 on its website.

Passengers on AirAsia, which flies Boeing 737-300 jets that average 10 years in age, can carry 15 kg of baggage free. AirAsia offers no free food or drinks on its flights.

Valuair, founded by a former Singapore Airlines executive, will offer hot meals and free coffee and tea.

Valuair, which first takes to the air on May 5 with Singapore-Bangkok flights, will use new Airbus A320 jets. Tickets will cost S$300 (HK$1,382) for a round trip during May.

29 April 2004 / 01:44 AM

Flying high on a rebounding economy ( 28/04/2004 )

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Dragonair’s launch of service to Tokyo reflects the high number of business travellers using Hong Kong as a hub

Hong Kong's aviation industry is soaring to new heights, buoyed by economic optimism and the SAR's increasing status as the region's aviation hub.

A number of international carriers are expanding or upgrading their services in and out of Hong Kong in response to growing passenger demand, especially from business travellers. Cathay Pacific Airways, Hong Kong's national airline, continues to build its fleet with plans for further expansion.

In addition, Hong Kong International Airport has been voted Airport of the Year for the fourth consecutive year, in two recent global surveys

Initiatives announced in recent months include Dragonair's inauguration of services to Tokyo's Narita Airport. The airline will operate seven flights a week: twice on Fridays and daily except Saturday. In March, Dragonair posted double-digit growth in both passenger numbers and cargo volume, with business travel a standout.

Economic optimism spins off

"The resumption of growth in the Hong Kong economy, and the widespread sense of optimism since the start of the year, has been good for the aviation industry here," said Stanley Hui, Dragonair CEO. "More people are travelling for work and pleasure, as reflected in the high number of passengers travelling with us.

"Our network has played a significant role in strengthening Hong Kong as an international aviation hub for almost 20 years, and it is a tradition we intend to keep alive by exploring new markets and opportunities for growth."

Malaysia Airlines is doubling its nonstop services between Hong Kong and Kuala Lumpur from seven to 14 times weekly, and expanding its service to Kota Kinabalu. Regional manager for China and Hong Kong Yap Kiang Thiam said the airline was strengthening its position in Hong Kong, which it has always considered be an important regional hub.
He commended the Hong Kong airport authority on recent initiative to retain its competitive edge, such as fast-tracking inbound passengers to the Pearl River Delta.

Aeroflot Russian Airlines is launching a new programme of quality standards aboard six direct flights from Hong Kong per week, with good connections to Europe and the Middle East. The carrier is offering enhanced service and an improved menu to business and first-class passengers.

Cathay posts strong first quarter

Growing demand for business-class seating is also being recognised by Cathay Pacific, which moved more than a million passengers across its global network in March, a growth of 4.2 per cent. General manager of sales Ian Shiu said the March figures capped a strong first quarter during which Cathay saw steady growth in business traffic, in particular on long-haul routes.

Cathay Pacific has placed orders for eight more wide body regional aircraft as part of its plan to grow the airline and further enhance Hong Kong as a leading international aviation hub. It aims to hire more operating crew and ground staff over the next three years, and has recently expanded services, including the addition of a new daily non-stop service to New York, starting on July 1.

Cathay Pacific Airways' deputy chairman and CEO David Turnbull said: "The acquisition of eight more aircraft reflects our plan to grow the airline and demonstrates our continued commitment to Hong Kong. The aircraft will enable the airline to increase services and strengthen our network, and at the same time help to further develop Hong Kong as a leading global aviation hub."

In other aviation news, Korean Air is in negotiations to secure additional passenger and freighter capacity between Hong Kong and South Korea. ``We are eager to increase the number of flights to Hong Kong,'' Simon Yang, the airline's regional vice president for Hong Kong and Southeast Asia, told The Standard. The airline has reached the maximum number of flights permitted under the existing air services pact.

Hong Kong International Airport (http://www.hongkongairport.com/)
Cathay Pacific (http://www.cathaypacific.com/)
Dragonair (http://www.dragonair.com/)

INTERVIEW: Virgin Atlantic Arrival In Sydney Delayed


Monday May 3, 2:38 PM
By Lilly Vitorovich of DOW JONES NEWSWIRES

SYDNEY (Dow Jones)--Virgin Atlantic Airways Ltd.'s long-awaited arrival in Sydney is being held up by red tape in Hong Kong, which should please its rivals British Airways Ltd. (BAB), Qantas Airways Ltd. (QAN.AU) and Cathay Pacific Airways Ltd. (0293.HK).

Virgin Atlantic's plans to start flying between London and Sydney via Hong Kong by midyear have been dashed due to "technical issues" relating to a deal between U.K. and Hong Kong officials, said Mackenzie Grant, Virgin Atlantic's head of Asian operations.

"We still have not had the last element of approval from the Hong Kong government," he said in an interview.

"Even though the deal was agreed last November, they haven't released it to us as yet, because they're waiting on some clarification from the European Union on the designation clause," Grant added.

The European Union is in the process of approving new legislation - the designation clause, which states any rights given to a U.K. carrier by a non-EU government also have to be given to any airline in the EU.

"It's quite a complex issue, but obviously one that's giving concern to some governments and not to others, but the overriding position we take is that if the agreement is pro-competition and pro-consumer, then it cannot be anything but good for aviation and for the consumer," Grant said.

Virgin Atlantic, which is known for its offbeat services including onboard massages and flamboyant founder Richard Branson, plans to operate a daily service between London and Sydney using 12 Airbus A340-600 aircraft when it receives the green light. The planes have been configured to seat 311 passengers.

Grant is confident that the deal will be approved, but concedes the delay in Hong Kong is frustrating after waiting for so long to start services.

"That's the only last remaining obstacle, and we're just waiting patiently for them to make a decision," he said.

"These things are always frustrating, but we've been dealing with this for the last 20 years - we celebrate our 20th birthday in June - and every time we have tried to expand, we've met road blocks and we just try to patiently work away at them, until the road blocks come down and we can operate," Grant said.

"It is particularly frustrating because Richard has always wanted to operate to Australia and he's very keen to see it happen, and so is everyone at Virgin," he added.

The Hong Kong government hasn't given any indication of when it's likely to hand down its final ruling, Grant said.

"No, they haven't. But we do expect it to be in the next few weeks or certainly two or three months," he noted.

"We remain confident, because we cannot believe that in this day and age that governments don't recognize the need for competition and I think this is a very pro-competition agreement," Grant said.

Virgin Hopes To Fly To Sydney Before Christmas

Virgin Atlantic hopes to arrive on Australian shores by the end of the year, most likely in the fourth quarter.

"We are still planning to operate down to Australia by the end of the year, but it will be later in the year, probably not until the very end part of this year," Grant said.

Virgin Atlantic will likely expand the London to Sydney route, more often referred to as the "Kangaroo Route", he added, but said it was difficult give an indication of the scale.

"It's very difficult to say, because it's quite a complex market, as Qantas points out there are over 20 other airlines flying to the U.K. from Australia and we will be added to that number," Grant said.

"But, we do think that both Qantas and BA have an inordinate share of that market, and we would like to get a share of that too," he said.

Qantas has a code-sharing agreement with 18% shareholder British Airways, which is before Australia's competition regulator. The agreement allows the pair to operate joint services on certain routes including the Kangaroo Route.

Grant declined to say how much a Virgin Atlantic ticket between Australia and the U.K. would retail for: "All I can say, we will be competitive, we haven't decided yet and we will not make that decision until we get approval, it would be premature to do that."

In the meantime, the U.K.-based carrier is focused on housekeeping, with plans to bolster its administration and airport staff in Sydney to around 30 from three. No final decision will be made until the Hong Kong government signs off on the bilateral deal, which also allows Hong Kong's biggest airline Cathay Pacific to fly on the lucrative London-New York route.

"We're putting things in place, so that when we get the go ahead we'll be ready to move fast," Grant said.

Virgin Atlantic counts Branson as its biggest shareholder with a 51% stake, while Singapore Airlines Ltd. (S55.SG) holds a 49% shareholding.

Branson also founded Australian budget carrier Virgin Blue in August 2000.

He currently holds a 25% stake in the airline, which has already grabbed one third of the domestic market, after selling down to Australian transport group Patrick Corp. (PRK.AU) and through an initial public offering on the Australian Stock Exchange.

KEY POINTS

In accordance with international practices, air services between the Hong Kong Special Administrative Region (HKSAR) and foreign countries are governed by bilateral air services agreements (ASAs) which are international treaties and provide the framework for scheduled air services between two bilateral partners.

The main objectives of the HKSAR's policy on air services are to maintain the status of Hong Kong as a centre of international and regional aviation and to ensure the provision of air links to a wide range of destinations to meet the needs of the travelling public and shippers.

To achieve these objectives, the HKSAR adopts an approach of progressive liberalisation of air services under the bilateral regime. Under this approach, the HKSAR Government continues to negotiate air services agreements and arrangements with new aviation partners and to review the arrangements with existing partners from time to time in the light of market development.

BACKGROUND

Air Services Agreements

Under the Basic Law of the HKSAR, acting under specific authorisations from the Central People's Government, the Government of the HKSAR may negotiate and conclude new air services agreements providing routes for airlines incorporated and having their principal place of business in Hong Kong and providing rights for overflights and technical stops. Such agreements cover scheduled air services to, from or through Hong Kong, which do not operate to, from or through the Mainland of China.

Arrangements for air services between the HKSAR and other parts of the People's Republic of China are to be made by the Central People's Government in consultation with the Government of the HKSAR in accordance with the Basic Law.

So far, the HKSAR has signed ASAs with 50 aviation partners, namely, Australia, Austria, Bahrain, Bangladesh, Belgium, Brazil, Brunei, Cambodia, Canada, Croatia, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, India, Indonesia, Israel, Italy, Japan, South Korea, Luxembourg, Malaysia, Mauritius, Mongolia, Myanmar, Nepal, the Netherlands, New Zealand, Norway, Oman, Pakistan, Papua New Guinea, the Philippines, Qatar, Russia, Singapore, South Africa, Sri Lanka, Sweden, Switzerland, Thailand, Turkey, the United Arab Emirates, the United Kingdom, the United States and Vietnam.

We are committed to progressive liberalisation of Hong Kong's air services market under the bilateral regime with a view to expanding our air links and promoting competition. In particular, we will proactively implement our liberal policy for air cargo services to further develop Hong Kong into an international and regional air cargo hub.

Scheduled services

A Hong Kong airline seeking to operate scheduled services must obtain a licence for the route from the Air Transport Licensing Authority (ATLA), secure designation by the Government of the HKSAR under the relevant ASA and be allocated traffic rights.

The ATLA is an independent statutory body, comprising non-Government members and chaired by a Court of First Instance Judge. Its purpose is to ensure that the most effective service is provided to the public while avoiding uneconomical overlapping.

Once licensed, a Hong Kong airline is eligible for designation by the Government of the HKSAR under the relevant ASA. In general only one Hong Kong airline will be designated on a given route, and the airline first licensed by the ATLA for a route would normally be the one to be designated for that route. However, our policy also provides for flexibility to designate more than one Hong Kong airline on any route in circumstances such as -

o where it is judged that more competition is needed in the public interest and the traffic is sufficient to sustain substantial operations by more than one Hong Kong airline in addition to the operations of foreign airlines; or

o where one airline has been designated for a route but chooses not to or has ceased to serve that route or does not operate services on it satisfactorily; or

o where the services provided by the airline which applies for designation are different from those provided by the existing designated airline on that route.

Non-scheduled air services

Airlines seeking to operate non-scheduled services to and from Hong Kong have to apply for a permit from the Director-General of Civil Aviation.

Thursday May 6, 7:06 PM

Hong Kong's Dragonair buys five Boeing aircraft, will convert to freighters

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Hong Kong airline Dragonair said Thursday it has bought five Boeing 747-400 aircraft from Singapore Airlines and will convert them into freighters.

Dragonair Chief Executive Officer Stanley Hui said in a statement the purchase will allow the carrier to expand its cargo services to North America. It currently operates freighter routes from Hong Kong to Taiwan, China, Europe and the Middle East.

He said two of the five planes will go into freighter service in 2006, two more will join in 2007 while the remaining plane will be ready in 2008.

The additions will bring Dragonair's freighter fleet size to nine.

Dragonair spokeswoman Bonita Chan declined to say how much the airline paid for the planes.

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Press Release

Purchase Of Five Special Freighters To Open Up New Destinations, Strengthen Hong Kong's Cargo Hub Position

(HONG KONG) Dragonair will more than double the size of its all-cargo fleet by the end of 2008, after announcing the purchase of five Boeing 747-400 special freighters. Two of the five aircraft will enter service in 2006, followed by two more in 2007 and one in 2008.

"Today's announcement is a major milestone in the growth of Dragonair's cargo operations, and a significant investment in the future growth of Hong Kong as a cargo gateway to and from the Mainland," said Chief Executive Officer Stanley Hui. "It will also ensure that Dragonair remains a major player in the air freight market in China and, increasingly, around the world."

"The purchase of the special freighters means that by the end of 2008 we will be operating nine all-cargo aircraft. Underpinning this growth is the continuing development of the China Mainland economy and continuing demand for air cargo services there."

Mr Hui added: "This cargo fleet expansion plan will allow us to look at new destinations, and for the first time puts us in a position to enter the major freight markets across the Pacific."

The five B747-400 special freighters have been purchased from Singapore Airlines. Conversion work will be carried out in collaboration with Boeing, and the aircraft will be among the world's first B747-400 passenger airliners to be converted to freighters.

Dragonair's cargo division currently operates three Boeing 747-300 freighters, with one Boeing 747-200 freighter due to enter service in mid-July.

The airline also recently announced plans to expand its passenger fleet, adding six new aircraft by the end of 2006 to take the passenger fleet to 33 aircraft.

Thursday May 6, 8:41 PM

April volume at main HK air cargo handler up 18.7%

HONG KONG, May 6 (Reuters) - Hong Kong's main air cargo handler said on Thursday its freight volume rose 18.7 percent in April from a year ago, because of bustling trade and low comparative figures.

Tonnage throughput at the world's busiest international air cargo terminal was 186,516 tonnes in April, Hong Kong Air Cargo Terminals Ltd (HACTL) said in statement.

"Tonnage growth for April is encouraging, reflecting the vigour in the trading sector," said Simon Large, HACTL's marketing director.

"The favourable comparison of tonnage figures on a year-on-year basis is also attributable to relatively weaker figure in April last year when cutbacks in passenger flights during SARS outbreak had driven down cargo carrying capacity and tonnage performance," he added.

Export volume jumped 24.9 percent year-on-year to 105,147 tonnes, said HACTL, which is 25 percent owned by Jardine Matheson Holdings and 20 percent by Swire Pacific Ltd .

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Monday May 10, 7:53 PM
Airlines Serving HK Hike Fuel Charges; Others Mull Move

HONG KONG (Dow Jones)--A total of 73 airlines that offer services to or from Hong Kong will increase fuel surcharges on cargo starting Tuesday, the Hong Kong Civil Aviation Department said Monday.

Carriers across the region also said they were studying ways to weather increased costs caused by the rise in crude oil prices, which are at levels unseen in more than a decade.

At 0918 GMT Monday, Nymex Access June crude softened to US$39.73 per barrel from Friday's close of US$39.80/bbl, after breaching US$40/bbl momentarily in Friday's session.

In Monday morning trade, the May jet fuel forward contract was quoted in Singapore at US$47.25/bbl, up 28% from US$36.90/bbl on March 11.

According to Hong Kong's Civil Aviation Department, the airlines' new fuel surcharges on cargo will be in place for at least two weeks, and are only adjustable downward if crude prices retreat.

Charges on long-haul routes will increase to HK$1.60 per kilogram from the current HK$1.20, while those on short-haul routes will rise to 80 HK cents per kilogram from 60 HK cents.

In Hong Kong, airlines follow a fuel surcharge scheme approved by the Hong Kong Civil Aviation Department to add or reduce fuel surcharges. However, if any airline intends to implement fuel surcharges on passenger flights, they are required to individually secure approvals from the department.

No major regional airline has levied fuel surcharges on passenger routes yet. Only one foreign airline has applied to Hong Kong's Civil Aviation Department to introduce such charges.

Both Hong Kong-based carriers, Cathay Pacific Airways Ltd. (0293.HK) and Hong Kong Dragon Airlines Ltd., a unit of China National Aviation Co. (1110.HK), haven't decided to add fuel surcharges on passenger flights yet.

"We are monitoring the changes in the fuel prices. At the moment we don't intend to apply for surcharges on passengers nor adjust ticket prices," Cathay Pacific Corporate Communication Manager Lisa Wong said.

Dragonair, Hong Kong's second largest carrier, said: "We are currently exploring other avenues to reduce the impact (of high oil prices). These include the possibility of fuel surcharge on passenger routes."

BOC International analyst Michael Chan said while hedging activities on fuel positions could moderate the impact of rising fuel costs on airlines, the rise could eat into their bottom line if carriers can't pass on the increased costs to passengers.

For Cathay Pacific and Singapore Airlines Ltd. (S55.SG), fuel accounts for one-fifth of total operating costs.

As oil prices are currently 10% above BOC International's estimated levels for the year, Chan may cut his first half earnings projection for Cathay Pacific, possibly by as much as a double-digit rate, if oil prices continue to stay at current levels.

Nevertheless, Chan also pointed out that the first half of 2003 would provide a weak earnings comparison due to the impact of the severe acute respiratory syndrome outbreak that swept through some parts of Asia in the second quarter.

Hong Kong airlines aren't the first in the region to hike fuel surcharges.

Japan Airlines System Corp. (9205.TO) and All Nippon Airways Co. (9202.TO) boosted fuel surcharges on international cargo to Y18 from Y12 per kilogram on Feb. 1.

However, there aren't immediate plans to introduce the charges to passenger flights.

JAL's executive officer in charge of finance and investor relations, Haruka Nishimatsu, said Friday that current oil prices are in stark contrast with levels projected by the company.

He said that the company believes such firmness in oil prices is unlikely to sustain and that JAL is hedging the risks of jet fuel costs partly through forward purchase contracts. It buys 40% of annual jet fuel consumption through such risk hedge.

In Australia, a Qantas Airways Ltd. (QAN.AU) spokesman said it is "looking at this issue" of high crude prices, declining to confirm reports that the carrier is set to increase its fuel surcharges on cargo to 25 Aussie cents from 20 Aussie cents on May 15.

Singapore Airlines Ltd. (S55.SG), whose estimated fuel bill for the year ending March 31, 2004 stands around S$1.4 billion, also has a wait-and-see stance.

"An increase in fuel price of one US cent per American gallon would add S$16 million to the annual cost of fuel for passenger operations, before accounting for US dollar exchange rate movements and changes in volume of fuel consumed," an SIA spokesman said.

"Market forces determine the price of tickets more directly than fuel prices, but if the rise in fuel costs doesn't moderate, then we, like other airlines, may have to review our pricing," he added.

Thursday May 13, 1:57 PM

HK Cathay Pacific Plans Flights To Moscow In Mid-2005

HONG KONG (Dow Jones)--Cathay Pacific Airways Ltd.(0293.HK) said Thursday it plans to introduce passenger flights to Moscow in the middle of next year, following a code share agreement with state-controlled Aeroflot-Russian Airlines (AFLT.RS) that will begin on June 1.

"It is certainly in our plans to serve the route with our own equipment in summer next year," Cathay Chairman James Hughes-Hallett said after the annual general meeting of Swire Pacific Ltd. (0019.HK), where he is also the chairman.

"One of the key things about the service to Moscow is the great ease for Russian travelers to come to Hong Kong" and the "tremendous upside" this could bring to Hong Kong's tourism industry, Hughes-Hallett added.

Commenting on business in Swire's property division, Hughes-Hallett said units under the company's retail portfolio are fully let, while its office portfolio had a 20% vacancy rate, similar to levels seen at the end of 2003.

While the rental prices in the overall office market has bottomed out, Hughes-Hallett believes any significant improvement in the sector will likely come this year.

"I think the supply will be absorbed in 2004 and early 2005, and this should set the scene for a good market for landlords (after that)," he said.

Hughes-Hallett will leave the top posts of both Cathay Pacific and Swire Pacific at the end of this year and return to London, where he will become the chairman of John Swire & Sons Ltd.

Guangzhou Baiyun to take airfreight trade from HK: study
Keith Wallis

Hong Kong should develop strategic links with other Pearl River Delta airports, improve its connectivity with the region, liberalise air services and improve reliability, flexibility and cost effectiveness to maintain its dominant position as an airfreight hub.

The suggestions are contained in a report by consultant GHK, funded by the Airport Authority, which shows Hong Kong International Airport is facing a significant threat to its cargo business from Guangzhou's new Baiyun airport.

The report pointed out that Hong Kong International Airport currently handles about 90 per cent of air cargo exports from Guangdong province.

This will fall to 47 per cent by 2020 as an increasing proportion of international freight is handled by Guangzhou and Shenzhen airports.

GHK forecast that 29 per cent of cargo exports would be handled by Guangzhou with 17 per cent by Shenzhen. The estimates do not include domestic or transshipped cargo.

But despite the fall in market share, the actual tonnage through the Chek Lap Kok airport will continue to increase.

Jonathan Beard, GHK (Hong Kong) managing director, said cargo volumes at Hong Kong International Airport will grow by an average of 5.6 per cent a year up until 2005, surging by 6 per cent a year between 2006 and 2010 before growth slows to 5per cent a year from 2010 to 2020.

The airport handled 2.64 million tonnes of freight last year, up 6.6 per cent over 2002.

GHK forecast that this will climb to 5.9 million tonnes by 2020, of which 4.8 million tonnes will come from the Pearl River Delta region.

The report also shows that despite common perception, it is cheaper to move airfreight via Hong Kong from the factory in Guangdong to many overseas markets than it is to use airports such as Guangzhou.

This was the main surprise of the study which was compiled following wide industry consultation that included interviews with 12 airlines, eight freight forwarders, 12 exporters, three express cargo companies and six trade associations.

``We assumed that assessed on total costs Hong Kong would be more expensive,'' Beard said.

GHK said it costs an average of HK$26.30 per kilogram to airlift cargo via Hong Kong to Los Angeles compared with HK$20.80 per kg to ship via Guangzhou or Shenzhen. Similarly, shipping via Hong Kong to Frankfurt costs HK$24.60 per kg and HK$17.8 per kg to Tokyo. The comparative figures for Guangzhou and Shenzhen are HK$27.60 per kg to Frankfurt and HK$20.80 per kg to Tokyo. This takes into account transportation from the factory to the airport, handling costs and air freight charges. Not included in these figures are the intangible costs, such as delays waiting at Guangzhou or Shenzhen for appropriate flights, or clearing mainland customs.

GHK estimated exporters would save two days shipping their consignments through Hong Kong International Airport than either Guangzhou or Shenzhen.

Beard said how long Hong Kong retained these advantages depended on how long Guangzhou and Shenzhen took to develop the same international route connectivity and efficient customs facilities.

He said Chinese customs focuses on revenue generation rather than law enforcement. Consequently there is inherent delays in the clearance process as officials maximise earnings.

One option to maintain Hong Kong International Airport's position was to seek alliances with other airports, especially Shenzhen. He said there was already rivalry between Shenzhen and Guangzhou airports which would help Hong Kong's negotiating position.

But he warned talks and a deal should be agreed sooner rather than later to allow Hong Kong to negotiate from a position of strength.

HK Standard
15 May 2004 / 01:24 AM

Tuesday May 18, 12:45 PM

Australia's Qantas Applies For More UK Flights

SYDNEY (Dow Jones)--Australian airline Qantas Airways Ltd. (QAN.AU) said Tuesday it applied to the International Air Services Commission for the right to operate additional flights to the U.K.

Qantas Executive General Manager John Borghetti said the new flights, if approved, would increase services to the U.K. by seven to 28 weekly flights over the next two years, including via Hong Kong for the first time.

The additional services include four via Hong Kong and three via Singapore.

Qantas has also applied to add a further three weekly services via Hong Kong to the U.K. These flights won't commence until April 2006.

Wednesday May 19, 12:46 PM

Flow Enhancement Key to HK Air Cargo Growth: CEO

HONG KONG, May 19 Asia Pulse - The enhancement of flow is the top priority in maintaining Hong Kong's position as the premier air cargo hub in the southern part of China, said David J Pang, chief executive officer of Airport Authority Hong Kong (AA).
Speaking at the Logistics Hong Kong 2004 Conference on Tuesday, Pang said the main thrust would be to improve connectivity with the Pearl River Delta (PRD), smoothen cross-boundary process and develop cooperation with mainland airports, especially with those within the PRD region.

"At the end of the day what matters most to the customers are factors including connectivity, reliability, efficiency and cost-effectiveness. Currently Hong Kong International Airport (HKIA) has a comparative advantage in these aspects but we will need to continue to improve and grow upon the existing critical mass," he explained.

The Hong Kong Special Administrative Region (HKSAR) government's adoption of a liberalized air services policy has helped further expand the extensive international air cargo network, and promote the economic growth in Hong Kong and the PRD, according to Pang.

"We also proactively reach out to our extended home market in the PRD. We have been exploring ways of cooperation with airports in the region to better integrate the flow -- to reduce total costs and increase efficiency in a hazzle-free manner," he added.

With the mainland international air cargo sector projected to have a double-digit growth year on year, Hong Kong could benefit enormously by carving a good portion of the growing pie, Pang said.

Logistics is one of the four pillars that support the Hong Kong economy. In 2003, HKIA handled 2.64 million tons of air cargo, an increase of 6.6 per cent compared with 2002. Seventy% of the cargo flow originated in the PRD.

Pang said it is important that there is timely provision of air cargo facilities in Hong Kong to meet increasing demands. Air cargo traffic at HKIA is expected to grow 6 per cent annually, with express cargo to grow at a rate of 13 per cent.

An express cargo terminal will be operational from the second half of this year. AA has also formed a joint venture with Hong Kong Air Cargo Terminals Limited to develop a cargo consolidation center in Futian, Shenzhen. Four parking stands will be built by 2005 to supplement existing 21 stands for cargo freighters. The ultimate air cargo handling capacity at Hong Kong International Airport is 9 million tons annually.

(XIC)

Cathay Pacific Airlines considering flying to Israel

The splendor of the Orient is making its way to Israel. Cathay Pacific is examining the possibility of operating a flight from the Far East to Israel.

Augustus Tang, Cathay Pacific Airline’s Director of Corporate Planning, told Maariv that the move was being examined as part of company plans to establish flights from the Far East to the Middle East.

According to Tang, in light of the increasing travel between Israel and from several Middle Eastern nations to the Far East, the company would like to begin operating flights between the two areas. The fine points are being scrutinized. Tang believes that a decision, to be based on a review of the data and of feasibility, will be made within several months.

Cathay Pacific Airlines is known for showing strong profitability. The company consistently wins numerous prestigious international awards for its service year after year. Based in Hong Kong, the company has a fleet of 94 modern planes, and operates lines from Hong Kong to Los Angeles, New York and European capitals.

(2004-05-20 13:17:12.0)
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AirBridge plans Russia-HK cargo run

20 May 2004, South China Morning Post

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RUSSELL BARLING

A subsidiary of Russian heavy-lift specialist Volga Dnepr plans to launch general-cargo services to Hong Kong in November, using aviation rights won in January's air-services agreement between Russia and Hong Kong.

Wholly owned AirBridge Cargo intends to offer thrice-weekly flights with Boeing 747-200 aircraft to complement services it launched last week to Shanghai and Beijing from Moscow and its Siberian hub at Novosibirsk.

"Our ambition is to get [Hong Kong services] moving right away. We definitely want to be in Hong Kong for the [Christmas] peak season," managing director Stan Wraight said. "At a minimum, we will start with a three-times weekly service. We have the rights for four times a week."

Last week, Cathay Pacific Airways chief executive David Turnbull said the airline would launch a service to Moscow, and cargo would be one of the factors that would make flights to the capital an attractive proposition.

AirBridge's parent was awarded the rights in January when Russia and Hong Kong agreed to a further seven flights a week. Mr Wraight said Russian authorities gave Aeroflot three of those rights; the rest went to Volga Dnepr.

Airport officials, the Civil Aviation Department (CAD) and Hongkong Air Cargo Terminals said they met the AirBridge delegation on Tuesday to lay the groundwork for the airline's Hong Kong launch.

The CAD, however, said no formal application for an air operator licence had been received. "The CAD has received inquiries from AirBridge Cargo on operation of services to Hong Kong," a spokeswoman said. An application took about 10 days.

AirBridge recently bought two 100-tonne-capacity B747-200 freighters from Italian carrier Alitalia. The first was used to launch the twice-weekly Shanghai and Beijing services last week and the second is being serviced.

It will launch a third China service, between Tianjin and Moscow, when the second aircraft is available, and will increase the Shanghai-Moscow service to three times a week. The Beijing service flies to Novosibirsk.

AirBridge is in talks to take possession of a third B747-200 by autumn and will use the aircraft to launch the Hong Kong service, which can fly anywhere in Russia except Moscow.

"Moscow is a Russian restriction because that is where Aeroflot flies from Hong Kong," Mr Wraight said.

The carrier's Greater China services are all scheduled beyond its Russian hubs to Luxembourg, giving Asian exporters another transport option to Europe and AirBridge more Asian cargo volume. It is also looking at opening up connecting flights to Italy and Britain.

Signing ceremony of the HKSAR/Kenya Air Services Agreement

The Secretary for Economic Development and Labour, Mr Stephen Ip, today (May 21) signed on behalf of the Government of the Hong Kong Special Administrative Region an Air Services Agreement with the Government of the Republic of Kenya in Hong Kong.

Representing the Government of the Republic of Kenya at the signing ceremony was the Hon Mr John Njoroge Michuki, Minister for Transport and Communications of the Republic of Kenya.

"The Air Services Agreement signed today provides a legal framework for the establishment of air links between Hong Kong and Kenya. It opens a new chapter in the development of air services between the two places," said Mr Ip at the signing ceremony.

"To enhance Hong Kong's position as the preferred international and regional aviation centre, we will continue to negotiate more air services agreements with new aviation partners in line with our progressive liberalisation policy in aviation," Mr Ip added.

At present, Kenya Airways is providing three weekly direct passenger services between Hong Kong and Nairobi, the capital city of Kenya.

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The Air Services Agreement with Kenya is Hong Kong's 52nd Air Services Agreement with foreign aviation partners.

Hong Kong has also signed Air Services Agreements with Australia, Austria, Bahrain, Bangladesh, Belgium, Brazil, Brunei, Cambodia, Canada, Croatia, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, India, Indonesia, Israel, Italy, Japan, Kuwait, Luxembourg, Malaysia, Mauritius, Mongolia, Myanmar, Nepal, the Netherlands, New Zealand, Norway, Pakistan, Papua New Guinea, the Philippines, the Republic of Korea, Oman, Qatar, Russia, Singapore, South Africa, Sri Lanka, Sweden, Switzerland, Thailand, Turkey, the United Arab Emirates, the United Kingdom, the USA and Vietnam.

Ends/Friday, May 21, 2004

Wednesday May 26, 1:37 PM
Business Class - Executive Travel in Asia Today

MORE FLIGHTS FROM HONG KONG TO LONDON WITH BRITISH AIRWAYS

LONDON - British Airways is offering three extra flights per week from Hong Kong to London. The addition brings the total number of British Airways Hong Kong flight services to 17 per week. To celebrate the introduction of the three extra flights per week, from now until 5 June 2004, British Airways is giving travellers the chance to win 60,000 Asia Miles by visiting www.british-airways.com.hk and answering three simple questions regarding the new flight schedule. The additional flights depart Hong Kong every Monday, Wednesday and Saturday at 01:00.

Cargolux introduces flights from Asia to Spain

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Luxembourg, 26 May 2004 - Cargolux Airlines International S.A. announces the introduction of a new, twice weekly B747-400 freighter service from Asia directly to Spain on 9 June 2004. CV7333 departs Hong Kong on Wednesdays at 0345h local time and arrives in Barcelona/Spain on the same day at 1340h local time. Departure from Barcelona is at 1445h with arrival in Luxembourg at 1635h.

The second flight, CV7336, departs Hong Kong on Saturday evenings at 1925h, arriving in Barcelona/Spain early Sunday morning at 0455h. Departure from Barcelona is at 0625h with arrival in Luxembourg at 0815h. From Luxembourg, the services feed into Cargolux's worldwide network, offering over 50 scheduled flights, plus additional interline possibilities.

The new Cargolux flights between Hong Kong and Barcelona are launched in response to the company’s Asian clients' request for efficient and fast freighter services. Shipments will include hi-tech items, telecommunication equipment, consumer goods and garments for both, the Spanish market as well as Cargolux's additional flight destinations.

From Spain, the company’s modern B747-400 freighters carry additional perishables, fashion and leather goods, as well as industrial cargo shipments, that are fed into Cargolux's worldwide route network.

Cargolux, based in Luxembourg, is Europe’s largest all-cargo airline, operating a modern fleet of 13 B747-400 freighters on a worldwide network, covering 90 destinations, 57 of which are served on scheduled all-cargo flights. The company has more than 85 offices in over 50 countries and also offers an extensive trucking network to more than 50 destinations in Europe and the US as well as charter and aircraft maintenance services. Cargolux employs more than 1300 staff worldwide.

Thursday June 3, 9:20 PM

Cathay Pacific and Lufthansa launch new freighter service between Hong Kong and Munich

Cathay Pacific Airways and Germany's biggest airline Lufthansa said Thursday they will launch new cargo services between Hong Kong and Munich. Cathay said the joint venture with Lufthansa Cargo will begin Aug. 15, with flights three times a week between Hong Kong and Munich.

Cathay and Lufthansa are already offering joint services to and from Frankfurt, Germany. "The new service can further strengthen Cathay Pacific's European network, and provide more choice for our customers," said Ron Mathison, Cathay's director and general manager of cargo services.

The Hong Kong-Munich flights will have a stopover in Dubai.

Air cargo tipped to rise by 6pc at terminal
Keith Wallis

Cargo volumes through the Asia Airfreight Terminal (AAT), the smaller of the two freight terminals at Hong Kong International Airport, are expected to grow by more than 6 per cent this year and may top 10-12 per cent.

Asia Airfreight Terminal chief executive Daniel Soh said there has been strong growth in the first four months of the year.

"About 10-12 per cent growth is not unachievable if there are no unforeseen issues that affect the increase in volumes,'' he said.

AAT handled 161,021 tonnes of freight in the first four months of this year, compared with 136,597 tonnes in the same period last year.

Soh was speaking after witnessing a contract signing between AAT and the Airport Authority for the freight company's second terminal at the airport.

The agreement was inked between AAT board chairman Karmjit Singh and Airport Authority chief executive David Pang.

The deal, confirmed by The Standard last Tuesday, involves the development of a HK$1.75 billion four-storey complex capable of handling 910,000 tonnes of freight a year.

The facility will more than double AAT's annual cargo handling capacity from the present 600,000 tonnes to 1.5 million tonnes when it is completed at the end of 2006.

Construction tenders for the building, which includes the latest materials handling system, will be invited in the next few months.

About 600 workers will be employed during construction.

AAT's current workforce of 600 people will rise to 1,000 when the new terminal opens, and may surge to 1,900 as the demand for cargo services increases.

Soh said AAT is studying options on how the terminal will cater for existing operator FedEx, the United States express parcels company that is also a shareholder in AAT.

Speaking about Hong Kong's airfreight market generally, Soh doubted whether the SAR would face any immediate direct threat from nearby mainland airports including Guangzhou's new Baiyun international airport.



Soh said AAT has no plans to invest in the Guangzhou airport. However, he added: "If an opportunity presented itself we would look at it.''

HK Standard, 4 June 2004 / 03:10 AM

Qantas confident of approval for direct HK-London flights

Chek Lap Kok stands to benefit if the Australian carrier gains the service rights and boosts competition

9 June 2004, South China Morning Post

Australia's flagship carrier Qantas Airways could begin direct flights between Hong Kong and London as early as November. Qantas is expecting approval from the Australian authorities to fly the "kangaroo route" later this week or next, according to a senior source with the airline.

The start of Hong Kong-to-London flights by the Australian carrier would further cement Chek Lap Kok's status as a regional air hub, giving travellers more choice of airlines on routes between Australia and Europe.

Qantas has applied to the International Air Services Commission, the Australian authority with regulatory power over route requests, for the right to operate seven flights a week between Hong Kong and London by April 2006.

It hopes to begin with three flights a week in November, with one additional weekly flight to be added in November next year. Cathay Pacific Airways, British Airways and Virgin Atlantic already offer non-stop flights between Hong Kong and London, with Cathay providing three services a day.

"We have reason to be optimistic that a decision in our favour by [the Australian authorities] could come maybe later this week or next week," the source said.

The Qantas flights to London come in the wake of a new air services agreement, signed between the Hong Kong and Australian governments in April.

The pact also allows Dragonair to launch Sydney services next year for the first time, which will see it compete with Qantas and Cathay.

Virgin is also expected to begin flights from Hong Kong to Sydney by the end of this year, as long as regulatory hurdles still standing in the way of the Hong Kong-Britain bilateral agreement being implemented are overcome. That deal was signed earlier this year but remains to be approved by the European Commission.

The Qantas source said the airline was optimistic about Hong Kong route rights because the commission had approved a separate application it submitted at the same time for new services to India. There were also no other Australian carriers applying for the Hong Kong-to-London rights, he said.

While the Hong Kong-to-London route is new to Qantas, the carrier already flies to Britain via Bangkok and Singapore. "We want to fly from Hong Kong because it will allow us to participate in the market growth in southern China," the source said. "Certainly, our presence will increase competition in an already competitive market but it's a market we want to be in."

Cathay spokesman Andrew Herdman played down the extent of competition that Qantas would bring to the route. "There are a 101 ways to fly to London from Hong Kong, with plenty of direct flights and even more indirect flights. There will be an impact but I wouldn't exaggerate it," he said.

Thursday June 10, 1:05 PM
Dragonair to launch cargo service to Nanjing; adds flights to Osaka and Shanghai

Hong Kong airline Dragonair said Thursday it will launch a cargo service to the eastern Chinese city of Nanjing and add more freighter frequencies to Osaka and Shanghai.

The weekly service to Nanjing _ a booming industrial hub _ will debut June 18, the company said in a statement.

Dragonair will double its cargo services to Shanghai to 12 a week from June 15. From June 18, the carrier will also expand its cargo service to Osaka to three flights a week, the statement said.

Nanjing will become the eighth destination in Dragonair's cargo network and its third in mainland China.

CARGO DEVELOPMENT - Asia Airfreight Terminal to triple air cargo handling capacity with new terminal expansion

(HONG KONG, 3 June 2004) – Asia Airfreight Terminal (AAT) will invest $1.75 billion in
constructing a new terminal, which will be completed by end 2006 with an annual handling
capacity of 910,000 tonnes. With the completion of AAT’s expansion in 2006, AAT will
triple its current design capacity.

It will feature a multi-storey warehouse design covering a gross floor area of 117,500
square meters. The new terminal will be equipped with advanced systems, including a
state-of-the-art material handling system and pallet container handling system.
Speaking at the signing ceremony for AAT Expansion, Chief Executive Officer of Airport
Authority Hong Kong, Dr David J Pang, welcomed AAT’s support for Hong Kong’s
initiative to become a logistics service hub within the Pan-Pearl River Delta region.

Dr. Pang explained: “Hong Kong is the key logistics centre for Southern China and we at
Hong Kong International Airport play an important role in connecting this region and the
world with our extensive aviation network.

“For the Airport Authority our mission is to provide timely facilities to meet the increasing
demand for air cargo handling, to maximize the value of our airport and to bring economic
activities to Hong Kong and the region,” he added.

Logistics is one of the four pillars that support the Hong Kong economy, with air cargo
accounting over 30 per cent of Hong Kong’s total trade value. In 2003, HKIA handled 2.64
million tonnes of air cargo, an increase of 6.6 per cent compared with 2002.

Up to 600 construction workers would be required for the AAT expansion project. On
completion of the new terminal in 2006, the current workforce of 600 will be boosted to
1,000 and ultimately to 1,900.

Chief Executive Officer of AAT, Daniel Soh, said “The expansion plan demonstrates
the company’s confidence in Hong Kong as the premier air cargo hub of the region and
underlines our long-term commitment to support its growth. With the added capacity and
design capabilities of the new AAT Terminal, AAT will be well positioned to meet the longterm
cargo capacity demands of our present and future customer airlines and further
improve the level of service delivery to the airfreight industry.”

The Mainland international air cargo sector is projected to grow double-digit year on year.
In Hong Kong, air cargo traffic is expected to grow at 6 per cent per annum long term, with
express cargo to grow at a rate of 13 per cent per annum.

Fact sheet of AAT’s expansion attached
AA Media Enquiries: (852) 2188 7152
AAT Media Enquiries: (852) 2949 7815

Monday June 7, 4:35 PM
CARGO DEVELOPMENT - HK Air Cargo Terminals' May Tonnage Rises 16.7% On Year

HONG KONG (Dow Jones)--Hong Kong Air Cargo Terminals Ltd., which handles nearly all of the air cargo in the world's busiest international air cargo hub, said it handled 16.7% more cargo last month than a year earlier, when the SARS outbreak choked throughput.

Total throughput in May climbed to 183,356 metric tons from a year earlier, Hactl said in a statement. Exports rose 19.0% to 98,658 tons, imports rose 17.1% to 62,008 tons and transshipments rose 6.5% to 22,690 tons.

By comparison, air cargo throughput in May 2003 rose just 3.3% on year as regional economies were hit by the outbreak of severe acute respiratory syndrome and airlines responded to plummeting demand by cutting flights. A year earlier, in May 2002, the rise in air cargo throughput was 25%.

Hactl is jointly owned by Swire Pacific Ltd. (0019.HK), Jardine Pacific Ltd., The Wharf (Holdings) Ltd. (0004.HK), Hutchison International Port Holdings Ltd., China National Aviation Corporation, Cathay Pacific Airways Ltd. (0293.HK) and CITIC Pacific Ltd. (0267.HK).

Cathay's first NY flight fully booked
Jonathan Tam, HK Standard

Bookings for Cathay Pacific Airways' new direct flight between Hong Kong and New York have been satisfactory - the inaugural flight on July 1 is fully booked - and the route is expected to provide good revenue, chief operating officer Philip Chen said.

Chen said as its Hong Kong-Vancouver-New York service is "pretty fully booked'', the direct flight should also be popular as passengers will find it easier to make connecting flights to other US cities.

Because the daily direct flight will arrive in New York in the afternoon, instead of late night via the Vancouver route, same-day connections will be available to many more destinations.

Round-trip economy tickets will cost between HK$8,920 and HK$10,600, the same as for the service via Vancouver, a Cathay spokeswoman said yesterday.

"Bookings have been satisfactory for the first month,'' Chen said. "As the high season is coming in the summer, it should generate good revenue.''

However the route has proven tough for other airlines. United Airlines scrapped its direct service in August 2001, after only four months of operation, and Continental Airlines scaled back its services.

On surging oil prices, Chen said fuel has been accounting for more than 20 per cent of Cathay's operating costs, so earnings will be affected if the price remains high. And he believes if high oil prices persist for a long period, demand for air travel will decrease.

Although the airline has been granted approval to levy a surcharge on tickets, this will cover less than half the increase in the cost of fuel, Chen said.

The Civil Aviation Department this month authorised a number of airlines to charge passengers a fuel surcharge until the end of August. Cathay Pacific can charge up to US$4 (HK$31) a trip on short-haul routes and US$14 on long-haul routes.

HSBC Securities estimates Cathay Pacific could raise HK$28 million a month if the charge were applied to all tickets from Hong Kong.

Despite high oil prices, analysts polled by Thomson Financial estimated Cathay Pacific's net profit to rise to HK$4.6 billion this year, from the 2002 net profit of HK$3.98 billion.

Cathay Pacific Airways shares fell 1 per cent yesterday to close at HK$14.60.

12 June 2004 / 03:34 AM

Cathay Pacific celebrates non-stop service to New York with 500 guests at gala dinner
10 June 2004

Cathay Pacific Airways today staged a gala celebration for its new daily non-stop service between Hong Kong and New York, with close to 500 guests attending the event in New York City.

The gala evening was hosted by Cathay Pacific Director and Chief Operating Officer Philip Chen at fashionable restaurant Cipriani. A delegation from the Hong Kong Government, business community and local media travelled to New York with him.

During the event, Cathay Pacific was presented with the Robb Report award, the United States’ most prestigious luxury lifestyle and travel award. Cathay Pacific was the world’s only airline named “Best of the Best” in the 16th annual Robb Report awards for the “world’s most exceptional products and services”.

Gala guests also enjoyed the airline’s “Walking on Air” stage show that showcases Cathay Pacific’s history and cabin crew uniforms through the ages.

With the launch of the new service on 1 July, Cathay Pacific will be the only airline to operate a daily non-stop flight between the two cities as well as a second daily one-stop service via Vancouver.

Cathay Pacific wrote aviation history when it made the world’s first ever non-stop commercial flight over the North Pole from New York to Hong Kong on 5 July 1998. In so doing, the airline paved the way that all airlines operating trans-polar flights to Asia now follow.

Speaking at the gala dinner, Mr Chen said: “We are delighted to start the only daily non-stop service that will take passengers only 16 hours to travel between two of the world’s most important business hubs on the world’s newest commercial aircraft, the Airbus 340-600. The new service will offer unbeatable choice and connectivity, further strengthening links between the two hubs. As the home carrier of Hong Kong, we are delighted to be able to play a part in bringing the world closer together.

“With our existing one-stop service via Vancouver we will be the only airline to offer passengers the choice of two flights between New York and Hong Kong every day. The new service underlines our commitment to give customers greater flexibility and to strengthen Hong Kong as a global hub,” Mr Chen said.

The addition of the new flight means that Cathay Pacific will operate 72 passenger and cargo services a week between Hong Kong and North America. The airline serves 24 cities in the United States, either directly or through code share passenger services.

Verdict Soon on Cathay's Transatlantic Route

JOSEPH LO
12 June 2004, South China Morning Post

A European Commission decision on whether or not to allow Cathay Pacific Airways to launch flights between London and New York could be made as early as next month.

A positive decision would also give Virgin Atlantic the right to extend its London to Hong Kong services to Sydney.

Ludolf van Hasselt, head of the commission's air transport unit, told a European Aviation Club luncheon in Brussels earlier this week that it would review new bilateral agreements between European member states and third countries.

Mr van Hasselt said the commission would "issue some decisions before the August break".

A commission spokesman, Gilles Gantelet, confirmed that the earliest the committee would be able to meet would be July 27. The committee comprises representatives of member countries and is chaired by the commission.

Virgin has been quietly gearing up to launch a new Hong Kong to Sydney service, having added staff and office space in both cities.

Cathay said it would now submit an application for take-off and landing slots at London's Heathrow airport for the winter schedule, in anticipation of the commission approving the deal soon.

After the government's initial decision to withhold implementation of the deal, Cathay set aside plans to apply for Heathrow slots.

The source said the airline's biggest worry was that it would not be able to secure "good" slot times at Heathrow and would instead be given times that were inconvenient for travellers. "We're not confident that we can get the time slots that we want," he said.

But the Cathay source said it was unlikely that the Hong Kong carrier would resort to buying slots at Heathrow from other airlines, as Australian carrier Qantas had done.

Qantas is believed to have paid nearly £20 million (HK$288 million) for two pairs of prime daily slots at Heathrow, purchasing them from FlyBe, a British regional low-cost carrier.

Local officials have had reservations about implementing the air deal with Britain, making it conditional on the European Commission's approval.

The process by which EC approval can be gained is in place - the legislation was ratified by the European Parliament last month.

Air Canada to Launch Non-Stop Service from Toronto to Hong Kong with A340-500 Aircraft, World's Longest Range Airliner Features Lie-Flat Seats and State-of-the-art Entertainment

Forgot to post this here ...

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MONTREAL, April 19 /CNW Telbec/ - Air Canada today announced the introduction of first-ever non-stop service from Toronto to Hong Kong with the delivery of its first A340-500 aircraft, the world's longest range airliner.

Effective August 1, 2004, the new daily non-stop service with a flight time of
15.5 hours will link eastern North America and southeast Asia with convenient daily flights that will save travellers more than four and a half hours compared to other carriers' best routings.

Concurrent with the start-up of its new service, Air Canada is introducing exciting new inflight amenities for customers in both Executive First and Hospitality Service cabins configured to seat 42 and 225 passengers, respectively. The airline is significantly enhancing its premium international product, Executive First, with the introduction of industry leading lie-flat seats on its new A340-500 service to Hong Kong. Combined with a generous 63 inch pitch, the ultra-luxurious seats recline to a flat 180 degrees and provide the ultimate experience in restful long haul flying. The carrier's Executive First seats also feature adjustable privacy dividers, stowage areas, individual reading lights, lumbar support system and personal large screen monitor offering video on demand.

First Air Canada Route with PTVs
In addition, Air Canada's Hospitality Service customers will enjoy, for the first time, individually controlled video on demand with personal monitors at each seat for a state-of-the-art inflight entertainment experience using a fully digital audio and video system. The Hospitality Service cabin features fully adjustable seats and headrests in a spacious 2x4x2 layout with 33-inch pitch providing more legroom than other carriers.

"We are very excited to offer travellers the fastest, most convenient air service between Toronto and Hong Kong with the first-ever non-stop service," said Montie Brewer, Executive Vice President, Commercial. "With the introduction of the new Airbus A340-500 aircraft in our fleet, Air Canada customers will enjoy state of-the-art entertainment, the most spacious cabin and a further enhancement to our premium Executive First product with the introduction of lie-flat seats. Following on the opening of a brand new air terminal at our Toronto hub only days ago, we are focused on strengthening our international network to offer our customers superior value, choice and the best schedule to meet their needs from coast to coast, and around the world."

Air Canada's new daily non-stop flights from Toronto to Hong Kong complement its daily Vancouver-Hong Kong flights by offering customers the choice and flexibility of two daily flights linking both western and eastern Canada with one of Asia's most important business centres and gateway to southeast Asia. With a 0945 departure from Toronto, flight AC015 is timed to
offer convenient morning connections to and from points throughout Air Canada's extensive North American network, particularly in eastern Canada and the United States. The early afternoon arrival in Hong Kong at 1315 the next day ensures connecting options for onward travel throughout Asia. The eastbound flight, AC016, leaves Hong Kong at 1515 and arrives in Toronto at 1835 the same day, providing maximum connecting options.

Air Canada will take delivery of two Airbus A340-500 aircraft this summer following successful negotiations with the Air Canada Pilots Association (ACPA) to facilitate the expedited introduction of the ultra long range aircraft to Air Canada's fleet. Air Canada has been operating daily non-stop service eastbound from Hong Kong to Toronto since December 1, 2003 using
Airbus A340-300 aircraft.

Air Canada offers customers up to 12 non-stop flights per day in each direction between Canada and nine destinations in Asia. From its main hub in Toronto, the carrier operates daily non-stop flights to Hong Kong, Tokyo and Delhi, the only non-stop link between North America and India. From its Pacific Asian gateway in Vancouver, Air Canada serves Hong Kong, Shanghai, Beijing, Tokyo, Osaka, Nagoya and Seoul with daily non-stop flights, as well as Taipei on a codeshare basis.

Additional Information
Currently, Cathay Pacific also flies daily between Hong Kong and Toronto and Vancouver.

CARGO DEVELOPMENT - Air cargo shows vibrant growth in May

(Hong Kong, 13 June 2004) - Cargo throughput at Hong Kong International Airport in May continued to soar, reaching 240,000 tonnes, an increase of 19.6% compared with May 2003.

A total of 2.82 million passengers travelled through the airport, a marginal growth of 0.6% over May 2002. May 2003 is not used as the benchmark as the SARS impact on air travel was at its worst.

A total of 19,510 aircraft movements were recorded, up 14.6% compared with the same month in 2002, with 16,810 passenger flights and 2,455 cargo flights. The increase was mainly due to the strong growth in cargo.

Passenger, cargo and aircraft movement figures all saw a rise over a rolling 12-month period from June 2003 to May 2004. Passenger throughput rose by 7.3% to 32.1 million; cargo throughput rose by 10.5% to 2.82 million tonnes, and aircraft movements rose by 5% to 208,648.

Thursday June 17, 9:43 PM
France agrees to let Hong Kong airlines sell seats on high-speed rail, Tahiti flights

French authorities have agreed to allow Hong Kong airlines to sell seats on its high-speed SNCF trains and French air services to Tahiti and the New Caledonian capital of Noumea, the Hong Kong government said Thursday.

Under the deal, Hong Kong carriers can offer seats on SNCF services covering 10 French cities, a government statement said. SNCF is France's state railway.

The code-sharing agreement _ Hong Kong's first to involve different forms of transportation _ was reached Tuesday after two days of negotiations in Paris, the statement said.

Tahiti and New Caledonia are Pacific islands under French rule.

EDITORIAL: Time to open mainland skies to HK airlines

18 June 2004, South China Morning Post,

The outline of a new air services agreement between the mainland and the United States indicates it could be the most liberal one yet between the two countries. Nothing is certain until the deal is signed, but the Sino-US framework is in line with the liberalising tone of the agreements Beijing has been entering with air traffic partners throughout the region over the past year.

The economic payoff for both countries could be great. On the mainland side, granting new access to US passenger and cargo carriers will expose its domestic airlines to greater competition but this should force improvements on the carriers. In any case, the benefits of inbound tourist traffic and easier access to international markets for high-value exports should more than compensate.

The deal could more than double the number of passenger flights from the US into the mainland over the next six years, while boosting the 20 cargo flights per week to 100 and giving access to five new American carriers. By themselves, the terms are remarkable. Contrasted with the official silence over similar talks between Hong Kong and the mainland - and the implication that little progress is being made on securing similarly broad access for our carriers - they are worrying.

Although Hong Kong's Chek Lap Kok operates far more flights into the mainland than any other airport in the world, that gateway status will be increasingly difficult to defend if the current pattern holds. The imminent US deal follows similar ones signed with Singapore, Malaysia, Thailand, South Korea, Australia and Britain. Carriers in these countries are increasingly bypassing Hong Kong in favour of direct flights, encouraged by increased flight quotas and in some cases lucrative "fifth-freedom" rights - allowing them to pick up passengers in mainland cities and fly onwards to third countries.

Meanwhile, Hong Kong-mainland air rights talks have been stalled for months, with little sign of a breakthrough. Apparently, mainland negotiators are asking for fifth-freedom rights for mainland carriers coming into Hong Kong. Although this would expose Hong Kong-based carriers to more competition, especially on Southeast Asian routes, such a concession does not seem to be out of the question.

What is being offered to Hong Kong in return for the concession is a little less clear. Certainly, any fair deal should include new flight allocations to the mainland for Cathay Pacific, which is now limited to three flights a week to Beijing, as well as better access to second-tier cities for the city's smaller startup airlines. Cathay's main competitor, Dragonair, should also be given assurances that none of these new rights will come at the expense of its existing mainland quotas.

Such a wish list sounds ambitious in the context of the mainland-Hong Kong negotiations, which have seen so little progress. But as the expected US-China deal shows, a far-reaching, mutually beneficial deal is possible. Aviation officials in Hong Kong and the mainland have shown over the past year their willingness to go along with the global trend towards open skies and deregulated air services markets, but only in deals with other jurisdictions. Hong Kong has made liberal agreements with Australia, Thailand, Japan and Singapore. Neither the mainland nor Hong Kong seems to believe that shielding local carriers should take precedence over raising overall traffic and introducing a healthy dose of competition. It is about time they struck a deal with each other.

The drive to turn Shanghai into a passenger hub and perhaps designate Guangzhou as a cargo hub - ambitions boosted by Federal Express plans to build a centre at the city's Baiyun airport - are understandable. Yet development of these plans does not have to depend on locking Hong Kong carriers out of the market. The mainland should open up in the name of fair play and vigorous competition, but it also stands to gain from the high volume of inbound traffic Hong Kong's extensive international connections could bring.

A bit more detail of the French air services agreement from a government press release :

HK, France forge new air services arrangement

New arrangements for air services between Hong Kong and France have been concluded after two days of negotiation in Paris.

Airlines may now enter into code-share arrangements with surface transportation providers (inter-modal code-sharing). Specifically, Cathay Pacific Airways can put its airline codes on French high-speed trains to 10 French cities.

The new arrangement also allows airlines of both sides to introduce code-share services to Papeete (Tahiti) and Noumea, two famous tourist destinations located in French Pacific territories. Capacity for freighter services has also been expanded for the market demand.

Deputy Secretary for Economic Development & Labour Wilson Fung said it is the first time inter-modal code-sharing is provided for under Hong Kong's air services arrangements.

He said inter-modal code-sharing will put a new dimension on our air services by providing online connection between scheduled air services and the massive train network to 10 major popular cities in France.

This will provide a major boost to the tourism industry between Hong Kong and France, he said, adding that the new service mode can enhance the network of HK International Airport by making use of train services. He hopes airlines will make good use of the new code-share routes soon.

June 17, 2004

Monday June 21, 4:43 PM
Virgin Atlantic to launch London-Hong Kong-Sydney route

http://www.virgin-atlantic.com/images/tridion/12_5317.jpg

Britain's Virgin Atlantic Airways said Monday it is launching a daily London-Hong Kong-Sydney service in December after it was approved by European regulators.

Virgin plans to start serving the so-called "kangaroo" route Dec. 7 using an Airbus A340-600, which will eventually be replaced with the double-decker superjumbo A380 now being built by Airbus, the European plane maker.

Virgin's competitors flying between Britain and Australia include its archrival, British Airways, Hong Kong's Cathay Pacific Airways and Australian carrier Qantas.

The new Virgin service was made possible by a recent aviation deal that doubles the number of flights allowed between Hong Kong and the Australian cities of Sydney, Melbourne, Brisbane and Perth.

Virgin's deal required European Commission regulatory approval, which was granted last week, airline spokeswoman Angelina Wong said.

Cathay hopping mad over Virgin's ticket plan
Keith Wallis, HK Standard

A dogfight has broken out between Cathay Pacific Airways and Virgin Atlantic Airways over plans by the British carrier to launch flights between Hong Kong and Australia in December.

Virgin said tickets for the Hong Kong-Sydney flights would go on sale this summer before daily services start on December 7.

The services would complete the Kangaroo Route between London and Australia.

Aircraft would stay on the ground for 90 minutes at Hong Kong International Airport to allow passengers to embark and disembark, cargo movements, refuelling and for new supplies to be brought on board.

The flights would carry the same flight codes - VS201 and VS200 - as the existing Hong Kong-London services.

Regional general manager Mackenzie Grant said the launch of the Hong Kong-Australia services would create 110 new jobs.

"We are going to recruit 60 in Hong Kong and 50 in Australia - both ground staff and cabin crew.''

But Cathay Pacific said the European Union has yet to give the green light to allow Virgin Atlantic to operate the flights.

Consequently, it believed Virgin is wrong to offer tickets before the EU confirms it has no objection to the flights.

Andrew Pyne, Cathay Pacific general manager for international affairs, said: "What they are doing is verging on the illegal. They have no right to sell tickets. European Union scrutiny is unlikely to be completed until September. If passengers buy tickets, they could run afoul of the law. If ticket sales are ruled out of order, both Virgin Atlantic and passengers could have quite a problem.''

Cathay Pacific's opposition is thought to be linked to Virgin's refusal to hand over some of its landing slots at London's Heathrow airport to enable the Hong Kong airline to start trans-Atlantic services.

The wrangle comes seven months after British and Hong Kong government officials agreed on an air pact in November. The deal, which has to be confirmed by the EU, grants Virgin rights to Australia and Cathay Pacific approval to fly across the Atlantic between London and New York, in addition to wider access on the Hong Kong-UK route.

Grant acknowledged that Virgin has yet to decide whether it plans to review the designation clause, which currently limits Hong Kong-UK routes to carriers registered in the two jurisdictions. If a review is done, it could potentially open the route to other EU member states, a move that would be blocked by the Hong Kong government.

But he was confident the EU would not review the clause.

"If the designation clause is reviewed, then the European Union would have to review all the other air service agreements reach by all other member countries,'' he said. These include deals between Netherlands and China, and France and China.

"Our advice from the UK government is that we can go ahead. I wouldn't like to say there is no risk, but there is minimal risk,'' he said.

One aviation insider closely linked to the SAR government said there is a provisional understanding the EU will raise no objection to the Hong Kong-UK air pact.

"Whether in the future there is an EU review has still to be seen but for now the agreement is being applied provisionally,'' he said.

The source believed that if the EU planned to object there would have been a clear indication by now.

Pyne, meanwhile, confirmed that Cathay had asked the EU to take action against Virgin to persuade it to hand over to some of its trans-Atlantic landing slots at Heathrow.

Grant countered by saying that Virgin had written to Cathay, saying slots were becoming available from another airline. He said that while Virgin had spent 20 million (HK$286.61 million) buying additional slots from other airlines, landing slots "was not an EU issue''.

22 June 2004 / 02:10 AM

Future of HK Hub - Sino-US pact opens the skies

From 2007, both nations' airlines will have the right to provide cargo services to third countries.

RUSSELL BARLING
http://biz.scmp.com/images/Business_aviation_graphicb.jpg
Graphic from SCMP

23rd June 2004, South China Morning Post

China's new reciprocal air services agreement with the
United States will rewrite the aviation rule book in
Asia, and protectionist governments not up to the
challenge will watch the new era of open skies from
the ground.

According to a copy of the agreement seen by the South
China Morning Post, from 2007 both countries' airlines
will be granted so-called "Seventh Freedom" rights
allowing them to set up cargo hubs and serve
third-country destinations without having to return to
their home markets.

Express operators such as United Parcel Service will
be able to fly from a China hub to, for example, Tokyo
and back whenever it pleases. At present, such seventh
freedom rights are not available to foreign carriers
in most Asian countries including Hong Kong.

Three years after preset criteria for establishing a
hub have been met, operators will have almost complete
operational flexibility in terms of frequencies,
aircraft types, sales and marketing, trucking
distribution and self-handling. However, domestic
cargo will remain off limits to foreign carriers.

Regional negotiators already rendered breathless by
the dizzying pace of China's aviation reform are again
reaching for their oxygen masks.

"This is very close to an open agreement, especially
for express operators," an airline executive said
yesterday. "It is a very, very open agreement and will
impact on future air-service negotiations in Japan,
South Korea, Hong Kong - all across the region. Other
governments will have to react."

The Sino-US agreement could threaten Asian regional
hubs that are looking to mainland travellers and
cargoes for the lion's share of their revenues. New
mainland hubs could even begin to siphon off non-China
business from their regional rivals by 2007.

At particular risk are China-gateway ports such as
Hong Kong and Tokyo. Hong Kong, for example, relies on
China trade for 50 per cent of its imports by air and
70 per cent to 80 per cent of its exports.

With direct access to the mainland restricted, Sino-US
trade through Hong Kong has grown tremendously. In the
first quarter, for example, the value of goods moving
between the US and Hong Kong by air jumped a
comparative 23.2 per cent over the same period last
year to HK$295 billion.

But that could begin to change as soon as next month
when the Sino-US air services agreement is signed in
Beijing and the first new US cargo airline - expected
to be Polar Air Cargo - gets direct access to China in
August.

Asked if the new agreement would prompt his company to
reconsider the efficacy of its Hong Kong hub, a senior
executive for a US express operator said: "It all will
now depend on 2005", when US and Hong Kong aviation
officials open a new round of air services talks.

The air-services agreement also allows five new
carriers from each country to access the Sino-US
travel and air-cargo market by 2010. All cargo and
passenger operators will be allowed to serve any city,
whereas before US and mainland airlines were
restricted to five and 12 destinations respectively.

Cargo operators will be given 111 additional flights
per week by 2010 and passenger carriers 84. Before the
agreement, they had an aggregate of only 54 weekly
flights.

According to Ken Torok, Asia-Pacific president for
UPS, this represents a 500 per cent increase in
freight capacity between the two markets.

But even these impressive numbers pale in comparison
to the regulatory advances contained in the agreement,
particularly for cargo carriers.

Only four criteria must be met for a "point in the
territory of the other party" to be considered a hub.
An airline must serve it with 72 all-cargo aircraft
movements a week, employ dedicated cargo workers, use
dedicated cargo facilities at the airport and operate
a bonded facility under customs supervision.

Article 11b, Section C of the agreement reads:
"Airlines shall have the right to perform scheduled
international all-cargo services between the hub point
in the other party's territory and any point or points
in third countries, without serving the territory of
the designating party."

Section B of the same article sets out the post-2007
regulations for "change-of-gauge" operations, under
which carriers can fly into a hub with large aircraft
and redistribute cargo to smaller planes for shorter
regional connections.

It states: "[Carriers can] perform international air
services without any limitation as to change, at the
hub, in size, type or number of aircraft operated,
provided that only four flights may operate to another
point in that party's territory from the point of
change of gauge for each incoming aircraft"

Thursday June 24, 11:17 PM
HK's Cathay to add daily non-stop flight to Sydney

HONG KONG, June 24 (Reuters) - Hong Kong's Cathay Pacific Airways Ltd will add an additional daily non-stop flight to Sydney from October 31, creating a thrice daily service to Sydney every day of the week.
The new service will bring the total number of flights to Sydney to 21 weekly, and the total number of flights to Australia to 43 per week.

The airline currently operates a twice-daily non-stop service between Hong Kong and Sydney. The new service will be operated by an Airbus A330-300 aircraft.

"Cathay Pacific now offers the most frequencies between Hong Kong and Sydney as well as Australia than any other airlines," the carrier said.

Its shares jumped 3.26 percent in Hong Kong on Thursday to end at HK$14.25 (US$1.83), before the latest announcement.

Helicopter firm to launch new airline

HK's fourth passenger carrier will target mid-size mainland cities and use small jets, executive says

JOSEPH LO
26 June 2004, South China Morning Post

Hong Kong-based helicopter operator has confirmed plans to launch a new passenger airline to be based at Chek Lap Kok.

The new airline, which will be Hong Kong's fourth passenger carrier, began its recruitment drive today, with an advertisement in the South China Morning Post calling for candidates for eight senior management positions. The head of Helicopters Hong Kong, Andrew Tse, plans to offer regular services to mid-sized cities on the mainland, using small jets seating 50 passengers.

The new airline is tentatively named Hong Kong Express, but Mr Tse said its name could be changed pending the completion of market research.

"We've reserved that name, but we'll do some market research first. It could be a variation of [Helicopters Hong Kong's] existing name," Mr Tse said.

The new airline is looking for people to fill the roles of marketing director, director of airports, interline sales manager, business analyst, director of maintenance, financial controller, revenue accounting supervisor and marketing communications manager.

It follows CR Airways, which flies 50-seat jets to the Philippines and Cambodia, as the latest airline to be established at Chek Lap Kok. The other passenger airlines based in Hong Kong are Cathay Pacific Airways and Dragonair.

"We're in no hurry to hire. The timing of the launch of our new airline will depend on the availability of aircraft ... which we plan to lease," Mr Tse said.

The launch of the airline also depends on successful negotiation of a new air services arrangement between local and mainland aviation authorities, which industry sources have said could be completed before the end of the summer.

No spare rights exist in the current arrangement for Hong Kong airlines to fly new mainland routes.

"I can't tell you where we plan to fly to, since the new deal has not been completed. But we are mainly looking at some cities in the mainland," Mr Tse said.

"We have made the decision to start hiring people now despite the lingering uncertainties, because we don't want to wait any longer. I hope the [deal] will be concluded as soon as possible," he said.

The air services talks, which have dragged on since early this year, have been a source of concern for Cathay, which is trying to gain the right for more flights to the mainland.

Hong Kong's Metrojet Expands Fleet, Acquires US$20 Million Gulfstream Executive Jet

Metrojet Limited, Asia's premier business aviation company, announced on 10 February 2004 that it has reached agreement with Gulfstream Aerospace, a wholly owned subsidiary of General Dynamics, to purchase a US$20 million (HK$155.5 million) Gulfstream G200 large-cabin, mid-range business jet.

This is the third Gulfstream to be operated by Metrojet and the fourth executive jet that the company has introduced to Hong Kong since its establishment in 1995. This high performance executive jet will be delivered to Metrojet in the third quarter of 2004 and will be based at the Hong Kong Business Aviation Centre at the International Airport at Chek Lap Kok, where it will be operated and maintained by Metrojet for charter services.

Commenting on the acquisition, The Hon. Michael D. Kadoorie, Chairman of Metrojet Limited, said: "We are delighted to add another Gulfstream G200 aircraft to our expanding fleet. The demand for Metrojet's charter services in the Asia Pacific region is rapidly increasing, with a particular growth in demand for charter flights to and from China. This aircraft will provide us with extra capacity to offer to our expanding customer base and will further endorse our position as the premier business aviation company in Asia and the most experienced operator of non-scheduled flights into and within mainland China."

"Metrojet has been a pioneering force behind the region's development as a market for charter air travel," said Roger Sperry, Division Vice President, International Sales, Gulfstream Aerospace. "We are pleased the company has again chosen to expand its charter fleet by adding another G200 and we look forward to continuing our partnership with the company for many years."

The large-cabin, mid-range Gulfstream G200 can accommodate up to 10 passengers and offers outstanding performance with its excellent climb, high cruising altitude, high speed, and range of 3,600 nautical miles. Powered by two Pratt & Whitney PW306A engines, the G200 can operate at speeds up to Mach.85 and at altitudes up to 45,000 feet. The spacious cabin features low ambient sound levels, plenty of natural light from generous-sized windows and 100 percent fresh air circulation.

Also, the generous size of the G200 cabin serves both as a productive workspace for business travelers and a relaxing place for leisure travelers.

With its extensive experience and network of contacts, Metrojet is experiencing increasing demand for charter flights to all destinations within Asia and serves the major cities as well as the seldom-serviced secondary airports. In the last 12 months alone, Metrojet has experienced a 20% increase in the number of charter flight reservations for both business and leisure travel. The company specializes in flying to small cities and towns in China, a luxury not afforded to non-China registered aircraft. Metrojet draws on its unique operational experience and regional expertise to expedite the necessary overflight and landing permits, handle customs and immigration, clearances and baggage transfer.

Metrojet's services are the most flexible transportation option available, and Metrojet's Gulfstream aircraft are available 24 hours a day. Flying directly to customers' chosen destinations provides the fastest way to visit any number of metropolitan areas. Flight schedules are determined by customers' agendas - if plans change, so can flight times and destinations. If time is short or the location lacking, Metrojet's aircraft can serve as a private business centre where confidential meetings can be held on the ground or en route to the next destination.

Metrojet also unveiled plans today to launch an advantage card programme that will suit the requirements of individual and corporate charter customers. The Metrojet Insignia Card will be launched in the second quarter of 2004 and will allow charter air travelers to purchase trips on a Metrojet aircraft to zoned regional destinations in return for a range of benefits including discount rate flights, priority aircraft reservation, helicopter and limousine transfers, mileage rewards, and a dedicated concierge service.

On an annualized basis, business aviation flights in Hong Kong have experienced 15-20 per cent growth since the establishment of the Hong Kong Business Aviation Centre in 1988.

Transmile to list forwarding unit
June 28, 2004, South China Morning Post

Transmile Group is to list its freight forwarding arm, Cen Worldwide, as the Kuala Lumpur-based air cargo company expands its presence in the lucrative China market and beyond in co-operation with Hong Kong's Kerry Logistics Group.

Transmile, which is controlled by Robert Kuok, was the surprise beneficiary of an air services agreement negotiated between Hong Kong and Malaysia in March, when it received fifth-freedom rights to fly beyond Hong Kong to destinations in the United States.

29 June 2004
Cathay Pacific signs new code-share agreement with Iberia

http://www.iberia.com/graphics/country_es/design/hmpa_logo.gif

Cathay Pacific Airways and its oneworld alliance partner Iberia, Spain’s national carrier, today announced the launch of their first code-share agreement, which will offer customers better connections between Hong Kong, Madrid and Barcelona.

Under the agreement, which comes into effect on 2 July, Cathay Pacific will place its ‘CX’ code on Iberia flights between Amsterdam and Madrid, and Amsterdam and Barcelona. Iberia will, in turn, place its ‘IB’ code on all Cathay Pacific’s flights between Hong Kong and Amsterdam. Tickets went on sale today.

This is Cathay Pacific’s fourth code-share agreement with a oneworld partner and reinforces the alliance’s aim of strengthening co-operation between member airlines. Cathay Pacific already code shares with American Airlines, British Airways and Qantas.

Cathay Pacific Director Corporate Development Tony Tyler said: “We are delighted to add two new destinations and a new country to our network through our first code-share with Iberia, our Spanish oneworld partner. We will continue to work closely with other alliance partners to bring benefits to all our customers and strengthen Hong Kong as a global hub.”

Iberia Senior Vice President Alliances and International Relations Elvira Herrero said, "We are pleased to announce Hong Kong as a new Far East destination in Iberia's network, made possible through this code-share cooperation with Cathay Pacific. This also is a further strengthening of ties between oneworld carriers."

Cathay Pacific and Iberia are both members of oneworld, the leading global airline alliance, together with Aer Lingus, American Airlines, British Airways, Finnair, Qantas, and LAN. As part of a range of oneworld benefits, passengers on alliance carriers can earn and redeem frequent flyer rewards across each other's networks, and gain access to more partner airline lounges.

FedEx Trade Networks Offers Year-Round Solution with Bi-weekly Air Charter Service from Hong Kong to the US

MEMPHIS, Tenn.--(BUSINESS WIRE)--June 29, 2004--

New Charter Flight Provides Increased Capacity to Serve Both Year-Round and Peak Season Needs

FedEx Trade Networks, a subsidiary of FedEx Corp. (NYSE: FDX), announced today the addition of an MD-11 charter to its existing international air cargo distribution service from Hong Kong to the US. Now offering two scheduled flights each week with Thursday and Saturday departures, FedEx Trade Networks China Connect(SM) provides year-round air charter service from Hong Kong to Chicago and onto New York, with ground service throughout the US and Canada.

This service supplements FedEx Trade Networks' existing cargo capacity on commercial flights from the same region. The additional charter provides augmented air capacity, reliable transit times, dedicated space to importers moving air freight and secure lift throughout the entire year, including critical capacity times such as peak season.

"FedEx Trade Networks is responding to customer demand by adding another chartered FedEx Express MD-11 to our China Connect service," said Ed Clark, president and CEO of FedEx Trade Networks. "We are providing our customers with consistent and dependable year-round service, unlike other providers that only offer additional lift during peak season."

The additional MD-11 doubles the charter capacity offered by FedEx Trade Networks China Connect, providing 180,000 pounds of increased capacity each week. The extra freighter also allows for main deck cargo storage, offering increased height capacity (up to 26 upper deck pallet positions). Customers will also benefit from:

- Augmented space throughout the entire year, including critical capacity times
- Eliminated risk of freight being bumped by items such as passenger baggage or mail
- Consistent flight schedule
- End-to-end, dependable FedEx service

FedEx Trade Networks China Connect serves a variety of industries including garments, high-tech, automotive and finished consumer goods. Cities that can be serviced from Chicago through FedEx Trade Networks China Connect include Detroit, Columbus, Atlanta, Memphis, Nashville, Toronto and Milwaukee. Cities served from New York include Philadelphia, Baltimore, Boston and Montreal.

For Christopher & Banks Corporation, a specialty retailer of women's apparel based in Minneapolis, the additional lift is critical to getting their product to market faster and more cost effectively. Currently operating over 500 stores in 42 states, Christopher & Banks imports their products from Hong Kong to Chicago and onto Minneapolis, via ground transportation.

"We see several advantages in using this service, including a higher frequency of charter flights and additional cargo space," said Dawn Stattman, Accounting Manager of Christopher & Banks. "Now we can get products to our stores quickly and hassle free. With FedEx Trade Networks China Connect we know there's a flight coming from Hong Kong when we need it."

About FedEx Trade Networks

FedEx Trade Networks, headquartered in Memphis, Tenn., is a provider of customs brokerage, global ocean and air cargo distribution, Trade and Customs Advisory Services, information technology, and trade facilitation solutions. With over five million entries filed annually, FedEx Trade Networks is the largest-volume customs entry filer in North America. Through its product FedEx Trade Networks WorldTariff(SM) (known as Eurotariff in Europe), FedEx Trade Networks is recognized as a leading source of multi-country Customs duty and tax information. More information about FedEx Trade Networks can be found at ftn.fedex.com.

About FedEx Corporation

FedEx Corp. provides customers and businesses worldwide with the broadest portfolio of transportation, e-commerce and business services. With annual revenues of $25 billion, the company offers integrated business applications through operating companies competing collectively and managed collaboratively, under the respected FedEx brands. Consistently ranked among the world's most admired and trusted employers, FedEx inspires its more than 240,000 employees and contractors to remain "absolutely, positively" focused on safety, the highest ethical and professional standards and the needs of their customers and communities.

Airports Council International relocates to Hong Kong


The Airports Council International (ACI), an association of the world's airports, has relocated its Pacific Regional Office from Vancouver to Hong Kong.

Speaking at the opening reception, the head of the Airport Authority, Dr David Pang, said Hong Kong was the ideal location for the office. Dr Pang was recently elected President of the regional board of the council.

"Half the world's population is within five hours' flying time from Hong Kong and air traffic in the Asia-Pacific region, in particular China, is forecast to grow at a higher rate over the next 20 years than other markets, offering vast growth opportunities," he said.

"The ACI Pacific Regional Office can serve as a platform for technology transfer, knowledge learning and experience sharing for airports in the region, helping each other to meet market demand and to grow their businesses."

The new office will be headed by the Regional Director, Mr Andrew Ma, who brings over 30 years of international trade promotion experience with the Hong Kong Trade Development Council, where he headed the regional offices in New York and London.

"The fact that Hong Kong was chosen as the regional office is testament to its strategic location as well as its importance in terms of connectivity to such key markets as China," said Mr Ma.

The Associate Director-General of Investment Promotion at Invest Hong Kong, Mr Mark Michelson, said the presence of the new ACI office would further strengthen Hong Kong's position as a regional and international aviation hub.

ACI is a non-profit organisation, which aims to foster co-operation among its member airports and with other partners in world aviation, including governmental, airline and aircraft manufacturing organisations. It was established in 1991 and now has 535 members operating almost 1,500 airports in 165 countries and territories.

Ends/Friday, July 2 2004

06 July 2004
WEEKLY CHARTER SERVICE TO SENDAI SET TO TAKE OFF IN JULY

http://www.dragonair.com/icms/images/eng//flight/logo.gif

(HONG KONG) Dragonair is to operate a charter service to Sendai in Japan every Sunday between July 25 and August 29.

The flights have been chartered as part of two-city package tours organised by four Hong Kong travel agencies. Travellers will be able to fly to Sendai and return from Tokyo, or vice versa.

"Sendai is famous for its summer festivals as well as for hot springs, while Tokyo is an unforgettable cultural experience," said Andy Tung, Chief Operating Officer. "Summer is a great time to visit Japan, especially now that visas are not required for Hong Kong travellers holding SAR or BNO passports."

Full details of the packages are available from the four travel agencies chartering the flights: Wing On Travel (tel: 2928 8882); Sunflower (tel: 2732 2888); Hong Thai (tel: 2108 8888); or Package Tour (tel: 3443 0707).

Dragonair launched services to Tokyo on April 2 this year, and flies there seven times a week.


05 July 2004
DRAGONAIR TAKES DELIVERY OF FIFTH FREIGHTER, SEES GROWTH CONTINUING

(HONG KONG) Dragonair has taken delivery of a Boeing 747-200 with a capacity of 110 tonnes. It becomes the fourth purchased freighter in the airline's five-strong fleet, joining three B747-300s and a wet-leased Airbus 300B4.

"We've now added a freighter to our fleet every year since 2000, in a reflection of the growth of the air cargo market in the Mainland," said Chief Executive Officer Stanley Hui.

"China's airfreight market is booming as a result of the country's entry to the World Trade Organisation and its development into the manufacturing base for the world. In the first five months of this year we have seen a 22% increase in cargo volumes compared with the same period last year."

The B747-200 arrived in Hong Kong from Xiamen, where it underwent an extensive maintenance check.

"The addition of the freighter to our fleet will allow us to enhance Hong Kong's position as a cargo hub for the Mainland at a time when the market there is still at an early stage of development. We see even greater growth opportunities going forward," Mr. Hui said.

Dragonair has announced plans to add five B747-400 freighter aircraft to its fleet between 2006 and 2008.

Wednesday July 7, 7:50 PM
HK June air cargo volume rises 17.3 pct yr-on-yr

HONG KONG, July 7 (Reuters) - Hong Kong's main air cargo handler, Hong Kong Air Cargo Terminals Ltd (HACTL), said on Wednesday its freight volume in June jumped sharply from a year earlier, fuelled by strong exports, particularly to Europe.
HACTL, which is 25 percent owned by Jardine Matheson Holdings and 20 percent by Swire Pacific Ltd , said air cargo volume in June totalled 183,374 tonnes, up 17.3 percent from a year earlier, HACTL said in a statement.

Air cargo throughput for the first six months this year jumped 16.4 percent to 1.07 million tonnes from a year ago.

HACTL attributed the increase to rising export volume, which grew 22.6 percent in June and 21.7 percent in the first six months respectively.

Hong Kong is the world's busiest international air cargo terminal.

Airport Authority re-introduces incentives to attract new routes

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(HONG KONG, 8 July 2004) – Rebate incentives on landing charges will be re-introduced to attract airlines to operate flights to new destinations from Hong Kong International Airport (HKIA).

The scheme, named New Destination Incentive Arrangement (NDIA), has been approved by the Chief Executive in Council. It will be gazetted tomorrow (9 July, Friday), and take effect from 8 September, for a period of two years.

New destinations will increase the connectivity of HKIA's home market, the greater Pearl River Delta, to the world, and will further enhance Hong Kong's position as Asia's premier hub.

Airport Authority (AA) Chief Executive Officer Dr David J Pang said, "Airport business draws its growth from the increasing flows of people, goods, capital and information. Connectivity is one of the major competitive advantages to enhance these flows. With the renewed incentives, we are aiming to extend ourselves to more diverse and versatile markets."

The arrangement will offer airlines a 50 per cent rebate on landing charges for the first year on flights they operate to a new destination, and a 25 per cent rebate in the following year.

A similar scheme introduced in March 2001 has lapsed in March 2002. As a result of that scheme, 17 airlines operating to 23 new destinations enjoyed a total saving of HK$44 million in landing charges.

AA Airport Management Director Mr Howard Eng said, "The re-introduction of the NDIA scheme will allow us to grow with our major business partners, the airlines. HKIA's high service standards and operation efficiency coupled with the diversified services provided by the airlines will offer passengers the reliability, flexibility and connectivity that are most crucial in designing their journeys.

"We believe airlines will take advantage of the Government's policy of progressive liberalisation of air services regime. Given the rapid development of the greater Pearl River Delta market and the demand for air travel in the region, the renewed incentives will encourage existing and new carriers to connect HKIA with many more new destinations," he added.

The Vice Chairman of the Board of Airline Representatives Hong Kong (BAR), Mr Gilbert Chow, welcomed AA's latest initiative to enhance HKIA's connectivity: "This timely re-introduction of the incentives will add impetus for carriers to extend their coverage and expand customer base to the PRD region and beyond. I am quite certain that airlines will work with AA to take the HKIA global route network to the next higher level.

"With the re-introduction of the NDIA scheme, HKIA's international connectivity will be further enhanced, in turn strengthening the airport's position as a regional aviation hub and bring economic benefits to Hong Kong,"he added.

Qantas Granted Rights to Seven Services From Hong Kong to UK

http://www.qantas.com.au/img/headers/logos/img_logo_qantas.gif

July 9 (Bloomberg) -- Qantas Airways Ltd., Australia's biggest airline, has been allocated seven services a week from Hong Kong to the U.K. in a draft determination by the International Air Services Commission.

The draft decision will allow Qantas to proceed with its plan to begin flying Boeing 747-400s three times a week between Sydney and London via Hong Kong from November, increase the number of flights to four a week in November 2005 and expand to daily services from April 2006.

Chief Executive Geoff Dixon plans to spend A$7 billion on new aircraft by 2006 as Qantas adds international and domestic routes as air travel rebounds from a slowdown caused by an outbreak of Severe Acute Respiratory Syndrome last year and the start of the war in Iraq.

The governments of Australia and Hong Kong agreed in April to allocate more air rights between the two countries. The agreement allows Cathay Pacific Airways Ltd. and Hong Kong Dragon Airlines Ltd., Hong Kong's two passenger carriers, greater access to Australian destinations and gives Australia access to air rights between Hong Kong and the U.K.

No other airline had applied for the extra Hong Kong-U.K. capacity, the International Air Services Commission said in the draft decision e-mailed to Bloomberg News. Qantas may use code- sharing arrangements with British Airways Plc to take up its extra capacity, the commission said.

Interested parties have until July 23 to make submissions on the proposed allocation of air rights.

To contact the reporter on this story:
Barbara Adam in Sydney at badam2@bloomberg.net

To contact the editor responsible for this story:
Jonathan Underhill junderhill@bloomberg.net

Last Updated: July 9, 2004 00:17 EDT

July 9, 2004
New Airline : Hong Kong Express Airways

A Hong Kong helicopter operator is planning to lease four short-range aircraft as part of a plan to become the territory's fourth commercial passenger airline, the firm's chief executive said on Friday.

Helicopters Hong Kong said it plans to launch an airline named Hong Kong Express Airways and will operate scheduled flights to cities in southern China.

"We're finalizing details," Andrew Tse, the firm's chief executive said. "We're planning commuter flights to cater to business travellers," he added.

Tse said that the company plans to lease four regional jets for the first year of operation and is considering the 50 seat CRJ200 made by Canadian plane maker Bombardier or a 70 seat Brazilian Embraer 170.

But Tse said the new venture hinges on a new air services agreement between Hong Kong and China, which would allow Hong Kong airlines to fly to more destinations in the world's fastest growing aviation market.

Tse said talks between the two governments have been delayed but industry insiders have said an agreement could be reached this summer.

"This is really a critical point for us," said Tse.

Hong Kong's main carrier Cathay Pacific Airways is also seeking to fly to more destinations in mainland China, a market dominated by the territory's smaller carrier Dragonair.

CR Airways became Hong Kong's third passenger airline in 2003. It offers charter flights but has said it plans to launch scheduled flights.

(Reuters)

July 9, 2004
Kangaroo Route via Hong Kong

http://www.virgin.com/img/companies/logos/vaa_139x34.gif

Australia's Qantas Airways was granted provisional capacity rights on Friday to start flights from Sydney to London via Hong Kong a month before rival Virgin Atlantic steps up competition on the same route.

The International Air Services Commission said it proposed to grant Qantas capacity to fly seven services a week from Hong Kong to London in a draft determination, but a final decision would not be made until it reviews submissions.

Virgin Atlantic Airways, run by British entrepreneur Richard Branson, plans to start flying from London to Sydney via Hong Kong on December 7, intensifying competition with Qantas and British Airways which dominate the so-called "kangaroo route" from Australia to Britain.

Qantas plans to fly three 747-400 services a week from Sydney to London, via Hong Kong, beginning in November 2004, increasing to four a week in November 2005, with daily services scheduled to start in April 2006.

Virgin intends to operate a daily service initially using an Airbus A340-600 aircraft and later by the 555-seat double-decker Airbus A380, which it is due to take delivery of in late 2007.

The new route from Hong Kong to Sydney, will enable Virgin Atlantic to hook up with its Australian no-frills sister carrier Virgin Blue.

(Reuters)

http://www.aircanada.ca/july/images/logo_ac.gif

Air Canada has taken delivery of its first Airbus A340-500 — the first of two the airline will receive this summer. The A340-500 is the longest-range commercial aircraft in the world and will serve Air Canada's new non-stop service between Toronto and Hong Kong. Its maiden flight is scheduled for Aug. 1.

June traffic marks continuous buoyant growth

(HONG KONG, 11 July 2004) - Hong Kong International Airport recorded strong double-digit increase in passenger, cargo and aircraft movement figures in June.

Cargo throughput reached 250,000 tonnes attributed to high demands for summer consumption in the European and American markets. The increase was 24% over the same month in 2003, and represented a double-digit growth for the fifth consecutive months.

Passenger traffic rose by 15% over June 2002 to 3.1 million, with Hong Kong resident, transfer / transit and visitor travel markets all making healthy increase.

The robust cargo traffic also brought 16% in aircraft movements to a total of 19,275.

Double-digit growth was also recorded in passenger, cargo and aircraft movement figures for the past twelve months. Passenger throughput rose by 19.9% to 34 million, cargo throughput rose by 12.6% to 2.87 million tonnes, and aircraft movements rose by 14% to 218,470.

Air Traffic Statistics
http://www.hongkongairport.com/eng/aboutus/statistics/ms200406.pdf

http://www.aircanada.ca/about-us/media/facts/images/aclogo_h.gif
Air Canada just did an open house for the media to show off their new A340-500. Photos of the airplane, including a 180-degree flat bed, can be seen at :

http://www.aircanada.ca/about-us/media/facts/logo.html

Beware : the photos are very large!

http://img44.photobucket.com/albums/v135/KS2043/HD935_788.jpg

12 July 2004
NEW A320 TAKES PASSENGER FLEET TO 25 AIRCRAFT

http://www.dragonair.com/icms/images/eng//flight/logo.gif

(HONG KONG) Dragonair has taken delivery of its ninth Airbus A320, which increases its passenger fleet to 25. The purchased aircraft, which features the airline's new cabin interior, is scheduled to enter service at the end of this week, by which time the airline's 10th A320 will have been delivered.

"The delivery has been timed to allow us to meet demand over the busy summer holiday period," said Chief Executive Officer Stanley Hui. "The new aircraft will operate on secondary routes in the Mainland, allowing us to increase frequencies to cities such as Hangzhou and Nanjing and to enhance Hong Kong International Airport as a gateway to the China Mainland."

The single-aisle A320 is powered by V2500 engines from IAE, and can seat eight passengers in Business Class and 150 in Economy Class.

Air traffic controllers in short supply

Hong Kong, China, Jul. 15 (UPI) -- Hong Kong will soon face a shortage of air traffic controllers as senior controllers recruited from overseas depart, a local paper reported Thursday.

At least 60 of the 220 air traffic controllers will be leaving in the next few years, the South China Morning Post reported. They are part of a group of 90 recruited from overseas before the opening of the new Chek Lap Kok airport in 1998, one-third of whom have departed already.

Chek Lap Kok handles 630 flights per day on average, with a record high of 746.

One controller told the paper he was worried that present training was insufficient to replace those leaving and retiring. Civil Aviation Department head Norman Lo said his department was aware of the problem and was trying to recruit more young people and raise them more quickly to senior positions.

It takes about seven years to train a new recruit to the level of radar controller, the paper said.

http://washingtontimes.com/upi-breaking/20040715-125700-1266r.htm

United Airlines Announces Start Date for New U.S.-Vietnam Service via Hong Kong

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United to Provide First Scheduled U.S. Air Carrier Service to Vietnam in Nearly Three Decades, Beginning Dec. 9, 2004

Tickets for Daily San Francisco-Hong Kong-Ho Chi Minh City Service On Sale Today

Chicago, July 22, 2004 -- United Airlines today announced that it will begin daily San Francisco-Ho Chi Minh City service via Hong Kong effective December 9, 2004, following completion of the application process with the government of Vietnam. The first flight will arrive in Ho Chi Minh City on December 10, 2004, the third anniversary of the U.S.-Vietnam Bilateral Trade Agreement.

"We are very excited by this historic opportunity to be the first U.S. carrier to provide direct service to Vietnam in almost 30 years. The route is an important addition to our global network and comes at the right time for travelers to and from the Asia-Pacific region," said Glenn Tilton, United's chairman, president and chief executive officer.

"Vietnam holds huge potential of becoming a significant trading partner and an emerging market for U.S. goods and services," Tilton said. "No airline is better suited to provide the service than United."

"Our relationship with Vietnam has continued to grow over the past decades through the expansion of trade relations and the full restoration and normalization of diplomacy," said Senator John McCain (R-AZ). "I applaud United's historic new service to Vietnam and hope it serves to build a better future for the American and Vietnamese people. "

The International Air Transport Association (IATA) forecasts Vietnam's air travel industry will grow 10.5% per year for each of the next 10 years. From 1985-1999, it grew 29.5%. The country's rate of gross domestic product growth is currently keeping pace with that of China, one of the fastest-growing economies in the world today.

"The U.S. and Vietnam have experienced a dramatic increase in our commercial relations since the Bilateral Trade Agreement came into effect on December 10, 2001," said the U.S. ambassador to Vietnam Raymond F. Burghardt. "Direct air connections are the next logical steps, and this should further increase trade, tourism and cultural relations between our two peoples."

United will operate combined passenger and cargo service using a Boeing 747-400 aircraft configured with 14 United First Suite® seats, 73 United Business® seats and 260 United Economy® class seats.

United Flight 869 will depart San Francisco at 12:10 p.m. on December 9 and arrive in Hong Kong at 7:00 p.m. on December 10. The continuing flight will depart Hong Kong at 8:55 p.m. and arrive in Ho Chi Minh City at 10:25 p.m. Beginning December 11, United Flight 862 will depart Ho Chi Minh City at 6:15 a.m. and arrive in Hong Kong at 9:40 a.m. The continuing flight will depart Hong Kong at 1:05 p.m. and arrive in San Francisco at 8:40 a.m. the same day.

Under the agreement reached between the U.S. and Vietnamese governments, United will be permitted to carry passengers and cargo locally between Ho Chi Minh City and Hong Kong. In addition, United's Ho Chi Minh City

- Hong Kong service will provide a convenient onward connection to and from United's daily Hong Kong - Chicago service and beyond.

United, United Express and Ted operate more than 3,500 flights a day on a route network that spans the globe. News releases and other information about United may be found at the company's Web site at www.united.com.

United first to take up discount incentive
Keith Wallis, HK Standard

United Airlines (UA) has become the first carrier to take advantage of the Airport Authority's discount scheme for launching new routes with plans to start a daily service between Hong Kong and Ho Chi Minh City in southern Vietnam.

The carrier will become the first United States airline in 30 years to start scheduled services to Vietnam's commercial capital when it inaugurates the flights on December 10 using Boeing 747-400 aircraft.

Wyn Li, UA's general manager for sales and marketing, said the Airport Authority initiative was one of the reasons why UA advanced the start of the flights from next year to December.

Under the plan announced by the Airport Authority two weeks ago, airlines launching new routes from September 8 will receive a 50 per cent discount on landing fees in the first year. There will be a 25 per cent discount in the second year.

Li said the airline was studying the possibility of launching several additional services through Hong Kong in the light of the Airport Authority's cut-price offer. He said the discounts would help offset the cost of operating new services and could make marginal services economically viable. "We are evaluating other possibilities - new cities, new routes and new opportunities. We are talking to head office people [in Chicago]. They might not all be worthwhile, but for Ho Chi Minh City, it is,'' he said.

Li said the carrier has asked for more information about the scheme because it wanted to be clear what was permissible, especially as it was different from a similar initiative introduced by Singapore's civil aviation authority.

UA's Ho Chi Minh City flights will compete with the twice daily service jointly operated by Cathay Pacific Airways and Vietnam Airlines. But Li was adamant there would not be a price war between the airlines. "Competition is always welcome. We don't see it as a big concern. We don't see a price war and we don't see a drop in fares,'' he said.

Travel agents will start selling tickets from today, although they could be bought online from the UA website Thursday night.

23 July 2004 / 02:41 AM

Asia & Hong Kong Market Analyses
Budget carriers help slow economy fares
Staff reporter, HK Standard

Economy airfares in Asia Pacific increased at a slower rate than first and business class fares in the second quarter as rates were affected by the emerging budget airlines.

The American Express Asia Pacific Airfare Index showed that first and business class airfares rose 0.5 and 0.8 per cent respectively in the second quarter from the previous quarter. By comparison, full and discount economy fares edged up 0.2 per cent and 0.3 per cent.

Airfares in Hong Kong changed only slightly, it said, without giving the specific rates.

"First and business class fares do not appear to be impacted by the growing number of low-cost carriers around the region,'' said Kyle Davis, vice-president of corporate travel Asia Pacific/Australia at American Express, adding that any impact in airfares, as a result of low-cost carrier services, is generally felt in full economy and restricted economy fares.

Low-cost carriers, such as AirAsia and Valuair, have been expanding in the region over the past year, offering no-frills services and much lower rates on airfares to grab market share amid the tourism recovery.

Compared with a year ago, Hong Kong airfares increased by 3.1 per cent for first class, 3.3 per cent for business class, 0.4 per cent for full economy and 0.7 per cent for discount economy.

23 July 2004 / 02:42 AM

Virgin goes flat out to match best-bed rival
Keith Wallis, HK Standard

http://www.virgin.com/img/companies/logos/vaa_139x34.gif

Virgin Atlantic Airways has upped the ante on flights between Hong Kong and London with the introduction of its upper class suite featuring a fully flat bed.

The move coincides with the planned launch at the end of this year of flights between Hong Kong and Australia to complete Virgin's "Kangaroo Route" between London and Sydney.

Virgin Atlantic spokeswoman Angelina Wong said "50 per cent of flights between Hong Kong and London operate with the new upper class suite". She said all aircraft flying the route should be equipped with the new seats by November. Virgin Atlantic plans to launch the Hong Kong-Sydney service on December 7.

Currently, Virgin Atlantic is offering the cheapest business-type return fare between Hong Kong and London. Virgin's online upper class fare is HK$42,572 compared with Cathay Pacific which is offering a business class return fare of HK$47,648, while a first class return is HK$71,700. British Airways is the most expensive of the three, with a business class round trip fare of HK$48,135 and a first class return of HK$88,850.

The introduction of the suites on Hong Kong services has led to a skirmish between Virgin Atlantic and British Airways,

which has claimed it is the only airline operating between Hong Kong and London to offer a truly flat bed in business.

Wong said: "It was, but not any more. We object to the word 'only'."

The suites have generated a mixed reaction among passengers, although most appear to be in favour. While most other seats extend to create a flatish bed, the Virgin seats flip over to form a proper flat bed with a mattress. And although the seats are more comfortable, the traditional side-by-side twin seats have been replaced by an individual pod seat offset at about 45 degrees so that most face into the cabin rather than straight ahead.

This means that while it is easier to talk to people in adjacent seats, the suites appear to offer less privacy and it is no longer possible to look directly out of the window.

But at 56 centimetres wide and 202cm long, the beds are wider and longer than first class seats and beds of most other airlines.

23 July 2004 / 02:47 AM

Insignia takes air travel to new plane
Keith Wallis, HK Standard

Metrojet, part of the Kadoorie family's Hong Kong Aviation Group, has launched a fixed-price membership scheme for individuals and corporate charter customers in an attempt to boost business jet travel.

Called Insignia, the programme offers a fixed-zone pricing scheme for more than 50 Asia destinations.

The package includes all-inclusive return trips on a Metrojet aircraft plus complimentary airport transfers by helicopter, limousine or sports car and priority aircraft reservations.

Basic Membership costs US$37,500 (HK$292,500) which includes a return flight from Hong Kong to any destination in zones one to three including Taipei, Beijing, Singapore, Kunming, Phuket and Nagasaki and an allowance towards further travel. Customers paying US$75,000 for enhanced membership will receive one return trip to any of the regional destinations in the programme, such as Tokyo, Jakarta, Calcutta and Osaka or multiple trips to a combination of zoned destinations.

The scheme also includes three- day, two-night packages starting from US$25,000 and rising to US$37,500 to Bangkok, Manila, Brunei, Shanghai, Kuala Lumpur, Seoul and cities in China. There are also four-day, three-night packages costing between US$43,750 and US$50,000 to destinations such as Guam, Nagoya, and Ulsan.

Outlining the benefits of corporate jet travel, Metrojet business development manager Jolie Chung said flying direct to a customer's destinations "provides the fastest way to visit any number of metropolitan areas. Flight schedules are determined by customers' agendas - if plans change, so can flight times and destinations''. The aircraft also serves as a private business centre where confidential meetings can be held on the ground or en route to the next destination.

In the past 18 months Metrojet, which operates a 10-seat twin-jet Gulfstream 200 and has a second on order for delivery in October, posted a 20 per cent rise in the number of charter flight reservations for both business and leisure travel.

23 July 2004 / 02:47 AM

Latest Photo of New Livery :
http://www.airliners.net/open.file/626043/L/

04 March 2003
Air Hong Kong signs order for six airbus freighters

AHK Air Hong Kong Ltd. today signed a purchase agreement for six new Airbus A300-600F General Freighter aircraft in order to implement its previously announced plan to expand operations within the Asian region.

The six wide-body aircraft are scheduled for delivery between the second half of 2004 and first quarter of 2005. AHK, the Hong Kong-based all-cargo carrier, also has options on four more of the same aircraft type for possible delivery at a later date. A final decision has yet to be made on which engine will power the aircraft.

AHK will be the launch customer for the A300-600F General Freighter, which differs from A300-600F aircraft currently being built for other carriers in that it has a loading system and side door capable of handling large items of general freight in addition to small packages.

AHK's order is in furtherance of its cooperative venture with DHL Worldwide Express, signed in October 2002, to support DHL's services to major cities in the Asia Pacific region from AHK's base at Hong Kong International Airport. AHK currently operates a DHL service to Tokyo. Cathay Pacific Airways owns 70 percent of AHK and DHL holds a 30 percent stake.

AHK Air Hong Kong Chairman Tony Tyler said: Air Hong Kong is now set to further the development of its partnership with DHL. This aircraft order demonstrates Air Hong Kong's commitment to enhancing Hong Kong's position as Asia¡'s leading air cargo hub, and to strengthening the scope and quality of service that we already provide DHL.

HK jet-setters go by name and looks
Vanson Soo, HK Standard

Hong Kong people pay more attention to an airline's reputation than air fares when travelling, a study shows.

They also travel more than most others around the world while local men say they would choose pretty airline hostesses over food and inflight movies, according to the study conducted by market researcher Synovate.

The global travel survey showed that 30 per cent of Hong Kong travellers would consider a carrier's reputation the most important factor in choosing an airline, while only 15 per cent would be lured by cheaper tickets. This is in steep contrast to global trends where 64 per cent of travellers worldwide opted for a budget airline over bigger or national carriers despite the fact that 32 per cent of those surveyed felt that budget airlines "treat passengers like a commodity - there is no personal service''.

About 75 per cent of those surveyed agreed with the statement that "an airline trip is just like a bus trip'' and all they sought was "to get there fast and cheap''. Overall, 73 per cent were even prepared to give up inflight meals if the price was lower.

Only 27 per cent said they would avoid budget airlines at all costs. "With all airlines under a number of economic pressures in the post-September 11 world, budget airlines are offering tickets at about half the current market prices on one to two-hour short-haul flights,'' said Tom Mularz, head of global omnibus at Synovate.

"But anyone who has flown commercially over the past few years can attest to the fact that the glamour of air travel has long since dissipated.

"Today, cost-conscious airlines, especially in North America and Europe, have created a hodge-podge of budget airlines with long lines, self-service shortcuts and decreasing legroom and amenities.''

The study also found that about 80 per cent of those surveyed from Hong Kong had flown before, much higher than the global average of 59 per cent.

The majority of all respondents said they travelled primarily for leisure.

Hong Kong travellers said they travelled for leisure 87 per cent of the time, with 6 per cent for business and the remaining for both leisure and business.

Overall, 25 per cent of all men surveyed - twice the number of women - felt that good-looking cabin crew was important in their choice of airlines, though this was not the case with the majority of German and French males.

Among Hong Kong men, more than 30 per cent said they would choose pretty cabin crew over food and movies. Americans came a close second at 29 per cent.

The study concluded that airlines needed to become more sophisticated in their understanding of travellers' needs, and budget airlines in Asia had the potential to expand the market generally.

The study covered about 5,000 respondents from the United States, Canada, France, Germany, Hong Kong, Malaysia, Singapore and Thailand.

27 July 2004 / 02:31 AM

Friday July 30, 10:22 AM
CR Airways to Service Hong Kong-Da Nang Route

HANOI, July 30 Asia Pulse - Hong Kong's third airline, CR Airways, is to re-introduce a flight from Hong Kong to the central city of Da Nang today, marking the airline's debut in Vietnam. CR Airways will fly its 50-seater Canadian Bombardier CR200 aircraft on this new route.

The CR Airways flight resumes the direct service from Hong Kong to Da Nang which was, until July 16, operational on a biweekly basis under the HCM City-based Pacific Airlines.

The CR Airway's Hong Kong-Da Nang service is to be launched as a result of tourism-related agencies, including the Furama Resort Da Nang, the management of the World Heritage Road Programme, the Da Nang Tourism authority and their Hong Kong counterparts.

Initially, there will be two flights per month, the second flight is scheduled for 12 August. Later there will be weekly flights on the route, said the Director of Da Nang Tourism Department, Luong Minh Sam.

He added that Da Nang City authorities have taken efforts to establish other air routes linking the city with other cities in South Korea, Singapore and Kunming, China.

(VNA)

FedEx's Incheon run to boost Asia network
Keith Wallis, HK Standard

http://images.fedex.com/images/globalhome/globalhome_fedex_corp_logo.gif

FedEx Express, the United States courier and logistics company, will reveal plans today for a thrice weekly non-stop service between Hong Kong and Incheon, South Korea, in a move that will bolster both its Hong Kong and inter-Asia connectivity.

Peter Yin, FedEx Express regional vice-president for South Pacific, confirmed that the services, using Boeing MD-11 freighters with a 90-tonne payload, would be inaugurated soon.

He said the flights would be the first direct link between Hong Kong and Seoul. Previous cargo services were handled through FedEx's major Asian hub at Clark airbase in the Philippines.

Yin said Hong Kong has about five direct cargo services to both Clark and the US. He added that talks are also continuing with Asia Airfreight Terminal (AAT) at Hong Kong International Airport about the role FedEx Express would have in its new HK$1.75 billion second terminal. But he said it is too early to outline concrete proposals. FedEx is a shareholder in AAT. Yin, who agreed that the facility is another example of FedEx's commitment to Hong Kong, said: "Whatever arrangements there are, the connection would facilitate trade and air flow."

He was speaking after confirming that FedEx Express had applied to the US transportation department for 18 extra frequencies between China and the US. FedEx Express has applied for 12 out of the 21 weekly frequencies that were available to US all-cargo carriers from yesterday. It would use six of these flights to launch a westbound round-the-world service connecting Shanghai with the US and other cities in Asia and Europe.

The other six frequencies would be used to inaugurate a direct link between Qingdao and the US.

FedEx Express has also requested six of the 18 additional frequencies that would be available from March 25 next year. These would be used to institute an eastbound round-the-world service linking Shenzhen, Shanghai and Beijing with India, Europe and the US as well as other Asian locations. There is no concrete timetable for the launch of the new flights, assuming that it wins all its requested frequencies.

Outlining the importance of the mainland market, Yin said total volumes rose 50 per cent in the last financial year which ended on May 31. "China is a great market. It's an important market for us,'' he said.

Yin said FedEx Express is still working on its options for Guangzhou's new Baiyun international airport after signing a framework agreement to study Baiyun as a potential site for a future cargo hub.

3 August 2004 / 02:58 AM

A Chinese air hub to rival Hong Kong's

GUANGZHOU, China Posing a potent threat to Hong Kong's position as Asia's second-biggest air hub, a $2.4 billion, state-of-the-art airport will open here Thursday.
.
Workers made final checks of machinery at the cargo terminal and farmers in straw hats peered through fencing on Monday as a China Southern Airlines plane made a ceremonial landing at what will be its new hub at Guangzhou Baiyun International Airport.
.
Once the second phase is done, as it is expected to be around 2010, the airport will be able to handle 80 million passengers a year. "Baiyun Airport will attempt to become the air transport hub for the Pearl River Delta, southern China, and connect with Southeast Asia," Huang Hua Hua, governor of Guangdong Province, told officials gathered Monday on the airport's freshly laid tarmac.
.
The airport is a two-hour drive from Hong Kong, in the heart of the industrial Pearl River Delta, which produces more than one-third of China's exports. The airport is expected to snare a significant slice of China's booming cargo market. The package-delivery company FedEx is considering moving its Asia hub to Guangzhou.
.
"What you're going to see is the pie getting larger and larger," said David Cunningham, FedEx's Asia Pacific president. "But, yes, a smaller percentage of goods will come out of Hong Kong."
.
Hong Kong's airport is the largest handler of international cargo, but 70 to 80 percent of that freight, including electronics and components, comes from the Pearl River Delta. Air France, Lufthansa and Thai Airways International are among about a dozen international passenger carriers that fly to Guangzhou.
.
Northwest Airlines will begin flying daily to Guangzhou from Detroit via Tokyo on Oct. 31, after a newly signed air-services agreement between China and the United States will increase by more than fourfold the number of commercial and cargo flights.
.
To fend off competition from Guangzhou, Hong Kong's airport, Chek Lap Kok, has begun ferry services to cities in China and started offering reductions on landing charges to airlines flying to new destinations from Hong Kong.
.
Hong Kong's airport was plagued by many problems, including computer failure and lengthy baggage and flight delays when it opened in 1998. It has since been named the world's best airport four years in a row by Skytrax Research in Britain.
.

GUANGZHOU, China Posing a potent threat to Hong Kong's position as Asia's second-biggest air hub, a $2.4 billion, state-of-the-art airport will open here Thursday.
.
Workers made final checks of machinery at the cargo terminal and farmers in straw hats peered through fencing on Monday as a China Southern Airlines plane made a ceremonial landing at what will be its new hub at Guangzhou Baiyun International Airport.
.
Once the second phase is done, as it is expected to be around 2010, the airport will be able to handle 80 million passengers a year. "Baiyun Airport will attempt to become the air transport hub for the Pearl River Delta, southern China, and connect with Southeast Asia," Huang Hua Hua, governor of Guangdong Province, told officials gathered Monday on the airport's freshly laid tarmac.
.
The airport is a two-hour drive from Hong Kong, in the heart of the industrial Pearl River Delta, which produces more than one-third of China's exports. The airport is expected to snare a significant slice of China's booming cargo market. The package-delivery company FedEx is considering moving its Asia hub to Guangzhou.
.
"What you're going to see is the pie getting larger and larger," said David Cunningham, FedEx's Asia Pacific president. "But, yes, a smaller percentage of goods will come out of Hong Kong."
.
Hong Kong's airport is the largest handler of international cargo, but 70 to 80 percent of that freight, including electronics and components, comes from the Pearl River Delta. Air France, Lufthansa and Thai Airways International are among about a dozen international passenger carriers that fly to Guangzhou.
.
Northwest Airlines will begin flying daily to Guangzhou from Detroit via Tokyo on Oct. 31, after a newly signed air-services agreement between China and the United States will increase by more than fourfold the number of commercial and cargo flights.
.
To fend off competition from Guangzhou, Hong Kong's airport, Chek Lap Kok, has begun ferry services to cities in China and started offering reductions on landing charges to airlines flying to new destinations from Hong Kong.
.
Hong Kong's airport was plagued by many problems, including computer failure and lengthy baggage and flight delays when it opened in 1998. It has since been named the world's best airport four years in a row by Skytrax Research in Britain.
.

Wednesday August 4, 7:34 PM
DHL plans Guangzhou centre in addition to HK hub

http://www.dhl-usa.com/images/graphic_ablogo_croped.gif

HONG KONG, Aug 4 (Reuters) - DHL plans to build an express parcel-handling centre at Guangzhou airport in southern China in addition to its US$100 million newly opened hub in Hong Kong, the global courier said on Wednesday.

"We chose the Pearl River Delta for our hub, and Hong Kong is the best option," John Mullen, DHL's chief executive officer for Asia Pacific, told reporters before an opening ceremony for its new facility at Hong Kong's airport.

"But it's not an either or. We will be investing significantly in Guangzhou," he said, adding that costs are lower in the southern Chinese city.

Mullen said booming trade with China was driving demand for express parcel deliveries. Around 40 percent of the country's exports come from the Pearl River Delta, China's export heartland.

Hong Kong's airport is the world's largest handler of international air cargo, and 70 to 80 percent of that freight comes from the Pearl River Delta.

But many industry observers say Guangzhou's sprawling US$2.4 billion airport, due to open on Thursday, will pose a competitive threat to Hong Kong.

Mullen said that DHL, a unit of Germany's Deutsche Post AG , planned to build its own "fairly large" facility at Guangzhou. DHL is still in negotiations, but a decision on the first level of infrastructure will be made in the next couple of months, he said.

"You don't build on-airport facilities for peanuts. It would be quite a few million US dollars that's for sure, but not US$100 million like we have spent here (in Hong Kong)," he said.

DHL is jostling with United Parcel Services Inc and FedEx Corp for a slice of China's booming parcel market. FedEx and UPS both have their Asian hubs in the Philippines, but FedEx is considering moving to Guangzhou.

Mullen said the Guangzhou investment would be in addition to the US$215 million DHL has already earmarked for expansion in China over the next five years.

The express courier said revenue from its China express parcel business totalled around US$300 million in 2003 and was expected to grow by a record 50-60 percent this year.

DHL has a 40 percent market share in China, where it has a 50-50 joint venture with freight forwarder Sinotrans Ltd .

In Hong Kong, it has a 40 percent stake in cargo-only carrier Air Hong Kong, while Cathay Pacific Airways Ltd owns the remainder. Its new express hub can handle 440 tonnes of air express cargo a day.

Wednesday August 4, 1:41 PM
QANTAS Wins Right to Fly to U.K. Via Hong Kong

PERTH, Aug 4 Asia Pulse - Australia's air services watchdog has granted Qantas Airways Ltd (ASX:QAN) the right to operate daily air services through Hong Kong to the United Kingdom.

The ruling comes after the International Air Services Commission (IASC) took the unusual step in May of inviting public submissions on Qantas' application due to the historical difficulty in securing rights on the route.

The flights only became available after the Australian and Hong Kong governments struck a bilateral air services agreement in April that allows Australian operators to use Hong Kong as a stopover en route to London for the first time.

The IASC said it had not received any applications for the capacity sought by Qantas.

Under the ruling announced today, Qantas must operate at least three services per week beyond Hong Kong to the UK by November 1, and four services a week by November 1 next year.

The capacity must be fully utilised by the beginning of the 2006 northern summer scheduling period.

Qantas can use the capacity to provide services with its code share partner British Airways.

ASIA PULSE

Thursday August 5, 8:43 AM
HK PRESS: Dragonair Seeks To Extend, Raise Fuel Surcharge

HONG KONG (Dow Jones)--Hong Kong Dragon Airlines Ltd. will ask civil aviation authorities to approve the extension of a fuel surcharge levied on passengers, the Chinese-language Sing Tao Daily reports.

Citing Dragonair Chief Executive Stanley Hui, the paper says Hong Kong's No. 2 airline may seek a higher surcharge this time.

The Hong Kong government in late May allowed five airlines, including Dragonair and rival Cathay Pacific Airways Ltd. (0293.HK), to levy a HK$42 fuel surcharge a sector for each passenger, effective until Aug. 31.

The report adds that Dragonair posted a profit of more than HK$100 million in the first six months of this year, reversing year-earlier losses caused by the severe acute respiratory syndrome outbreak. The first-half earnings also marked an increase from the same period in 2002.

Dragonair's major shareholders are China National Aviation Co. (1110.HK), which holds a 43.29% stake; CITIC Pacific Ltd. (0267.HK), with 29.35%; Cathay Pacific, with 17.79%; and Swire Pacific Ltd. (0019.HK), which holds 7.71%.

Thursday August 5, 1:12 PM
DHL Opens US$100 Mln Cargo Facility At Hong Kong Airport

HONG KONG (Dow Jones)--German express-delivery company DHL (DHL.XX) has opened a new, US$100 million cargo-handling facility in Hong Kong, marking a vote of confidence in the territory's continued relevance as a logistics hub amid increasing competition from mainland China.

"The new central Asia hub will significantly increase express shipment throughput capacity in Hong Kong and southern China," said John Mullen, DHL's chief executive officer for Asia-Pacific, in a statement. It will handle 440 metric tons a day in 2004, expanding to 900 tons a day by 2014.

DHL, a unit of Deutsche Post AG (DPW.XE), said the investment in the new facility reflects the increasing importance of the Asian market. Shipments among Asian countries now account for nearly half of DHL's express revenue and are the company's fastest-growing market segment.

Much of that growth is driven by the expanding Chinese economy, where DHL's volume of shipments has been growing by about 40% annually in recent years. And the majority - 70% - of DHL's shipments into and out of China are still routed through Hong Kong.

But mainland Chinese cities are increasingly trying to capture some of Hong Kong's freight business for themselves - as shown this week by the opening of the new Baiyun international airport in Guangzhou, the capital of neighboring Guangdong province. It will be able handle 1 million tons of cargo annually, nearly twice what the old airport handled last year.

Stephen Ip, Hong Kong's secretary for economic development and labor, said the Hong Kong airport is trying to meet that challenge by increasing its links to the Pearl River Delta region, which is the source of so much of its traffic. In his speech at the opening ceremony Wednesday, he emphasized the new DHL facility "will strengthen our airport's position as the premiere air cargo hub in the region."

But DHL said it also plans to make parallel investments in Guangzhou, though Hong Kong remains its primary hub for north and central Asia. It is also opening new facilities, in the Pearl River Delta cities of Dongguan and Zhongshan, and expanding its office in Shenzhen.

CR Airways launches HK-Danang service
Keith Wallis, HK Standard

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CR Airways, owned by businessman Robert Yip, has inaugurated charter flights between Hong Kong and Danang, Vietnam, in what it hopes will soon become a regular scheduled service.

The Civil Aviation Department approved the airline's application last week to operate two charter flights. These were flown on July 30 and last Monday (August 2).

But just 22 people, including 10 journalists, were on board the airline's 50 seat Bombardier CRJ-200, for the first flight last Friday.

Despite the low passenger load, Yip was upbeat about the service. He told reporters in Danang: "We are delighted to have this opportunity to expand our regional network to Vietnam, one of Asia's fastest growing economies and newest and most exciting tourism destinations.''

The two charter flights came about two weeks after Vietnam's Pacific Airlines stopped its twice-weekly service between Hong Kong and Danang because of lack of business.

Undeterred, CR Airways has filed a licensing application with the Air Transport Licensing Authority (ATLA) to operate regular scheduled services between Hong Kong and Danang.

Kenneth Thong, CR Airways director and chief executive, said it normally takes ATLA between six weeks and three months to process an application.

Asked if the scheduled flights would start by Christmas, Thong said: "I don't think as quickly as that.''

After receiving the licence, CR Airways would have to be made a designated carrier on the Hong Kong-Danang route by the Economic Development and Labour Bureau. It would also have to seek traffic rights from the Hong Kong and Vietnamese authorities.

One insider doubted whether there was spare capacity under the existing Hong Kong-Vietnam air services agreement for CR Airways to launch a large number of weekly flights. "All the capacity is on routes to Hanoi and Ho Chi Minh City,'' the insider said. He added that the new services would form an extension of the airline's existing twice-weekly service between Hong Kong and Siem Reap in Cambodia.

"The schedule would be Hong Kong-Danang-Siem Reap,'' he said.

Thong said the CR Airways flights would become the first direct scheduled service between Hong Kong and Danang. He said the airline is currently reviewing plans to expand the fleet with the acquisition of additional Bombardier regional jets.

Asked how many aircraft the airline was planning to acquire, Thong said: "We don't know yet. It all depends on the routes we have.''

There has been speculation CR Airways plans to acquire up to 20 Bombardier CRJ-200s. The airline has also actively been seeking outside investors with Hutchison Whampoa named as one of the firms that have been approached.

6 August 2004 / 02:29 AM

27 July 2004
FRANKFURT AND LONDON STANSTED ADDED TO FREIGHTER NETWORK

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(HONG KONG) Frankfurt in Germany and London Stansted in the UK will become the ninth and 10th destinations in Dragonair's freighter network, doubling the number of points the airline operates to in Europe on July 29.

"We're very excited about adding these two major points to our network," said Chief Executive Officer Stanley Hui. "They will provide us with even deeper access to central and eastern Europe and the important southern UK market.

"Demand for goods from the China mainland is high in Europe and by providing additional connections between these two major markets we expect the growth momentum in our cargo operation to continue."

Services to Frankfurt and London Stansted will operate from Hong Kong via Dubai three times a week. The airline's Boeing 747 freighters will be used on the route.

"We have been progressively building up our presence and name in Europe since introducing all-cargo flights there in 2000. With the launch of services to Frankfurt and London we are moving up to the next level," explained Mr. Hui.

Dragonair also flies six times a week to Amsterdam in the Netherlands and Manchester in the north of the UK.

Services to the two new destinations will operate every Monday, Thursday and Saturday on the routing Hong Kong-Dubai-London Stansted-Frankfurt-Dubai-Hong Kong .

Airport to take Baiyun challenge in stride
Zach Coleman, HK Standard

Envy clouded Hong Kong's view of the debut of Guangzhou's HK$18.6 billion new Baiyun International Airport last week.

It is a given that factories over the border can sew shirts, make toys and build computers about as well as ever could be done here and at a fraction of the price. But pride requires Hong Kong to believe it's in another league from the mainland in service industries like construction and aviation.

Television crews from Hong Kong scoured the new airport for flaws, some kind of fiasco to top the baggage chaos that marked the opening of Hong Kong International Airport six years ago.

Though they had passed on rumours of problems for weeks, about the most egregious flaw the reporters could find on opening day was a bathroom for the handicapped so packed with surplus waste baskets that a wheelchair would be unable to enter.

New Baiyun took off better and cheaper than HKIA, but that should not spell doom for Hong Kong's aviation business. True, shipping is rapidly following manufacturing northward but aviation follows its own fundamentals and here Hong Kong retains key attractions.

HKIA handles more international cargo than any airport in the world and more international passengers than any other airport in Asia.

Recent figures showed air cargo throughput remained strong at Chek Lap Kok last month, with 270,000 tonnes handled, a 13.9 per cent rise from a year ago.

Passenger traffic was 2.83 million, up 12.5 per cent from last March, when Sars began to affect air traffic. However, passenger throughput for the past 12 months fell 19.2 per cent to 27.6 million, while cargo rose by 7.5per cent to 2.74 million tonnes.

The simple truth is, from this high baseline, further growth will inevitably be a bit slow. Guangzhou, Shenzhen and Macau are each experiencing much faster economic growth than Hong Kong and that will translate into a higher rate of air-traffic growth for them.

That's an uncomfortable truth for the Hong Kong government, which hopes to close its swelling budget deficit, in part through partial privatisation of the airport.

To reassure potential investors that HKIA is keeping up with market developments, the Airport Authority announced on the eve of New Baiyun's opening that it would again offer fee discounts for carriers opening new routes from Hong Kong over the next two years.

The authority has also been negotiating to take an equity stake in Shenzhen Baoan International Airport or Zhuhai Airport and has opened direct passenger and cargo ferry connections between the airport and points around the Pearl River Delta.

What's missing is a recognition that different airports can carve out different niches.

In both New York and London, one of each city's many airports is especially dominant as a long-haul international hub. Cargo flights are concentrated at certain of the airports, as are services by discount airlines. In Asia, Shanghai, Tokyo, Osaka, Taipei and Seoul each maintain one busy airport for domestic connections and one for international.

Absent any formal arrangement on splitting the delta's aviation market, Hong Kong will still retain many of the choicest bits.

Hong Kong is home to the largest, well-traveled, wealthy populace between Singapore and Tokyo. Many of these people will not spend the extra one to three hours it would take to catch a cheaper flight from another delta airport, say analysts.

This is especially true when flying on business. Likewise, most business travelers coming to Hong Kong will feel compelled to fly directly here. Tourists coming to splurge on Gucci and at Gaddi's aren't going to skimp on flights either.

These are markets that HKIA is looking to cultivate more, hence the planned exhibition centre, golf course and luxury hotel at the airport.

But even many mainlanders prefer to fly internationally via Hong Kong though they could fly directly from local airports because they want to make a shopping stop here, says Udom Tantiprasongchai, managing director of Orient Thai Airlines.

Each of the delta's five airports is the home base of a passenger airline. Only HKIA though accommodates more than one, with Cathay Pacific Airways, Dragonair, CR Airways and HeliHongKong's planned new regional jet operator all finding or expecting to find enough demand to build their bases here.

Though new jet models are increasingly making even the most distant cities reachable by direct flights, foreign airlines like Qantas and Virgin Atlantic still see Hong Kong as a profitable place to route through extended services, such as London-Sydney and Singapore-San Francisco. For this reason, Hong Kong stands to be one of the first airports to be served by the new Airbus A380 superjumbo.

Guangzhou and now Shenzhen have sizeable populations rich enough and keen enough to fly, as well as factories and trade shows drawing business visitors.

This does not have to come at a cost to Hong Kong. Singapore Airlines now serves four of the delta's five airports. Northwest Airlines, Malaysia Airlines and Japan Airlines are starting flights to Guangzhou without reducing service to Hong Kong.

The outlook for HKIA's position as cargo king is more precarious.

Almost 90 per cent of Guangdong's air cargo shipments now fly out via HKIA. As mainland authorities give foreign carriers more freedom to serve its airports, more airlines will shift their attentions northward. United Parcel Service, for example, told United States regulators in its recent application for service rights to Guangzhou that it could improve delivery times by a half day by flying from Guangzhou instead of driving shipments to Hong Kong.

9 August 2004 / 01:47 AM

HK, Iceland sign air services agreement

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Hong Kong and Iceland today signed an air services agreement in Reykjavik to strengthen aviation relations between the two places.

Secretary for Economic Development & Labour Stephen Ip represented Hong Kong while Iceland's Minister for the Environment & Nordic Co-operation Siv Fridleifsdottir signed for Iceland.

Speaking at the signing ceremony, Mr Ip said the agreement provides a legal framework for the establishment of air links between Hong Kong and Iceland.

"It opens a new chapter in the development of aviation relations between the two places," he said.

"To further develop Hong Kong as a preferred transportation and logistics hub, we will continue to liberalise our air services regime and negotiate more new air services agreements with our aviation partners," he added.

The air services agreement with Iceland brings to 53 the number of Hong Kong's foreign aviation partners.

Following is the speech by the Secretary for Economic Development and Labour, Mr Stephen Ip, at HKSAR/Iceland Air Services Agreement signing ceremony in Reykjavik, Iceland today (August 9) :

Minister Fridleifsdottir, Distinguished Guests, Ladies and Gentlemen,

It is my great pleasure to be in Reykjavik to sign the Air Services Agreement between the Government of the Hong Kong Special Administrative Region of the People's Republic of China and the Government of the Republic of Iceland. I would like to thank Minister Fridleifsdottir, Ambassador Egilssonfor and the Iceland Government for your hospitality and thoughtful arrangements.

The Air Services Agreement we are signing today is the first formal bilateral agreement between the Hong Kong Special Administrative Region and Iceland. It marks an important milestone in our bilateral relationship. The agreement will provide a legal framework for the establishment of scheduled air links between the two places.

Since the opening of the Hong Kong International Airport in 1998, the Hong Kong SAR Government has implemented a policy of progressive liberalisation of our air services regime to enhance Hong Kong's position as an international and regional aviation centre. Hong Kong now enjoys an extensive air services network, with direct flights to more than 140 destinations worldwide. Each week, some 70 international airlines operate more than 4,500 flights into and out of Hong Kong. To maintain our status as an international aviation hub, we will continue with the policy of progressive liberalisation. The agreement between Iceland and Hong Kong is an extremely liberal one whereby airlines of the two sides are free to operate as many passenger and cargo flights between the two places as they wish.

The air services market between Hong Kong and Iceland has good potential. Among the 6.8 million Hong Kong residents, many are frequent travellers who are keen to explore new and exotic places around the world. Iceland certainly presents an attractive choice for Hong Kong people to experience its culture, friendly people and pollution-free environment.

On the other hand, Hong Kong also has a lot to offer. We are a world-renowned shopping centre with thousands of good restaurants serving Chinese and international cuisine. I am sure the people of Iceland would find Hong Kong a very attractive tourist destination.

The conclusion of our Air Services Agreement today signifies closer cultural and economic ties between our two governments and our people. Hong Kong welcomes all of you from Iceland and I look forward to seeing you in Hong Kong soon.

Ends/Monday, August 9, 2004

New A330-300 Aircraft Off to Hong Kong

Sydney, 10 August 2004

Qantas today began operating its new Airbus A330-300 aircraft on international routes. The aircraft will initially operate from Sydney, Melbourne, Brisbane and Perth to Hong Kong.

Executive General Manager Qantas Airlines, John Borghetti, said this marked an important step in a fleet strategy which will see A330-300s replacing Boeing 767 aircraft on international routes.

Qantas recently took delivery of three new two-class A330-300s fully configured for international flying and featuring:

30 Business Class and 267 Economy Class seats
Qantas' new International Business Class product which includes the award winning Skybed sleeper seat and specially trained, dedicated flight attendants
Qantas' Inflight Entertainment System offering individual inseat video screens and 18 video and 16 audio channels for customers in Business and Economy Class
two self-service Business Class bars
mood lighting throughout the Business Class cabin

"The A330-300 fleet will become an integral part of our international operations," Mr Borghetti said. "The aircraft will allow us to offer our new Skybed International Business Class product and inflight entertainment system on important routes such as Hong Kong."

The Airbus A330-300s will fly on other medium haul routes in coming months, including Tokyo Narita, Singapore and from Sydney to Shanghai when Qantas resumes services to China on 2 December later this year. A further three A330-300s will be delivered for international flying from November 2004, bringing the total A330-300 fleet to nine.

A330-300 statistics include:
* Length 63.7 metres
* Width 5.38 metres
* Wing Span 60.3 metres
* Average Cruise Speed 880 km/h
* Cruise Altitude 28,000-39,000 feet
* Maximum Range 9,445 km
* Engines General Electric CF6-80E1A3

Wednesday August 11, 10:38 AM
HK PRESS: China, Hong Kong May Sign Air Pact August

HONG KONG (Dow Jones)--The Hong Kong government and China's central government are in the final stage of negotiations on expanding air links, and are highly likely to sign an agreement this month, the Chinese-language Sing Tao Daily reports.

The two governments are likely to increase the number of weekly flights between China and Hong Kong to 860 from the 700 currently, the paper says, citing unnamed industry and government sources.

However, the Hong Kong negotiators are believed to have failed to secure rights for Cathay Pacific Airways Ltd. (0293.HK) to fly to Shanghai, though the airline should be able to add four weekly flights to Beijing to its current three.

Air services deal with Iceland comes under attack
Keith Wallis, HK Standard

The signing earlier this week of an air services agreement between Hong Kong and Iceland has been criticised for doing little to improve Hong Kong's position as an aviation hub.

The pact was signed between Secretary for Economic Development and Labour Stephen Ip and Iceland's environment minister Siv Fridleifsdottir in Reykjavik. Ip said the agreement, the first formal deal between Hong Kong and Iceland, would provide a legal framework for the creation of scheduled air links.

He said: "The air services market between Hong Kong and Iceland has good potential'' and claimed Hong Kong's frequent travellers are keen to explore new and exotic places.

But neither Cathay Pacific Airways nor Icelandair have plans to establish direct links between Hong Kong and Iceland.

One aviation insider said: "The government is wasting its time on minnows rather than spending time negotiating agreements with governments that are really important.''

He added: "I don't think it will open opportunities. Cathay Pacific has no interest in flying to Iceland, while Icelandair is focused on the North Atlantic market. Neither is it likely to make any difference to Air Atlantic Icelandic, which has leased aircraft to airlines including Cathay.''

The insider said: "We would prefer the government discuss measures to boost services to attractive destinations like London rather than Iceland, which has no commercial value.''

13 August 2004 / 02:06 AM

Saturday August 14, 12:27 PM
Eleven airlines to increase fuel levies for flights into and out of Hong Kong

Hong Kong's government has allowed British Airways, Swiss International Air Lines, and nine other carriers to raise and extend fees for passengers traveling in and out of the territory to cover surging fuel prices, an official said Saturday.

Hong Kong requires airlines to individually seek government approval if they want to implement fuel surcharges on passenger flights. The 11 airlines had initially been granted permission to impose the fuel levies from June to the end of August.

Authorities have allowed British Airways to more than double its fuel levy from US$4 to US$10 for all flights. Swiss International and Virgin Atlantic Airways will charge US$19 instead of US$14, said Civil Aviation Department spokeswoman Stella Tse.

Cathay Pacific Airways, Hong Kong's leading carrier, will increase its surcharge from US$5 to US$7 each way for flights within Asia, and from US$14 to US$19 for flights to other destinations, Tse said.

Hong Kong's Dragonair and three mainland China airlines - Air China, China Eastern and China Southern - can charge each passenger US$6.92 instead of US$5.40 per flight, regardless of its length.

The other airlines that won approval Friday to raise levies were EVA Air and China Airlines, both of Taiwan, and Royal Brunei Airlines, which will raise charges from US$5 to US$7.

The increased surcharges will run from Sept. 1 until Nov. 30, Tse said.

On Friday, the government also allowed five other airlines - Air India, Air New Zealand, Garuda Indonesia, Orient Thai Airlines and Royal Nepal Airlines - to extend their levies ranging from US$4 to US$14 until the end of November.

Passenger traffic reaches an all-time high in July

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(HONG KONG, 15 August 2004) - Passenger traffic numbers at Hong Kong International Airport rose to 3,448,000 in July, breaking any monthly record ever made in Hong Kong.

In fact, year-on-year comparisons showed that all passenger, cargo and aircraft movements registered double-digit growth in July.

At 3,448,000, passenger throughput showed a 40 percent increase compared with July last year and a 14 percent rise against July 2002. More than 35 million passengers passed through Hong Kong International Airport (HKIA) over the past 12 months, a rise of almost 26 percent compared with the corresponding period last year.

July's cargo throughput rose to 260,000 tonnes, representing a 23 percent increase compared with the figure for the same month last year. Loaded cargo (export) grew 25% to 159,000 tonnes, mainly as a result of high demand in North American and European markets. Cargo throughput for the last 12 months rose to 2,919,000 tonnes, showing a 14% increase against the corresponding period for the previous year.

These record figures illustrate that the region's aviation market is expanding rapidly, with HKIA reaping the benefits of robust growth.

July's aircraft movements rose by 44% to 20,365. There were 224,680 aircraft movements recorded for the past 12 months, representing a 19% increase against the same period last year.

Monday August 16, 3:00 PM

HK Dragonair Passengers, Cargo Hit Record Highs In July

HONG KONG (Dow Jones)--Hong Kong Dragon Airlines Ltd. said Monday the number of passengers and amount of cargo it carried in July reached record highs.

The territory's second-largest airline carried 412,828 passengers last month, up 38% from 299,022 in July last year and up 7% from the previous record set in June.

"The start of the summer holidays has given a huge boost to passenger traffic, with Bangkok, Tokyo and Chengdu among the top destinations," said Chief Executive Stanley Hui.

"The increase in frequencies to Chinese cities where the individual travel scheme has been extended has helped to boost numbers," Hui said.

The Chinese government began allowing residents of certain cities to visit Hong Kong on an individual basis from the middle of last year, and has been extending that scheme to other areas since. Previously, mainland Chinese could only visit the territory as part of a tour group.

Dragonair noted, however, high oil prices are "inevitably feeding through to the bottom line".

The airline carried 28,195 metric tons of cargo in July, up 23% on year and up 7.5% from June. The previous record of 27,485 tons was set in March.

"Shipments from Hong Kong were particularly strong in July, but the figures reflect a buoyant performance throughout the network," Hui said.

Dragonair operates a fleet of 10 A330-300s, six A321s and 10 A320s, as well as four Boeing 747-200/-300 freighters and one wet-leased A300B4 freighter.

Dragonair's major shareholders are China National Aviation Co. (1110.HK), which holds a 43.29% stake, CITIC Pacific Ltd. (0267.HK), with 29.35%, Cathay Pacific Airways Ltd. (0293.HK), with 17.79%, and Swire Pacific Ltd. (0019.HK), which holds 7.71%.

Tuesday August 17, 5:28 PM
HK Dragonair Expects August To Be Record-Breaking Month

HONG KONG (Dow Jones)--Hong Kong Dragon Airlines Ltd. expects August to be a record-breaking month for passenger traffic, Chief Executive Stanley Hui said.

In a statement Tuesday, Hui said the carrier - the territory's second largest - flew a record 17,220 passengers Tuesday, up from the previous record of 16,179 set on April 8.

"August looks to be a record-breaking month for us, boosted by summer holiday traffic and comes amid new highs for passenger numbers in July," said Hui.

Dragonair carried 412,828 passengers in July, up 38% from 299,022 in the same month last year.

HK offers air travel savings to Mainlanders
August 19, 2004, Hong Kong Government Press Release

Mainland residents in the Pearl River Delta will enjoy huge air travel savings in September when flying from Hong Kong International Airport.

More than 15,000 return air tickets for flights to Singapore, Malaysia, Thailand, the Philippines, Japan, Australia and New Zealand will be offered at irresistible prices - such as RMB998 for a return ticket for Southeast Asian destinations, RMB1,498 for Tokyo and RMB2,998 for destinations in Australia and New Zealand.

Hong Kong's two home carriers, Cathay Pacific and Dragonair, are joined by Philippine Airlines and Thai Airways in providing the special promotional packages offered under the 'Fly via Hong Kong' banner.

Fly via Hong Kong is a bundled offer that includes coach and ferry tickets for transportation between a Pearl River Delta city and Hong Kong airport, a round-trip air ticket and gift vouchers to enable travellers to enjoy the airport's many facilities.

Apart from bundled tickets and 200 participating Pearl River Delta travel agencies, the scheme also offers a website - http://www.flyviahk.com - where customers can obtain information on all flights operating at the airport, details of promotional packages, as well as travel and tourist information to help them to plan their trip.

With an array of popular destinations including Tokyo, Bangkok, Phuket, Kota Kinabalu, Singapore, Phnom Penh, Manila, Auckland, Sydney, Melbourne, Perth, Brisbane, Cairns and Adelaide to choose from, travellers taking advantage of the special-offer tickets will need to depart from the airport between September 1 and 26.

Tickets are valid for 14 days for locations in Australia and New Zealand, and seven days for all other destinations.

CHARTERED FLIGHTS FROM TAIWAN'S TAICHUNG TO HK TO BEGIN BY END 2004

August 25, 2004

TAICHUNG - Travelers from central Taiwan can expect a chartered flight service to Hong Kong from the Chingchuankang Airport in Taichung County to begin by the end of the year, Taichung Chamber of Commerce (TCC) President Lai Cheng-yi said Tuesday.

Lai said the airport is currently not able to offer international flight services due to the fact that its runway is too short for large aircraft.

(C) Asia Pulse Pte Ltd.

HKSAR /Jordan air services agreement signed

The Secretary for Economic Development and Labour, Mr Stephen Ip, today (August 28) signed an Air Services Agreement on behalf of the Government of the Hong Kong Special Administrative Region with the Government of the Hashemite Kingdom of Jordan in Amman.

Representing the Government of the Hashemite Kingdom of Jordan was His Excellency Mr Hanna Najjiar, Director-General of Civil Aviation Authority of Jordan.

With its strategic location, the Middle East is an important emerging market in Hong Kong's overall aviation network. At present, 13 carriers are operating some 110 weekly passenger and cargo services between Hong Kong and eight destinations in this region.

"Jordan is located in the heart of the Middle East and I believe the air services market between the two places has good potential. Notably, bilateral trade between Hong Kong and Jordan has been growing rapidly, registering an impressive 50% average annual growth rate for the past five years. This encouraging trend provides good opportunities for airlines of the two sides to develop air services between Hong Kong and Jordan. The Air Services Agreement signed today provides a legal framework for the establishment of air links between Hong Kong and Jordan. Traffic rights exchanged between the two governments provide opportunities for airlines to launch services between the two places anytime.

"To further develop Hong Kong as a preferred transportation and logistics hub, we will continue to liberalise our air services regime and negotiate more new air services agreements with our aviation partners. The more agreements we have negotiated, the wider the platform on which we can extend our aviation network. These agreements, including the one we sign today, also provide valuable opportunities for Hong Kong and foreign airlines to further develop the market," Mr Ip added.

The Air Services Agreement with Jordan is the seventh agreement Hong Kong has concluded with a Middle East partner and the 54th with foreign aviation partners.

Hong Kong has signed Air Services Agreements with Australia, Austria, Bahrain, Bangladesh, Belgium, Brazil, Brunei, Cambodia, Canada, Croatia, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, India, Indonesia, Israel, Italy, Japan, Kenya, Kuwait, Luxembourg, Malaysia, Mauritius, Mongolia, Myanmar, Nepal, the Netherlands, New Zealand, Norway, Pakistan, Papua New Guinea, the Philippines, the Republic of Korea, Oman, Qatar, Russia, Singapore, South Africa, Sri Lanka, Sweden, Switzerland, Thailand, Turkey, the United Arab Emirates, the United Kingdom, the USA and Vietnam.

Ends/ Saturday, August 28, 2004

Wednesday August 25, 8:25 AM
Chartered Flights From Taiwan's Taichung to HK to Begin by End 2004

TAICHUNG, Aug 25 Asia Pulse - Travelers from central Taiwan can expect a chartered flight service to Hong Kong from the Chingchuankang Airport in Taichung County to begin by the end of the year, Taichung Chamber of Commerce (TCC) President Lai Cheng-yi said Tuesday.

Lai said the airport is currently not able to offer international flight services due to the fact that its runway is too short for large aircraft.

However, the businessman said the TCC has asked the Ministry of Transportation and Communications to expand the airport.

Lai indicated there is a demand for the flight because at present 50 per cent of the Taiwanese business travelers taking a transit stop in Hong Kong en route to mainland China were from the central regions of the island.

(CNA)

26 August 2004
HONG KONG RED CROSS RELIEF GOODS FLOWN TO YUNNAN

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(HONG KONG) Dragonair is to fly over 1,700 kilogrammes of relief goods for the Hong Kong Red Cross to Yunnan province, which has been hit by flooding and mudslides over the summer.

Heavy rains in the region have affected more than 14 million people and have left 232 dead.

Dragonair operates a daily service to Kunming in Yunnan, and will transport 339 boxes of new clothes over the two days without charge.

"The flooding has had a devastating effect, especially in southwest Yunnan, and Dragonair is glad to be able to play a small role in joining with the Hong Kong Red Cross to help relieve some of the suffering," said Laura Crampton, Assistant General Manager, Corporate Communication.

The clothes are destined for Dehong, a prefecture in the province that has been particularly badly affected by the floods.

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Dragonair is flying 339 boxes of clothes to Yunnan to help the Hong Kong Red Cross with its relief efforts.

Cathay Pacific to launch third daily service to Sydney

HONG KONG (AFX) - Cathay Pacific Airways said it will launch a third daily
service to Sydney as part of an expanded new winter schedule.

"A third daily flight to Sydney will put us firmly in the lead ... Our
expanded winter schedule further strengthens Hong Kong's status as a global
aviation hub, offering one of the strongest connections to Australia and New
Zealand among major hubs," Chief Operating Officer Philip Chen said in a
statement.

Brisbane will be served daily, up from five flights a week and two more
services to Auckland will take its weekly total to 12. In all, the airline will
operate 63 services per week between Hong Kong and Australia and New Zealand.

From October 31, flights to Manila will also be increased from 35 to 37
weekly, while flights to Surabaya in eastern Indonesia will be increased to four
from three services.

From December 1, Cathay will add two more weekly services to Dubai, taking
it to 13 flights a week.

Wednesday September 8, 3:46 PM

HK and China reach pact to expand air services

HONG KONG, Sept 8 (Reuters) - Hong Kong and China agreed on Wednesday to increase the number of passenger flights between the two places to 1,600 a week in October from the current 1,200, the Hong Kong government said.

The pact will also allow a second Hong Kong carrier to fly to Shanghai, starting in October 2006. Currently, Hong Kong Dragon Airlines is the city's only carrier with rights to fly to China's financial hub.

Hong Kong's main carrier, Cathay Pacific Airways Ltd., has long sought to expand its network in mainland China. Cathay only flies to Beijing three times a week but wants to fly to Shanghai and the southeastern city of Xiamen.

Hong Kong's second carrier, Dragonair, in which Cathay has a 19 percent stake, flies to over 20 destinations in mainland China.

Additional Information - Government Press Release
Review of Mainland/HKSAR Air Services Arrangement concluded


The latest review of the Mainland/The Hong Kong Special Administrative
Region (HKSAR) Air Services Arrangement (the "Arrangement") was
concluded today (September 8).

Since the Arrangement was signed in 2000, annual reviews were conducted
to address market needs. Compared to previous exercises, the latest review
covered a much wider spectrum of issues and achieved substantial progress
on various fronts.

The HKSAR side was represented by the Economic Development and
Labour Bureau, with the General Administration of Civil Aviation of China
as its counterpart on the Mainland side.

The Secretary for Economic Development and Labour, Mr Stephen Ip, is
very pleased with the successful conclusion of the review. "A liberal
Arrangement is crucial for enhancing the competitiveness of the Hong Kong
International Airport, and for strengthening Hong Kong's status as an
international and regional aviation centre. In the face of increasing
competition from airports in the region, the HKSAR Government must
firmly and actively implement its progressive liberalisation policy on air
services. The latest expansion of the Arrangement clearly demonstrates our
commitment to this policy," Mr Ip said.

The new Arrangement provides a clear timetable for opening the Hong
Kong/Mainland aviation market to more airlines and for expansion of
capacity limits on individual routes. The limit on the total number of airlines
allowed to participate in the market will be lifted immediately, while the
number of routes that allow "dual designation" by each side will be
increased in phases, eventually covering all routes by winter 2006.

Passenger and cargo capacities between the two places will be substantially
increased. Starting from next month, overall passenger capacity will be
increased by 30%, such that the total number of passenger flights that may
be operated by airlines of the two sides will increase from around 1,200 to
1,600 per week (number estimated on the assumption that aircraft types
currently deployed on respective routes remain unchanged). Capacity for
all-cargo services will increase by 100%, from the current 21 frequencies
per week (fpw) for each side to 42 fpw, bringing the total number of
freighter services that may be operated by airlines of both sides to 84 fpw.

Taking Beijing as an example, the new Arrangement will allow Hong Kong
airlines to add 4 passenger fpw starting from next month and another 7
passenger fpw starting from March next year, bringing the total number of
weekly frequencies that may be operated by Hong Kong airlines on the
route to 70.

As to Shanghai, Hong Kong may designate a new airline to operate
all-cargo services starting from next month, and the maximum number of
cargo flights that Hong Kong airlines may operate on this route will be
increased from 21 to 28 fpw. Passenger capacity will be increased by about
10% (7 fpw), and another 10% starting from March next year, bringing the
total number of weekly frequencies that may be operated by the Hong
Kong designated airline to 98. In addition, from October, 2006, a second
Hong Kong airline will be allowed to operate passenger service on the
Shanghai route. These new rights provide valuable business opportunities to
our airlines that have plans to launch services or increase their existing
services on the respective routes.

The Arrangement currently provides for a wide route network covering a
total of 44 destinations in the Mainland. A new route, Lijiang, has been
included in the new Arrangement. Services on the route may commence
once Customs-Immigration-Quarantine facilities are in place and the
required technical conditions are fulfilled.

The new Arrangement also provides for new modes of operation and
additional flexibility, by allowing airlines to combine two Mainland points in
one service, and enter into code-share arrangement on all routes between
Hong Kong and the Mainland.

Furthermore, the Arrangement also provides expanded through-running
rights (to more destinations with higher capacity on each route) for
Mainland airlines to operate services to overseas destinations via Hong
Kong, to strengthen the hub position of the Hong Kong International
Airport.

Mr Ip is confident that the new Arrangement will add impetus for further
development of the Hong Kong aviation industry. The new Arrangement
will bring in more competition and provide consumers with wider choices.

"It is a win-win Arrangement for all, as the additional traffic rights will create
abundant opportunities for both incumbent airlines as well as new comers,"
Mr Ip added. He hoped that the aviation industry would make good use of
the traffic rights to further strengthen Hong Kong's status as a regional and
international aviation centre.

Ends/Wednesday, September 8, 2004

NNNN

Media Reaction - Pact paves way for more flights to mainland cities
Dennis Eng, HK Standard

Hong Kong and the mainland have signed an agreement that will increase
passenger flights by a third and double air cargo capacity while clearing the way
for new carriers to enter the Hong Kong-China market.

The pact will have few immediate benefits for Hong Kong's two airlines - Cathay
Pacific and Dragonair.

Cathay which has been actively pressing for expanded rights to serve mainland
cities beyond its three weekly flights to Beijing, will most likely gain access to
the lucrative Shanghai market, but not until late 2006.

It will also be able to apply for routes to other mainland cities. Under current rules
the number of carriers from each side is limited to one, effectively giving
Dragonair a duopoly on those routes with one or another mainland carrier.

Beginning immediately the limit will be raised to two carriers per city in 11 cities,
rising to 40 by next March, and 45 in 2006.

Cathay said on Wednesday that the only additional route it will seek for now is
Xiamen.

For Dragonair, the benefits are harder to discern, since the carrier could, under
existing authority, apply for additional mainland routes and flights.

Moreover, the new agreement immediately lifts the current ceiling on the number
of carriers that can serve Hong Kong-China routes - two from Hong Kong, seven
from China - which could open the way for new, low-cost carriers to enter the
market.

These lines typically fly shorter routes with smaller planes, and thus could pose
a greater potential threat to Dragonair's service to smaller mainland cities than to
Cathay.

The secretary for economic development and labour, Stephen Ip, welcomed the
move, saying that: ``It is a win-win arrangement for all, as the additional traffic
rights will create abundant opportunities for both incumbent airlines as well as
newcomers.''

Both Hong Kong carriers issued cautious statements on the agreement.

"It is essential that the pace of liberalisation of air links between Hong Kong and
the mainland catches up with that seen between China and the rest of the world,"
Cathay said.

"Building on a capacity arrangement that sees market demand being adequately
met, the new arrangement provides for growth in passenger and cargo demand
on mainland routes over the next few years," Dragonair chief executive Stanley
Hui said.

Under the expanded Air Services Arrangement signed between the Economic
Development and Labour Bureau and the General Administration of Civil Aviation
of China on Wednesday, liberalisation of the aviation market will take place in
three phases through the end of 2006.

Cathay said that it plans to apply for both cargo and passenger services to
Shanghai and Xiamen, as well as more flights to Beijing.

Starting from October, the total number of authorised passenger flights per week
will be increased from about 1,200 to 1,600, lifting overall passenger capacity by
30 per cent.

This arrangement applies to both flights from Hong Kong to mainland
destinations and visa versa over 30 routes.

Another 14 routes will experience no change as they "already have ample
excess capacity", Economic Development and Labour Deputy Secretary Wilson
Fung said.

In the case of Beijing, Hong Kong carriers can add four weekly flights from
October and seven more in March, for a total of 70.

For Shanghai, the weekly frequency will rise to 98 as seven more flights per
week will be added starting from both October and March next year.

All-cargo services will double to 42 flights per week for each side.

Passenger flights from Hong Kong to China currently number about 700 per week
while cargo services number more than 20.

9 September 2004 / 02:26 AM

Thursday September 9, 9:39 AM
More Media Reaction
HK-Mainland Air Services Agreement Paves Way for More Flights

HONG KONG, Sept 9 Asia Pulse - In a review of air services between the mainland and Hong Kong, Beijing and Hong Kong SAR officials agreed Wednesday on a substantial increase in capacity of both passenger and cargo flights.

The new agreement provides a clear timetable for opening the Hong Kong/Mainland aviation market to more airlines and for expansion of capacity limits on individual routes.

The limit on the total number of airlines allowed to participate in the market will be lifted immediately, while the number of routes that allow "dual designation" by each side will be increased in phases, eventually covering all routes by winter 2006, according to Hong Kong Secretary for Economic Development and Labour, Stephen Ip.

Passenger and cargo capacities between the two places will be substantially increased. Starting from next month, overall passenger capacity will be increased by 30 per cent, raising the total number of passenger flights that may be operated by airlines of the two sides from around 1,200 to 1,600 per week.

Capacity for all-cargo services will increase by 100 per cent, from the current 21 frequencies per week (fpw) for each side to 42 fpw, bringing the total number of freighter services that may be operated by airlines of both sides to 84 fpw.

Taking Beijing as an example, the new agreement will allow Hong Kong airlines to add 4 passenger fpw starting from next month and another 7 passenger fpw starting from March next year, bringing the total number of weekly frequencies that may be operated by Hong Kong airlines on the route to 70.

As for Shanghai, Hong Kong may designate a new airline to operate all-cargo services starting from next month, and the maximum number of cargo flights that Hong Kong airlines may operate on this route will be increased from 21 to 28 fpw.

Passenger capacity will be increased by about 10 per cent (7 fpw), and another 10 per cent starting from March next year, bringing the total number of weekly frequencies that may be operated by the Hong Kong designated airline to 98.

In addition, from October, 2006, a second Hong Kong airline will be allowed to operate passenger service on the Shanghai route. These new rights provide valuable business opportunities to Hong Kong airlines that have plans to launch services or increase their existing services on the respective routes.

The agreement currently provides for a wide route network covering a total of 44 destinations in the Mainland. A new route, Lijiang, has been included in the new Arrangement.

Services on the route may commence once Customs-Immigration-Quarantine facilities are in place and the required technical conditions are fulfilled.

The new agreement also provides for new modes of operation and additional flexibility, by allowing airlines to combine two Mainland points in one service, and enter into code-share arrangement on all routes between Hong Kong and the Mainland.

It also provides expanded through-running rights (to more destinations with higher capacity on each route) for Mainland airlines to operate services to overseas destinations via Hong Kong, to strengthen the hub position of the Hong Kong International Airport.

ASIA PULSE

From the Sun :
http://the-sun.com.hk/channels/news/20040909/img/a180909_big.jpg

Thursday September 9, 10:26 AM

China Aviation Regulator, HK Sign Flight Svc Expansion

BEIJING (Dow Jones)--China and Hong Kong have signed an agreement to expand passenger and cargo air services as part of their Closer
Economic Partnership Arrangement, the civil aviation regulator said.

The announcement by the Civil Aviation Administration of China, or CAAC, confirms a statement issued Wednesday by the Hong Kong
government.

CAAC said the greater access to China's skies is part of CEPA, which aims to give the former
British colony increased access to the mainland market.

The new arrangement removes the current restrictions on the number of designated carriers that
are allowed to fly between the mainland and Hong Kong, CAAC said in a statement.

Total number of passenger flights between the city and mainland China will also be increased to
about 1,600 a week from the current 1,200 beginning in the fourth quarter, the statement said.
The number of cargo flights will also be doubled to 84 a week, it said.

Hong Kong Dragon Airlines Ltd. currently flies mainland routes from Hong Kong in
competition with Air China, the country's flag carrier, while Hong Kong-based international
carrier Cathay Pacific Airways Ltd. (0293.HK) has been pushing for landing rights within
China.

Dragonair's major shareholders include China National Aviation Co. (1110.HK), a company controlled by Air China, which holds a 43.29%
stake. CITIC Pacific Ltd. (0267.HK) with 29.35%, Cathay Pacific with 17.79%, and Swire Pacific Ltd. (0019.HK) with 7.71% hold the
remaining stakes in the Hong Kong airline.

CAAC tied the expansion of air rights to an extension of the greater market access granted through CEPA, a preferential-trade deal between
China and Hong Kong that came into effect on Jan. 1, 2004.

-With Victoria Ruan, Dow Jones Newswires; 8610 6588-5848; djnews.beijing@dowjones.com

-Edited by Sharon Buan

September 9, 2004
Deal Preserves Hong Kong's Hub Status

http://graphics7.nytimes.com/images/misc/logoprinter.gif

By KEITH BRADSHER

HONG KONG, Sept. 8 - Beijing agreed on Wednesday to allow more flights from here to cities across China, a step that promises to make air travel to China easier, less expensive and possibly safer. The deal could also influence legislative elections here on Sunday in which relations with the mainland are the main issue.

The pact strengthens Hong Kong's role as Asia's busiest hub for international air travel at a time when it faces new competition. An enormous rival, Baiyun International Airport, opened three weeks ago just 80 miles up the Pearl River in Guangzhou.

By addressing Hong Kong's lingering nervousness about losing its role as the gateway to China, Wednesday's agreement could help pro-Beijing candidates against their pro-democracy rivals in the elections on Sunday.

China has offered several economic plums to Hong Kong in the last 15 months in an attempt to tamp down calls for greater democracy in this former British colony. Other deals have included a relaxation of exit visa restrictions for travel here, which has brought a flood of mainland tourists into Hong Kong, and a free trade pact.

Sandra Lee, who oversaw the negotiations as Hong Kong's permanent secretary for economic development, said that participants had been working as fast as possible to conclude a deal ever since the talks began in December.

Without mentioning Baiyun Airport, Ms. Lee said that Wednesday's agreement would help Hong Kong by making sure that travelers could reach many Chinese cities with much greater frequency from here. The accord will increase the number of seats available on flights from here to the mainland by 30 percent, with most of the increase taking place on flights to second-tier cities, and will double the number of air cargo flights.

"Increasing the density of the network is an important step toward enhancing our competitiveness," she said.

United Airlines, a unit of UAL, announced last week that it was seeking authority to begin daily, nonstop flights to Baiyun Airport from San Francisco. Until now, Hong Kong has been the main airport for China's Pearl River delta region, which is China's wealthiest region because Deng Xiaoping started his experiment with capitalism in 1979 in cities across the border from Hong Kong.

The management of Baiyun Airport had no criticisms of Hong Kong's air rights agreement. "This is very innovative and worth learning from," said Qi Yaoming, the publicity director of the Guangdong Airport Management Company.

Cathay Pacific, which is the dominant carrier here and has chafed at restrictions on its flights to mainland destinations, welcomed Wednesday's deal and called for a further relaxation on flights.

"In order to defend the competitiveness of Hong Kong International Airport as the predominant hub in the region, it is essential that the pace of liberalization of air links between Hong Kong and the mainland catches up with that seen between China and the rest of the world," the carrier said in a statement. "This is vital for the overall interest of Hong Kong - not just one or a number of airlines."

The national government has been trying to help second-tier cities, especially in the interior, as Beijing, Shanghai, Guangzhou and other cities near the coast have boomed. But providing daily service to some of the less-known cities, instead of flights twice a week, is important to preserving Hong Kong as a hub for China.

For cities that have only one or two flights a day, the new accord will authorize as many as four or five a day. The agreement, which will be phased in over the next two years, allows flights to go from here to a second-tier city and then on to another second-tier city before returning to Hong Kong, instead of coming straight back.

The pact also calls for code-sharing between mainland and Hong Kong-based carriers.

But the agreement calls for only modest increases in passenger flight schedules from Hong Kong to Shanghai and Beijing, the highest-volume and most lucrative routes. Cathay Pacific has wanted to greatly expand its service to these cities, but such competition would cut into the profit margins of carriers that are partly or
entirely owned by the Chinese government and currently dominate the routes.

Wednesday's pact also does little if anything to help European and American carriers. The agreement allows additional flights by mainland Chinese carriers and by airlines based in Hong Kong that make most of their decisions in Hong Kong and have mainly Hong Kong shareholders. The agreement could actually increase
competition for European and American carriers, because it gives mainland carriers the right to increase the number of flights that originate on the mainland, make a stop in Hong Kong and then continue to overseas destinations.

While Cathay Pacific has struggled for the rights to operate more flights to the mainland, it has been the main beneficiary of Hong Kong's reluctance to approve "open skies" agreements with other countries. Such agreements would allow other carriers, especially American carriers, to operate more flights to and from Hong Kong. Long-haul flights out of Bangkok and Singapore are often less expensive.

Wednesday's agreement grew out of an annual review of the four-year-old agreement that governs air traffic between the mainland and Hong Kong, which Britain returned to Chinese rule in 1997. Ms. Lee said that the agreement was not an attempt to increase the value of the Hong Kong Airport Authority, which the
government hopes to privatize as part of an effort to plug a budget deficit here.

10 September 2004
Air Hong Kong takes delivery of new airbus freighter Air Hong Kong - first carrier to
operate new Airbus A300-600GF

http://downloads.cathaypacific.com/cx/press/20040910airhk001.jpg
The new Air Hong Kong Airbus A300-600F “General Freighter” touching down at Hong Kong International
Airport from Toulouse, France at 8:21am on 10 September 2004.

http://downloads.cathaypacific.com/cx/press/20040910airhk004.jpg

AHK Air Hong Kong Ltd today announced it has taken delivery of the first of six new Airbus
A300-600F General Freighters in the carrier’s new livery. When it enters service on 12
September 2004 operating to Bangkok and Penang, AHK will become the first carrier in the
world to operate this new freighter variant.

The aircraft is part of an order for six A300-600GF freighters placed by AHK in January
2003 to implement its plan of expanding its operations within the Asian region. The other five
wide-body aircraft are scheduled for delivery between now and the end of the first quarter of
2005. DHL, the world’s leading express and logistics company, holds a 40 percent stake in
AHK with Cathay Pacific owning the remaining 60 per cent.

AHK is also the launch customer for the A300-600GF which differs from the A300-600F
freighter aircraft currently being built for other carriers. Its unique features include a cargo
loading system capable of handling almost every type of container and pallet, and a side door
at the rear of the lower deck capable of handling large items of general freight. The new
freighter is powered by two General Electric CF6-80C2 engines.

Currently AHK operates a fleet of leased freighters comprising one Boeing 747-200, one
Airbus A300-600, two Airbus A300B4 and one Boeing B727. The route network includes
Bangkok/Penang, Osaka, Tokyo, Taipei, Seoul and Singapore. As each new freighter enters
service, it will replace one of the leased aircraft which will be returned to the lessors.

AHK Air Hong Kong Chairman Tony Tyler said: “Delivery of the new freighter is a significant
step in our fleet expansion. It demonstrates Air Hong Kong’s commitment to enhancing Hong
Kong’s position as Asia’s leading air cargo hub, and to strengthening our network and quality
of service.”

Cathay Pacific’s Director and Chief Operating Officer Philip Chen said: “Cathay Pacific's
original partnership to operate overnight services in conjunction with DHL extended Hong
Kong's capability from a global passenger and cargo hub to being a regional express shipment
center as well. Today's delivery of Air Hong Kong's first in a fleet of freighter aircraft signals
another significant step forward in Cathay Pacific's efforts to strengthen Hong Kong's hub
position as we continue to invest in the city's infrastructure and people to further develop Hong
Kong's economy. “

“As the only all-cargo carrier based in Hong Kong, AHK is well-positioned to strengthen the
status of Hong Kong as Asia’s leading cargo and logistics hub,” said John Mullen, Chief
Executive Officer – Asia Pacific, DHL Express. “AHK will also complement DHL’s recently
inaugurated US$100 million Central Asia Hub in Hong Kong and reinforce our regional air
network’s payload capacity and geographical coverage.”

DHL has a dedicated Air Network that covers 25 destinations in 16 countries and is served by
20 aircraft in dedicated air operations with over 800 commercial flights daily.

“With this order, Air Hong Kong launches a new variant of Airbus’ most successful freighter,
an endorsement of the strength of the Airbus product line,” said Noël Forgeard, Airbus Chief
Executive Officer. “The freighter market continues to grow for Airbus aircraft and this new
variant is the result of Airbus listening and reacting to market demands.”

Training boon for Dragonair
Keith Wallis, HK Standard

A surge in growth of shorter-haul routes and the expansion of low-cost carriers in the region is set to be a boon for Hong Kong Dragon Airlines (Dragonair) as more carriers use the airline's training facilities.

Dragonair has trained flight crew from Qantas, Air New Zealand, Philippine Airlines, Air Macau and Taiwan's TransAsia Airways.

Stanley Hui, Dragonair chief executive, said he believed interest would grow as an increasing proportion of airlines switched to Airbus A320 and A330 aircraft.

The Dragonair flight training centre at Hong Kong International Airport is one of the few facilities in the region that can offer state-of-the- art flight and simulator training on these Airbus aircraft.

Hui said: "As more airlines select Airbus A320 family aircraft such as the A319/320/321, the demand for simulator training on such aircraft naturally will rise. Our flight training centre is one of the facilities in the region providing such training, and we do expect stronger demand for A320 related training services."

He said there was growing interest in providing training in 2005.

"We have indeed received lots of enquiries from airlines in the region for such A320 simulator training next year," Hui said.

He added: "Recently, A320 simulator training in particular is in strong demand and we are bringing pilots from a number of airlines to Hong Kong for their A320 simulator training." Hui believed this has raised the profile of Hong Kong as one of region's main aircrew training centres.

Dragonair has helped several big name airlines such as Air New Zealand introduce the A320 into their fleets after training a select number of aircraft flight crew.

A similar agreement was reached between Dragonair and Qantas on training for the larger A330 twinjet. The package included flight simulator training together with "first-hand flying experience on our A330 flights after training with us for a period of time," Hui said.

Qantas started operating Airbus A330-300s on international routes last month. These included services between Hong Kong and several Australian cities such as Sydney, Perth, Melbourne and Brisbane.

He added: "We trained about 10 and 12 pilots for Air New Zealand and Qantas" between 2002 to 2004 with a short interruption due the Sars epidemic in the spring of 2003.

Hui said: "They were primarily their training/management pilots who in turn will train their own pilots on the aircraft after being trained by us."

4 September 2004 / 02:50 AM

Here is some more information about CX's service increase later this year :

06 September 2004
Cathay Pacific to launch third daily Sydney service in expanded winter passenger schedule

Cathay Pacific Airways today announced it will be the only airline to operate three-times daily to Sydney with the 31 October launch of a new early morning service that is part of an expanded new winter schedule. Overall, the airline will add 16 weekly scheduled departures out of Hong Kong, bringing total passenger services to 511 flights – further strengthening Hong Kong as a global aviation hub and the gateway to the Chinese Mainland.

With the start on 31 October of the airline’s winter schedule, passenger services to Manila will increase from 35 to 37 weekly flights and Surabaya will go from 3 to 4 services a week. Brisbane will be served daily, up from five flights a week, and two more services to Auckland will take its weekly total to 12. In all, Cathay Pacific will operate 63 passenger services per week between Hong Kong and Australia and New Zealand.

Later, from 1 December, Cathay Pacific will add two more weekly services to Dubai, taking it to 13 flights a week. Cathay Pacific serves 87 destinations for passenger services worldwide, either directly or through code shares. During the summer, Cathay Pacific launched a daily non-stop service to New York and, through code-share arrangements, services to Moscow, Madrid and Barcelona.

According to the latest visitor arrival statistics from the Hong Kong Tourism Board (“HKTB”), the Australia, New Zealand and South Pacific region represents an area of robust potential. July arrivals amounted to 41,384, representing 85.3% growth on July 2003 and 31.7% on the 2002 figure. For the first seven months of 2004, arrivals stood at 81.3% ahead of those for 2003 and 13.7% above 2002.

Cathay Pacific Director and Chief Operating Officer Philip Chen said: "A third daily flight to Sydney will put us firmly in the lead. We are offering more than 17,000 seats to Australia and New Zealand every week and 900,000 seats every year. Our expanded winter schedule further strengthens Hong Kong's status as a global aviation hub, offering one of the strongest connections to Australia and New Zealand among major hubs, and linking them to other parts of the world via Hong Kong.”

Passenger Services / Week from October 31 (Change)
Manila 37 (+2)
Surabaya 4 (+1)
Brisbane 7 (+2)
Sydney 21 (+7)
Auckland 12 (+2)

Passenger Services / Week from December 1 (Change)
Dubai 13 (+2)

Fly the new Qantas non-stop services to London from just HK$3,490

Qantas Airways will begin the new non-stop services from Hong Kong to London from 3 November 2004, serving three return flights a week. London is a cultural city and at the same time is vibrant and modern. You can find lots of galleries, museums, shops and great landmarks there.

To celebrate the new Hong Kong–London–Hong Kong route, Qantas is offering a special deal for you to visit London from just HK$3,490. Promotion is valid from 14 September to 23 September 2004. Don’t miss the chance, book now!

QF29
Hong Kong to London
Depart - 0120; Arrive - 0715
Frequency : Wed, Fri, Sun

QF30
London to Hong Kong
Depart - 1225; Arrive - 0815+1
Frequency : Wed, Fri, Sun

HKIA passenger throughput reaches 3.5 M new height

http://www.hongkongairport.com/eng/img/hkia_logo.gif

(HONG KONG, 12 September 2004) - Passenger number at Hong Kong International Airport (HKIA) continued on its growth, with another record set in August of 3,509,000 passengers.

Throughput for the month was 16.3 per cent higher than the same month last year. In the last 12 months, 35.5 million people passed through HKIA, almost 30 per cent more than the preceding 12 months.

Cargo throughput also continued on its strong growth in August, at 257,000 tonnes and 17.3 per cent higher than the same month last year. In the past 12 months, 2,963,000 tonnes of cargo moved through HKIA, a 15.5 per cent increase over the previous 12 months.

Exports (loaded cargo) grew by 22.3 per cent from last year to 164,000 tonnes, with demand continuing to grow heavily in Europe, North America and the Mainland.

Stimulated by the strong growth in cargo throughput, aircraft movements for the month rose by 21.5 per cent to 20,560. There were 228,330 movements for the past 12 months, an increase of 22.3 per cent.

Air Traffic Statistics (pdf) (http://www.hongkongairport.com/eng/aboutus/statistics/ms200408.pdf)

China Travel plans online venture

Lee Yuk-kei, HK Standard
September 14, 2004

China Travel International Investment, the largest Hong Kong-listed travel agency, has struck a deal with TravelSky Technology, which runs the mainland's biggest air reservation system, to set up online travel businesses in Hong Kong.

China Travel said it is preparing an online travel business in which H-share listed TravelSky will provide travel data, information and technology upgrade support.

TravelSky will also provide broader channels for sales of China Travel's products and the strategic co-operation will offer a solid foundation for further co-operation between the two companies, it said.

TravelSky executive director Ding Weiping said the company may have some form of shareholding co-operation with China Travel's online unit but did not offer details.

The agreement will "provide new momentum" for both parties, China Travel said.

Last month it said it plans to spend HK$300 million to set up an online travel unit and may list it on the Nasdaq. Executive director Michael Ng said the company will spend HK$100 million to promote its online business and will resume marketing in Singapore, Europe and the United States where travellers were discouraged by the Sars outbreak.

China Travel, a unit of the state-owned travel service provider, reported a record first-half net profit of HK$500.53 million, reversing a net loss of HK$290.93 million a year ago when its operations were badly hit by the Sars outbreak.

The government's easing of travel restrictions on mainland residents also helped boost demand for travel services.

Shares of China Travel have jumped 12.5 per cent since last Monday as investors expect the air services expansion between China and Hong Kong to boost travelling by lowering air fares.

Ng said the company plans to repurchase its shares and may buy back more when the price is right. China Travel bought back one million shares at HK$1.63-HK$1.64 each.

WestJet, Cathay mull transpacific alliance
By BRENT JANG, TRANSPORTATION REPORTER
UPDATED AT 12:12 PM EDT, Monday, Sep 13, 2004

The Globe and Mail

Cathay Pacific Airways Ltd. is holding talks with WestJet Airlines Ltd. to form a strategic alliance in a bid to raise the Hong Kong carrier's Canadian profile and form a common front against Air Canada.

"We've had some exploratory chats with WestJet," said Philippe Lacamp, the new head of the foreign airline's Canadian operations. "It's going to be important that there is as close a match as possible. It's certainly something that I will continue to explore. I think we're quite a good fit."

Preliminary discussions between Cathay and Calgary-based WestJet began six months ago, and if all goes smoothly, the two sides could be partners in the Canadian market within a year, Mr. Lacamp said.

Mr. Lacamp said in an interview his airline wants to defend its turf against incursions from Air Canada's new international strategy, notably its plan to bolster Asia-Pacific traffic.

Montreal-based Air Canada, which is scheduled to emerge from bankruptcy protection Sept. 30, has indicated in its restructuring plan that it will bank on its Asian flights to help it return to profitability.

"Air Canada's most lucrative area is the transpacific. That's no secret," Mr. Lacamp said.

Using wide-body aircraft, Cathay currently offers two daily non-stop flights to Hong Kong from Vancouver and one daily flight to Hong Kong from Toronto, via Vancouver.

Cathay also offers one daily non-stop flight to New York from Vancouver. And depending on demand, Cathay could add an extra daily flight to Hong Kong from Toronto.

The goal is to make it possible for a passenger booking a flight to Hong Kong from smaller Canadian centres -- such as Calgary, Ottawa, Montreal and Halifax -- to board WestJet and connect to Cathay seamlessly on one booking.

"There are important concentrations of the Asian travelling community throughout Canada," Mr. Lacamp said. Luggage destined for Hong Kong would be transferred by baggage handlers instead of having WestJet customers collect and recheck their bags.

WestJet, in business since 1996, stands to benefit from a partnership with Cathay by attracting more passengers on domestic routes into Vancouver and Toronto.

Cathay recognizes the importance of Canada-Hong Kong relations, and also wants to persuade more Canadian travellers to use Hong Kong as the gateway to China and other Asian centres, Mr. Lacamp said.

Last week, Cathay won the right to gain greater access to China's bustling market. The mainland government has been restricting the carrier to three flights a week to Beijing from Hong Kong.

Cathay, which resumed service to Beijing last December after a 13-year absence, will be able to offer daily flights to the Chinese capital from Hong Kong.

While Air Canada has the advantage of an extensive domestic network that feeds into its Vancouver and Toronto hubs, Cathay is seeking to woo some of that domestic traffic through WestJet.

"If WestJet is putting in a product which is superior to Air Canada, and we already believe our product is superior, hopefully that's an offering that the travelling public is going to enjoy," said Mr. Lacamp, who will meet WestJet chief executive officer Clive Beddoe this fall.

WestJet spokeswoman Siobhan Vinish declined to discuss the Calgary carrier's specific talks with possible partners, but she said WestJet "continues to talk to different airlines on an ongoing basis about opportunities for the future."

A major obstacle to any partnership would be WestJet's "ticketless" reservation system that secures bookings but provides confirmation by fax or e-mail instead of a conventional ticket, she said.

Cathay belongs to the One World Alliance and sees WestJet as a prospective partner because the discount carrier is independent.

Air Canada, by contrast, is a partner in the rival Star Alliance.

Mainland airports could stifle HK growth
Dennis Eng, HK Standard
September 14, 2004

The inability of airports in Beijing and Shanghai to handle more take-offs and landings may stifle efforts by Hong Kong's airport to capitalise on a new agreement that was expected to boost passenger traffic between the territory and the mainland by 30 per cent.

According to Merrill Lynch analyst Trina Chen, airports in the two cities are already operating at close to full capacity.

She said a second runway was due to open in 2005 at Shanghai Pudong International Airport. This would help with traffic created by a second Hong Kong airline serving that route from October 2006.

In Beijing, however, airport facilities are not likely to be expanded until the end of 2007, in preparation for the 2008 Olympic Games, she said.

"Before then, capacity will be tight. Dragonair will find it hard to add more flights to Beijing now,'' Chen said. "There is a difference between opening up the market and what is really happening.''

Under an air services agreement inked between Hong Kong and the mainland on September 8, Hong Kong airlines can add four weekly passenger flights to the Chinese capital in October and seven more in March 2005, bringing the total weekly flights to 70.

Seven more weekly flights can be added to the Shanghai route in October and again in March 2005, meaning local airlines will be able to fly 98 flights per week there. At present Cathay Pacific Airways flies to Beijing three times a week but cannot fly to Shanghai until October 2006.

These additional flights would boost passenger traffic at Hong Kong's Chek Lap Kok airport, which soared to a record 3.45 million passengers in July, up 40 per cent year on year, the Airport Authority said. In the 12 months to July, more than 35 million passengers passed through the airport.

On Monday, Airport Authority chairman Victor Fung declined to speculate on what effect the expanded air services agreement would have on the value of the airport's assets.

"The expanded air services rights between Hong Kong and China provide a great opportunity for the industry to grow as more routes are available,'' he said.

Fung added that under the Closer Economic Partnership Arrangement, Hong Kong could invest in mainland airports and its air service personnel could participate in the mainland aviation industry.

The SAR wants to sell shares in the Airport Authority to help cover its budget deficit.

Wednesday September 15, 6:28 PM
HK Dragonair Posts Record Passenger, Cargo Numbers In Aug

HONG KONG (Dow Jones)--Hong Kong Dragon Airlines Ltd. said Wednesday it set monthly records for passenger and cargo numbers in August.

The airline said it flew 444,498 passengers in August, 7.7% more than in July. It carried 30,613 metric tons of cargo during the month, up 8.6% compared with July.

Dragonair said it set a daily record on August 15, when it carried 17,220 passengers.

China National Aviation Co. (1110.HK) holds a 43.29% stake in Dragonair. CITIC Pacific Ltd. (0267.HK) has a stake of 29.35%. Cathay Pacific Airways Ltd. (0293.HK) and its parent Swire Pacific Ltd. (0019.HK) also hold shares in the Hong Kong airline.

Thursday September 16, 2:17 PM
HK Airport Authority in HK$4 bln loan -Basis Point

HONG KONG, Sept 16 (Reuters) - Airport Authority Hong Kong will mandate for a HK$4 billion (US$512.8 million), two-tranche loan, debt market news service Basis Point said on Thursday.

The quasi-sovereign borrower is expected to use the facility to refinance government shareholders' loan in preparation for its privatisation, Basis Point said.

Four banks -- Bank of China Hong Kong, Citigroup, HSBC and Standard Chartered Bank -- will mandate the loan, Basis Point quoted sources as saying.

The revolving credit would be launched to general syndication as early as Thursday, it said.

The all-ins are expected to be 17 basis points for a HK$2 billion, three-year tranche, and 22 basis point for a HK$2 billion, five-year tranche which amortises to give an average life of four years.

The respective margins are 12 basis points and 17 basis points. (US$=HK$7.8)

15 September 2004
AUGUST PASSENGER AND CARGO NUMBERS SET NEW HIGHS

Dragonair News Release
http://www.dragonair.com/icms/images/eng//flight/logo.gif

(HONG KONG) Passenger and cargo numbers set new highs in August, the second consecutive month that both areas of operation at Dragonair posted record figures.

The airline flew 444,498 passengers in August to record its third consecutive monthly record. The number was 7.7% higher than in July, with travel in both months driven by holiday traffic. August 15 saw a new daily mark set, with 17,220 passengers carried on the day.

"August saw the summer holidays get into full swing and represented the season's peak," said Chief Executive Officer Stanley Hui. "We have been operating our most extensive schedule ever and the excellent numbers reflect that.

"Not surprisingly, the emphasis has been on leisure travel. This has helped boost numbers, but given the more competitive environment yield continues to remain lower than we would like it."

Cargo surpassed the record of 28,195 tonnes set in July by 8.6%, and passed the 30,000-tonne mark for the first time in a month. The 30,613 tonnes carried was 33.2% higher than in the same month last year.

"The first full-month contribution of Frankfurt and London Stansted following the entry into service of our fourth freighter aircraft at end of July has had a positive effect," said Mr. Hui. "The outlook for the cargo market for the remainder of the year remains positive as it is traditionally a strong time for shipments.

He added: "The cloud that continues to hang over our business is the persistently high price of oil."

Statistics with % Change Y/Y
Revenue Passengers Carried : 444,498 +16.5
Cargo Carried (tonnes) : 30,613 +33.2
ATK : 236,639,773 +38.2
ASK : 844,439,936 +28.9
RPK : 583,551,609 +19.6
# flights : 3314 +35.4

Hong Kong airport hits back at competition with new advance check-in scheme

7 September 2004
Airline Industry Information
English
(c) 2004 M2 Communications, Ltd. All Rights Reserved.

The Hong Kong Airport Authority has said that it has made significant progress in installing advance check-in facilities in some Pearl River Delta cities to help Hong Kong International Airport.

The airport is coming under increased competition from the newly opened Baiyun International Airport, which can handle 25m passengers a year, and other neighbouring airports. The plan is to allow passengers to eventually check-in all luggage before boarding a bonded bus to Hong Kong International Airport without the need for further checks.

A spokespersons for the Airport Authority said that there was no set timescale for the scheme and it would involve issues of customs and border control to be ironed out first, reports The Associated Press.

Although the effects on scheduling are not explicit yet, it will definitely affect the London flights into and out of Hong Kong :

Wednesday September 15, 11:37 PM
BA to Axe Almost 1,000 Heathrow Flights
By Michael Smith

LONDON (Reuters) - British Airways Plc, Europe's second-biggest airline, is to cancel almost 1,000 flights out of London's Heathrow airport in the next three months to ease the congestion that led to travel disruptions.

BA said on Wednesday it would cut 966 flights, 2 percent of total operations or 12 flights a day, on domestic, European and long-haul destinations to improve performance.

The move follows an embarrassing week of flight cancellations by BA at Heathrow last month which it blamed on staff shortages and technical problems.

The problems disrupted travel for thousands of passengers before a busy holiday weekend. Heathrow is one of the world's most congested airports.

"We have done a prudent precautionary measure which relieves some pressure on the flying program at what is a very busy airport," a BA spokesman said.

The airline said only high-frequency routes would be affected, including flights to New York, Los Angeles, Hong Kong, and short-haul routes to Edinburgh, Manchester, Frankfurt, Munich, Brussels and Amsterdam.

Passengers booked on those flights would be redirected to other BA services on the same routes.

Analysts said the cancellations were not expected to affect BA financially, but would do little to lift public confidence in the carrier.

"You would hope that by doing it there was a gain because you would reduce the scope for disruption," independent airline analyst Chris Tarry said.

"You are putting some more buffers in the system so it actually works."

BA in the past month been hit by threats of industrial action by its front-line staff and flight disruptions due to shortage of staff.

Unions said the carrier, which has slashed 13,000 jobs since the September 11, 2001, attacks on New York, had hired 200 new ground staff to ease shortages at Heathrow.

"These 1,000 cancellations may take a bit of pressure off but if BA had listened to us back in 2003 and not cut the operational staff numbers to the marrow of the operation then it would not now be in this position," GMB National Officer Ed Blissett said.

The BA board is expected to consider the outcome of an inquiry into last month's cancellations on Friday amid speculation some senior managers may lose their jobs over the problem.

Shares in BA, which is battling higher fuel prices and tough short-haul competition, were 1.9 percent weaker at 217 pence after earlier falling more than three percent in a firmer broader market.

Here is an editorial about the new HK-China air pact from the South China Morning Post :

Too many downsides to this air services pact

The signing of a liberal air services deal has a tendency to generate buzz and excitement in the airline industries affected. Witness the number of American carriers lining up to claim new rights granted under an agreement signed between the US and China in July.

Now contrast that with the tepid response from our own airlines after Wednesday's signing of a new pact between Hong Kong and Beijing. Cathay Pacific, for example, issued a statement saying it "respects the outcome" of the eight months of talks. This tells us all we need to know about how illiberal the deal really is, despite the apparently vast increase in the number of flights allowed.

To be sure, there will be benefits over the next two years as the arrangements take effect. Leisure and business passengers who want to fly to the mainland's second-tier cities are bound to have more choice, and perhaps lower prices, once a second Hong Kong-based carrier is allowed to set up business on these routes. For Hong Kong's start-up airlines, CR Airways and Helicopters Hong Kong's subsidiary Hong Kong Express, there is the possibility of thriving in under-served markets that the more established airlines do not find worth their while. And allowing mainland airlines to fly via Hong Kong to onward destinations can only increase the traffic at Chek Lap Kok and secure its position as a regional hub.

But the disadvantages of the deal are glaringly obvious, the first of which is that mainland airlines have got everything they wanted, in the form of rights to pick up passengers and cargo in Hong Kong for third destinations. This almost guarantees Hong Kong will face an uphill battle when it tries to get back to the negotiating table for the next round of talks.

The deal's other details are nothing spectacular, either. The increase of 400 passenger flights per week might look like a lot, but most of the new quotas go to less-profitable secondary-city routes, while the lucrative Beijing and Shanghai routes will see only a modest expansion in flights. More competition for passengers on the Shanghai route will not come until 2006.

Cargo capacity will be doubled, with an increase of 21 flights per week from each side. However, under July's Sino-US agreement, American cargo carriers will get that many new flights this year alone; another 18 flights per week come into effect in March, and by 2010 there will be 111, an increase of more than 500 per cent. Such developments ensure that, over time, more air cargo will go to and from the mainland without passing through Hong Kong.

The decision to allow two carriers from each side to serve the existing routes is a step in the right direction, but a truly liberal agreement would see that cap lifted entirely. The China-US deal, by contrast, included no such limits. New permission to code-share with mainland carriers and serve two stops with one flight will allow Hong Kong's airlines to achieve some cost savings. But the prohibitions against picking up passengers or cargo and flying on to destinations beyond the mainland limit the usefulness of these measures. There is also a certain lopsidedness about it all, considering that mainland airlines now have these rights.

It is hardly surprising that the signing of the agreement has caused barely a ripple in Hong Kong. We have heard routine statements from carriers about their intention to apply for new rights allocations in due course. But the absence of excitement should tell our economic tsars they are not bargaining hard enough on behalf of their own industries.

The next review of Hong Kong-mainland air services arrangements begins next year. This time, the target should be nothing less than open skies and unlimited competition. Such an arrangement would be good for both sides, bring increased economic activity and raise industry standards. The challenge, though, will be giving the mainland a reason to reopen negotiations. That will be hard, given the sweetheart deal it got this week.

LOAD-DATE: September 10, 2004

September 18, 2004
Air shuttle services considered
Hong Kong Government Press Release

Air shuttle services between Hong Kong and southern parts of the Mainland are being considered, using smaller planes and more frequent services, Deputy Secretary for Economic Development & Labour Wilson Fung says.

The move came after the review of the Mainland-Hong Kong Air Services Arrangement earlier this month, which provides a clear timetable for opening the Hong Kong-Mainland aviation market to more airlines and for expansion of capacity limits on individual routes.

Speaking on a radio talkshow today, Mr Fung said the new rights provide valuable business opportunities to Hong Kong airlines planning to launch or increase services.

In October, overall passenger capacity will rise 30%, increasing weekly passenger flights operated by airlines in the two jurisdictions to 1,600.

Cargo capacity will also rise 100% from the current 21 flights a week for each side to 42, bringing the total number of weekly freighter services that can be operated by airlines of both sides to 84.

On passenger services to Shanghai, Mr Fung said a second Hong Kong airline will be allowed to operate the service from October 2006.

He said existing passenger capacity can still meet demand and the Government will keep monitoring and reviewing the situation.

Copyright 2004 Financial Times Information
All rights reserved
Global News Wire - Asia Africa Intelligence Wire
Copyright 2004 Kasturi & Sons Ltd (KSL)
Business Line

August 21, 2004

LENGTH: 428 words

GROWING SYNERGY BETWEEN INDIA, CHINA: CATHAY SEES RISE IN TRAFFIC

Chennai, Aug. 20 - CATHAY Pacific Airways sees the growing trade and official relationships between India and China as providing a major push for airline traffic for it.

Consequently, without changing the marketing of Cathay Pacific in India, the Hong Kong-headquartered airline will lay greater emphasis on China as being its home market, according to Mr Rupert Bray, Country Manager - India, Nepal and Bangladesh, Cathay Pacific Airways Ltd.

He told Business Line here that China was a major leisure destination with tour groups and leisure groups combining the best of Hong Kong with the best of mainland China.

Judging by the way tourists to China from other countries such as Indonesia, Malaysia and Thailand had picked up, he expected to see a big increase in tourist traffic from India to China.

Cathay Pacific hopes to increase its services to India. At present, it operates four flights a week each to Delhi and Mumbai, and hopes to increase these to daily services. Besides, the airline is hoping that it will be able to fly to other metros such as Chennai, Bangalore and Kolkata. Discussions on bi-lateral air services agreement between India and Hong Kong are on, according to Mr Bray.

He said that Cathay Pacific operated flights to Beijing and Shanghai, while its sister airline, Dragon Air, covered all the major and secondary cities in China.

Mr Bray identified four major passenger segments as growth areas. One was the corporate traveller - from software companies such as Wipro, Infosys, Oracle, TCS and business process outsourcing companies. This was premium traffic and an important segment of the airline's market, and a growing one too.

The next was the segment that was partly driven by the IT industry - those visiting friends and relatives abroad. The third segment was the traditional Cathay market, which was the leisure travellers flying to Bangkok and Hong Kong.

However, even here, there was an increasing number of travellers flying to other destinations, including those in Australia and in China. The last segment was the small businessmen and traders, who were travelling to China on work.

Apart from operating more direct flights between India and Hong Kong, Cathay Pacific planned to increase its freighter services into the country. At present, it operated a total of three freighters a week to Delhi and Mumbai with connections to London and Paris. The cargo traffic was increasing, particularly of components and other time-critical shipments, Mr Bray said.

N. Ramakrishnan & Mr Rupert Bray

Monday September 20, 7:59 PM
HK CNAC Sees Dragonair Passenger Traffic, Yield Up In 2H

HONG KONG (Dow Jones)--China National Aviation Co. (1110.HK) said Monday it expects the passenger traffic and yield of its 43.29%-owned Hong Kong Dragon Airlines Ltd. to improve in the second half this year compared with the first half, due to the economic recovery and China's individual-visit scheme.

Speaking after CNAC's extraordinary general meeting, Dragonair Chief Financial Officer Francis Wai said the airline's passenger yield "wasn't satisfactory" in the first half.

He said Dragonair's newly launched Tokyo and Bangkok routes, and reduced ridership from Taiwan due to the island's presidential election, were among the factors which weighed down its passenger yield.

The company didn't disclose the yield for the first half of the year, but it said earlier it carried 2.06 million passengers in the first six months, 93% more than in the year-earlier period.

Wai said Dragonair would develop more routes and extend its coverage in China, following the new air services arrangements between Hong Kong and China to increase the number of routes and relax certain operating restrictions.

Wai said the five new Boeing 747-400 special freighters acquired from Singapore Airlines Ltd. (S55.SG) will be delivered between 2006 and 2008, and will be used to develop its cargo routes to the U.S.

CNAC said Friday it swung to a net profit of HK$120.6 million for the six months ended June 30, from a net loss of HK$181.3 million a year earlier, due to the robust economies of China, Hong Kong and Macau.

Its operating loss narrowed to HK$15.8 million from HK$190.6 million.

CNAC Executive Director Thomas Tsang said of the HK$15.8 million operating loss, "several million" were losses from CNAC's 51%-owned Air Macau Co., and more than HK$9 million were from goodwill amortization.

However, Executive Director Gu Tie-fei said Air Macau recorded profit for the first eight months of 2004 and expects earnings to improve until December.

The number of tourists from mainland China has been increasing since the Chinese government decided in late June last year to allow residents of selected cities to visit Hong Kong on an individual basis rather than as part of tour groups.

September 21, 2004
SECTION: South China Morning Post - Business; Pg. 2
LENGTH: 341 words

Cathay Pacific, Dragonair chase Shanghai cargo rights
Russell Barling

Hong Kong's two biggest airlines have applied to the government for new route allocations to fly all-cargo services to Shanghai in line with the rights won in this month's air-services agreement with the mainland.

Cathay Pacific Airways and Hong Kong Dragon Airlines (Dragonair) would not reveal yesterday how many frequencies available from October 21 they had requested.

"We have applied to the Economic Development and Labour Bureau to increase our freighter frequencies from Hong Kong to Shanghai in our winter schedule starting on October 31 ," said a spokesperson for Dragonair, which offers 13 all-cargo flights to Shanghai a week and one to Nanjing.

The agreement signed this month doubled to 42 the number of weekly freighter flights each side can operate.

Shanghai and Beijing are off-limits to Hong Kong carriers, with only 28 of the 42 frequencies available to serve those destinations.

With 11 all-cargo flights a week to Shanghai available this round - four flights were not allocated from the last agreement - Cathay and Dragonair appear set for a dogfight as both are expected to apply for at least daily flights.

"Four times a week would be less than adequate for Cathay, especially going up against an affiliate which may be flying triple dailies by then," said Peter Negline, regional transport analyst for US investment bank JP Morgan. "If they had an opportunity to achieve critical mass, we would expect them to bid aggressively for it."

Cathay, which can also launch passenger services to Shanghai from 2006 under the agreement, has had the rights to fly thrice-weekly all-cargo services to Beijing for more than a year but has not used them, according to government sources.

It is understood those rights cannot be transferred to the Hong Kong-Shanghai sector.

Cathay's only services to the mainland are thrice-weekly passenger flights to Beijing but it also this month won the rights to fly to Xiamen, Fujian province.

Dragonair to expand mainland services Carrier plans to increase flight frequencies under new air pact
South China Morning Post - Sept. 21, 2004
Annette Chiu

Hong Kong Dragon Airlines plans to launch services to new destinations in China, including Lijiang in Yunnan province, under the recently signed air services agreement with Beijing that allows Hong Kong carriers more access to the mainland.

It is also looking to increase flight frequencies on other routes.

"We hope to upgrade services such as those to Qingdao, Ningbo and Dalian to daily flights," Dragonair chief financial officer Francis Wai King-fai said at yesterday's post-results briefing for its parent company - China National Aviation Co (CNAC).

"Lijiang is one of the destinations we plan to fly to. But we don't have a timetable. The airport cannot accommodate international carriers at the moment."

Hong Kong's No2 carrier is also considering "wet leasing" freighters to serve US routes before it takes delivery in 2006 of five Boeing 747-400Fs it has ordered from Singapore Airlines. CNAC, which holds 43.29 per cent of Dragonair, reported an interim net profit of $ 120.64 million, compared with a loss of $ 181.28 million last year when the industry was battered by the Sars outbreak.

Its share of profit from associated companies, mainly Dragonair, reached $ 166.56 million in the first half, compared with a loss of $ 98.6 million a year earlier.

But Air Macau, its 51 per cent-owned subsidiary, reported a loss in the first half.

CNAC's operating loss was $ 15.84 million, compared with $ 190.56 million a year ago.

"Macau is traditionally a transit point for cross-strait traffic. The recovery cannot be compared to Hong Kong, which is an international aviation hub," CNAC executive director Thomas Tsang Hing-kwong said.

Management said Air Macau had been able to break even in the first eight months of this year and the carrier was expected to deliver a profit for the full year.

Last month, the Hong Kong-listed firm announced a shareholding restructuring plan, in which its mother company, China National Aviation Co Group, will transfer its 69.5 per cent stake in CNAC to a new company through a capital contribution in return for an interest in the new entity.

CNAC's management refused to comment on whether the restructuring was related to the listing plans of Air China, its sister company.

SECTION: SOUTH CHINA MORNING POST - BUSINESS POST; Pg. 5
September 20, 2004

Cathay Pacific takes aim at Air Canada; Discussions with a budget airline reveal focus on lucrative, long-haul passenger routes
John Gray in Toronto

With a jealous eye on the growing number of travellers between Canada and Hong Kong, Cathay Pacific Airways has started talks with Canada's thriving discount airline, WestJet Airlines, about a possible alliance.

Analysts agree that by entering into the talks with WestJet, Cathay Pacific is taking direct aim at Air Canada, the faltering national airline that has turned to its Asian routes for the prosperity that has eluded it at home.

Air Canada president Robert Milton has made no secret of his belief that his airline's hopes of success lie increasingly in long-haul routes, especially those to Asia.

Philippe Lacamp, who became head of Cathay Pacific operations in Canada three weeks ago, revealed the talks between the two airlines in a Canadian newspaper interview. He described the two airlines as "a good fit".

Both airlines took pains to play down the significance of the discussions. Cathay acknowledged there had been talks "but they are preliminary and they are exploratory, really, just early discussions".

Cathay spokeswoman Jennifer Pearson said the discussions had been conducted "over the past three to six months". She was careful to say Cathay had also had discussions with other airlines. No date was set for the next meeting with WestJet, she added.

Similarly, WestJet spokeswoman Siobhan Vinish insisted the meetings between the two airlines were "just discussions", similar to talks with other airlines.

But many analysts suspect Cathay's overture to WestJet is a response to the opening of Air Canada's new service between Hong Kong and Toronto, the first direct flights between the two cities.

The national airline, which will emerge from bankruptcy protection at the end of this month, already has direct services from Vancouver to Shanghai, Beijing and Hong Kong. Air Canada's other Asian destinations are Seoul, Osaka and Tokyo.

Like most of the world's airlines, Air Canada has suffered a variety of ailments that have pushed it to the edge of bankruptcy over the past 18 months - the September 11 terrorist attacks, the Sars epidemic and domestic competition with discount airlines.

Pushed to the brink, Air Canada sought bankruptcy protection in April last year.

For a time, it looked as if Victor Li Tzar-kuoi would save the airline with a C$ 650 million (HK$ 3.9 billion) rescue, but he backed away when Air Canada's unions would not make the financial sacrifices he was demanding.

So Air Canada cut its payroll by more than C$ 1 billion and went scrambling for investment - $ 850 million from Deutsche Bank, $ 250 million from the New York hedge fund Cerberus Capital, and a combination of $ 1.5 billion in financing and $ 600 million in reduced aircraft leasing costs from GE.

The surprise of the Cathay Pacific move is that in its eight-year history, WestJet has made its mark with a lean operation that offered low fares instead of frills, winning a reputation as "the airline for seniors and students".

WestJet's profits are also lean - C$ 60.5 million last year - but it was still a profit, as opposed to Air Canada's 2003 net loss of $ 1.87 billion. Almost unheard of in the airline industry these days, WestJet has had 30 consecutive quarters of profitability.

Although WestJet began as a non-union and bare-bones operation, it has spread its wings increasingly in recent years to pose a major challenge to Air Canada. It now has 30 per cent of the country's domestic passenger traffic, about half of Air Canada's share.

More significantly, WestJet, which has made Toronto's huge and expensive Pearson International Airport its eastern hub, will enter the US market later this month with flights to New York, Los Angeles, Fort Lauderdale and Orlando, Florida, Phoenix, Arizona and Palm Springs, California.

A partnership with Cathay Pacific would be a deviation from WestJet's basic business plan, but airline analyst Karl Moore sees advantages for both airlines.

Mr Moore, a professor at Montreal's McGill University, believes WestJet could function as a feeder from Canadian centres for Cathay Pacific, which now offers two flights daily from Vancouver to Hong Kong and a Toronto-Hong Kong flight via Vancouver.

"So if Cathay Pacific could have a feeder domestic airline in Canada and increasingly a North American airline as a feeder for themselves, that's an attractive proposition because it's a growth area - and Air Canada sees it increasingly as a growth area," he said.

The next step for WestJet, he suggested, might be for the airline to launch itself into the long-haul business after using the partnership with Cathay Pacific to learn the rules of the international game.

Whatever the uncertainties about alignments, analysts agree that the airlines know what they are doing in their focus on the trans-pacific market. Mr Moore and independent aviation analyst Rick Erickson, based in Calgary, agreed that operations such as Air Canada and Cathay Pacific must focus on long-haul operations to generate profit growth.

And both agreed that Air Canada's Mr Milton is right to concentrate on the Chinese market, not only for Canadian and Chinese business people but also for tourists.

"China is really central to the world economy, so North Americans are increasingly going to China," Mr Moore said.

As a result, the Chinese market has been a major growth area for Air Canada.

Mr Erickson expects a tremendous growth in the China market, given the growth of the Chinese middle class. One of the long-term goals of Air Canada, he says, is access to "15 or 20 Chinese cities with populations of more than three million that nobody in Canada has ever heard of".

Copyright 2004 South China Morning Post Ltd.
South China Morning Post
September 22, 2004
SECTION: News; Pg. 1

Long-haul visitors returning in droves
Paggie Leung

The number of long-haul visitors coming to Hong Kong has finally bounced back to pre-Sars levels.

The city welcomed almost 1.79 million long-distance visitors between January and July, up 80 per cent on the same period last year when Sars devastated the tourism industry, the Tourism Board said yesterday.

The figure was also up 5.5 per cent on the 2002 figures.

The biggest growth was in tourists from Australia, up 13.7 per cent over 2002.

There was also strong growth from Europe and the US, the Tourism Board said, without giving figures.

Tourism Board executive director Clara Chong Ming-wah said she expected the number of long-haul travellers this year would surpass the full 2002 figure, underscoring the recovery of the industry.

Ms Chong said that instead of focusing on mainland travellers, the board hoped to maintain a "balanced percentage" of tourists from different regions, keeping the percentage of long-haul visitors at about 15 per cent.

Overall, the mainland was the biggest source of visitors, with 6.83 million mainlanders arriving in the first seven months of the year.

Visitors from the mainland, the United States, Taiwan, Britain and Australia were the biggest spenders last year, the Tourism Board said, with each visitor spending from $ 4,857 to $ 6,018.

The board is spending 44 per cent of its resources on wooing long-haul travellers this year.

Hong Kong will host the annual World Travel Congress of the American Society of Travel Agents from September 28 to October 3. The society is the world's largest association of travel professionals, with more than 20,000 members.

Hong Kong last hosted the event in 1965.

Fuel depot plan may mean disaster for Tuen Mun
Daniel Hilken, Hong Kong Standard

Building a huge aviation fuel depot next to a steel mill in Tuen Mun is extremely hazardous and could lead to a deadly explosion and fire, a Hong Kong court was told.

The plan by the Hong Kong Airport Authority to place fuel tanks just 100 metres from Shiu Wing Steel factory is flawed, Shiu Wing's barrister Nigel Pleming said on Wednesday.

"Even if leaking fuel is stopped by the walls of the steel mill there is still a danger of fuel or fuel vapour igniting because the furnace operates at 1,300 degrees,'' Pleming told the Court of Appeal. "Each of the tanks is the size of one tower of the Lippo Centre.''

Each storage tank can hold up to 39 million litres of aircraft fuel, previous court hearings into the case were told.

Shiu Wing is making a last bid to prevent the fuel tanks being built near the steel factory after approval was granted by the Environmental Protection Department.

The challenge by Shiu Wing has been ongoing since 2002. It has already lost an appeal in a lower court against the development plan, which envisages the depot being operational by 2006.

Shiu Wing claims that the environmental report approved by the Environmental Protection Department underestimates the danger. Pleming said that the report's "Hazard to Life'' section was flawed in concluding that the worst-case scenario was a spillage of 10 per cent of a tank's contents. He said this figure was too low and that even a 10 per cent leak could be disastrous.

Pleming referred to a report on the project commissioned by Shiu Wing from Britain's Health and Safety Laboratory (HSL) which concluded: "The hazard assessment is fundamentally flawed because it fails to identify and assess the risk associated with a catastrophic failure of one of the aviation fuel storage tanks, i.e. instantaneous loss of 100 per cent of the tank contents.

"This is contrary to common practice for hazard assessment studies in Hong Kong and published international good practice.

"Furthermore, there have been past occurrences of catastrophic tank failure relevant to the [fuel depot].'' The HSL report estimated that one worst-case scenario of an explosion and fire could result in 200 people being killed at the steel factory alone.

Shiu Wing claims that the Director of Environmental Protection's approval was unlawful because the director failed to assess "quantitively'' the possibility of the entire contents of a tank spilling.

"All the fuel leaving a tank instantaneously would cause incalculable consequences. Leaving that scenario for the public without assessing its risk is unacceptable,'' Pleming told the court.

"Even if there is only a one in a billion chance of that happening the law requires an assessment of such a scenario where 1,000 people may die as a result. The director took what we say is a lax decision.''

The appeal continues.

23 September 2004 / 02:49 AM

South China Morning Post
September 23, 2004
SECTION: Supplement; Pg. 4

Saudi Arabian Airlines Hopes to + Cargo Flights & Begin Passenger Flights to Hong Kong

Air of optimism for flights to hit higher altitudes Robust cargo traffic paves way for further opportunities with talks under way to launch direct passenger flights

SAUDI ARABIAN Airlines hopes to increase its cargo flights and to launch direct passenger routes with Hong Kong.

The airline now operates three cargo flights a week, carrying lots of consumer goods, garments, watches, electronics items, telecommunications products and many other daily necessities or novelty items to Saudi Arabia.

In a bid to strengthen ties and increase trade opportunities, the Saudi Arabian and Hong Kong governments are negotiating an agreement for direct passenger flights.

Tam Wing-kun, chairman of Intergulf Express HK and Saudi Arabian Airlines' general sales agent in Hong Kong, said direct passenger flights would hopefully be launched next year.

The Hong Kong government was adopting a welcoming attitude to secure air service deals with more international airlines, which boded well for the prospect of new routes with Saudi Arabia, Mr Tam said.

From a business viewpoint, he suggested that a direct passenger flight operation was most possible to Jeddah, which is a major commercial port. Other potential connecting destinations were the capital city of Riyadh and Damman on the east coast.

Mr Tam said direct flights would boost business trade as more Saudi businessmen looked for opportunities in Asia, including China. Many Saudi traders increasingly made Asia a sourcing hub for their businesses, raising demand for passenger flights, he said.

Businessmen wishing to enter the China market also chose to go through Hong Kong.

Mr Tam said direct flights could facilitate the growth of Hong Kong tourism to Saudi Arabia.

He said the Saudi Arabian government was studying the possibility of relaxing restrictions on overseas visitors, which in future could help fuel expanding growth in tourism.

Saudi Arabian Airlines started in 1945 with a single twin-engine DC-3 Dakota and has been a fast-growing carrier since then.

A few years ago, the airline completed a fleet upgraded acquiring 61 jets including the state-of-the-art Boeing 747-400s, 777-200s, MD-11s and MD-90s.

Today, it is one of the largest airlines in the world, with about 140 aircraft, including the latest and most advanced wide-bodied jets available.

In the first half of this year, the airline recorded a high of 92.31 per cent in on-time flight schedules, more than any other major airline.

Prince Sultan bin Abdul Aziz al-Saud, the Second Deputy Premier, Defence Minister and Inspector General, praised the airline's achievement. Airline director-general Khaled bin Baker said the record was achieved despite an increase in internal and external operations which averaged 300 flights per day.

In Asia, the airline operates flights to and from Bangkok, Manila, Jakarta, Kuala Lumpur and Singapore. There are also frequent flights to India, Pakistan and Bangladesh.

Intergulf Express was appointed as the airline's Hong Kong general sales agent in 1986 with indirect cargo flights connecting with Saudi Arabia via Bangkok or Manila.

Direct cargo flights were launched in October 2002 between Hong Kong and Riyadh. Early this year, the frequency of these flights was increased from two to three a week.

Mr Tam said Hong Kong would continue to serve as a regional hub and a gateway between the mainland and the world.

Saudi Arabian Airlines' existing cargo flights with Hong Kong recorded a high usage rate and in peak seasons, chartered flights were engaged to handle the extra cargo, he said. There was demand for more flights to keep up with growth in trade and flow of goods.

With growing business opportunities on the mainland, Saudi Arabian Airlines is also exploring possible cargo flights.

Mr Tam said his company was appointed the airline's general sales agent for China this year. Shanghai was the most probable destination, and the link would tap the tremendous potential of trade opportunities on the mainland.

Virgin Atlantic Announces Start Date for London - Hong Kong - Sydney
Virgin Atlantic - 21 Jun 2004

Virgin Atlantic Airways today announced that it is to launch daily scheduled services between London and Sydney via Hong Kong. The service will be operated by an Airbus A340-600 aircraft and will commence on 7 December this year. The A340-600 is the longest plane in the world and in future years this will be replaced on the route by the Airbus A380, the biggest plane in the world.

Sir Richard Branson, Chairman of Virgin Atlantic said:

“I am delighted that Virgin Atlantic is now able to offer flights to Australia – everyone at Virgin has long wished for us to operate to Australia and today’s announcement really is a dream come true. Australians have also been waiting for many years for the BA-Qantas duopoly to be broken and for new competition to be introduced.

“Today’s announcement is another major landmark in Virgin Atlantic’s development. Sydney is a prestigious route and will become our 23rd destination. Tomorrow is also the 20th anniversary of our very first flight from Gatwick to Newark in 1984. Australia is a country that everyone at Virgin has been hoping to fly to from those early days and the news that our ambitions have become a reality will really add to our celebrations!

“I am grateful to the British and Hong Kong governments who have brokered this pro-competition deal that enables us to launch these new services. I’d also like to thank the Honourable Joe Hockey, Australia’s Minister for Tourism, for all his help and support.

“Virgin Atlantic’s new services on the kangaroo route will be good news for consumers in the UK, Hong Kong and Australia, as it will mean that much needed competition and choice is brought to these markets. I am sure that Virgin’s award winning service and innovative products will be well received both in the UK-Australia and Hong Kong-Australia markets.”

Mackenzie Grant, Head of Asia Pacific for Virgin Atlantic Airways, said:

“I would like to thank all the government and airport agencies in Hong Kong, Australia and the UK who helped us fulfil our dream to operate to Australia and I am particularly pleased that we will be able to offer our award winning service on this route. We will offer Virgin’s new Upper Class suite which consists of a reclining leather seat for take off, a place to sit and eat a meal opposite your partner, the biggest fully flat bed in business class with a proper mattress for sleeping on, a private onboard bar to drink at with your friends and an inflight beauty treatment area. Also included in the price of a Virgin Upper Class ticket are four chauffeur driven journeys to and from the airport at both ends of the route.”

Tickets will go on sale for the new services later in the summer. Details of introductory promotional offers will also be announced at that time.

Sydney will bring the total number of destinations served by Virgin Atlantic to 23. In addition to this route, Virgin recently announced that it is due to launch a number of new routes including Cuba and The Bahamas and an increase in services to the US, Caribbean, Asia and the Far East.

Notes:

The service through to Sydney will operate via Hong Kong with a 90 minute stopover in Hong Kong in both directions. The route will be operated by an Airbus A340-600 aircraft with a configuration of 45 Upper Class Suites, 28 Premium Economy and 233 Economy seats.

Flight VS200 will depart London’s Heathrow daily at 2130 arriving in Hong Kong at 1750 the following day. This aircraft will then depart Hong Kong at 1920 arriving in Sydney at 0710 the following day.

Flight VS201 will depart Sydney at 1615 arriving at Hong Kong at 2205. The aircraft then departs Hong Kong at 2335 arriving at London Heathrow at 0450 the following day.

Copyright 2004 South China Morning Post Ltd.
http://www.scmp.com/images/iEdition/MastHead/logo_scmp.gif

September 24, 2004
SECTION: Business; Pg. 5

Barriers to airline start-ups leave reforms up in the air
Joseph Lo

Hang around enough aviation and logistics-themed luncheons, conferences and seminars and you get a sense very quickly of what's important, or not, to the industry.

The opening of the new Baiyun International Airport in Guangzhou and its potential impact on Hong Kong is one issue that has dominated industry discussions in recent months, as has the Sino-US air services agreement struck this summer.

Funnily enough, the new Sino-Hong Kong air services arrangement has generated nowhere near the same level of industry interest, despite it being framed by the government as a major victory for the progressive liberalisation of our aviation industry.

It is, by some measures, the most liberal arrangement ever put in place to govern Hong Kong-mainland air links and it sets a timetable for Cathay Pacific Airways' return to the Shanghai passenger market. It also boosts cross-border air freight services, a critical element to the local economy.

Importantly, it champions the cause of newcomers to Hong Kong's air travel market, giving local start-up airlines - CR Airways and Hong Kong Express, a spin-off of Helicopters Hong Kong, are the first two aspirants, thus far - access to the smaller mainland cities that they crave.

For the pair, the critical part of the deal is this: it opens up 10 mainland cities (except Shanghai) for operations by more than one local airline immediately, with more cities to be granted dual-designation status over the next two years.

With some caveats, CR Airways and Hong Kong Express will now be able to launch regional jet services to the secondary cities that don't yet have the market to support services by larger Cathay and Dragonair jetliners.

This is potentially good news for Hong Kong's hub and mainland gateway status, as it helps enlarge the pool of mainland cities accessible from Chek Lap Kok. Air service links to the mainland are critical to our status as Asia's leading hub, and in turn feeds the growth of our finance, business services and tourism sectors.

But before CR Airways and Hong Kong Express break open the champagne, there is a hurdle that the new deal does not help them overcome. CR Airways has applied for a licence from the Air Transport Licensing Authority (Atla) to fly to Guilin, Haikou, Changsha, Tianjin, Sanya and Wuhan, for which it is facing opposition from Dragonair and Hong Kong Express.

Unfortunately for CR Airways, Dragonair already holds Atla licences and operates to those six cities, meaning that its application will be furiously contested. Atla is preparing to hear formal objections to the application.

Results aside, the process is time-consuming and costly, and adds to CR Airways' business uncertainty. A start-up can ill afford such costs.

So the formidable barriers to entry for start-up airlines at Chek Lap Kok remain. Despite the government's pledge to liberalise the industry, it is a shame that there seems to be little political will to truly implement change for the better.

Pushing the central government for open skies between Hong Kong and the mainland would be a huge step. Locally, a push to reform the industry's regulatory barriers - to provide more clarity in the way that licences and route rights are granted to airlines - might be no less important.

The Atla licensing process is deliberately separate from the requirements for obtaining the route rights to launch flights, a process that is controlled by the Economic Development and Labour Bureau (EDLB). An airline can hold an Atla licence for a destination, but never be allowed to operate the route because it lacks the requisite capacity allocations from the bureau.

Securing Atla approval adds to the burden for start-ups. So why not do away with it? In its place, a new authority could be carved out of the Civil Aviation Department (CAD) and the EDLB, with statutory powers to make sure licences and route rights are used in a timely manner.

A company approved by the CAD to operate air services could then approach the new authority with meaningful route applications, shaped by whatever actual rights were available under the prevailing agreements.

Such a framework would make life easier for start-ups and encourage more entrepreneurs to enter the industry. When that happens, we can celebrate a victory for liberalisation.

Copyright 2004 Financial Times Information
Global News Wire - Asia Africa Intelligence Wire
Copyright 2004 The Saigon Times Daily

September 24, 2004

UNITED AIRLINES PRESENTS FIRST VIETNAM-U.S. TICKET - LUCKY DRAW LAUNCHED FOR PASSENGERS
TUONG THUY


United Airlines yesterday presented the first HCMC-San Francisco ticket to one of its first customers, marking the start of a direct daily air service between Vietnam and the U.S. in almost 30 years.

United country director for Vietnam Richard Snyder handed a symbolic ticket to Ta Quoc Cuong, president of HCMC-based Thanh Thao Ltd., at its current HCMC ticketing office.

"Mr. Cuong is a valued, valued customer of United Airlines," Snyder said. "The issuing of the first ticket in Vietnam represents another milestone for our new direct service between the two sister cities, HCMC and San Francisco."

The U.S. second biggest airline is scheduled to launch the daily HCMC-San Francisco service via Hong Kong on December 11.

Cuong said, "This is a much-desired air service for Vietnamese businessmen like me. I regularly travel to America for business and I will not have to spend hours on connecting flights. I can fly with United direct to various cities in the U.S."

To mark the launch of the daily HCMC-San Francisco service, United has launched a promotion in which passengers buy a ticket for any international flight, they will automatically enroll in a lucky draw from now to October 31. Prizes include a round-trip economy class ticket to any of the 150 U.S. destinations served by the airline.

The airline says it is now the leading U.S. airline operating in Asia-Pacific. Asked by the Daily at the ticket presentation ceremony yesterday about special services for Vietnamese passengers on the upcoming HCMC-San Francisco flights, United marketing manager in Pacific South Krystal Ku said her airline was considering using Vietnamese-speaking flight attendants. "Our motto is to provide all what our customers need."

JOURNAL-CODE: FSGT

LCC 'to link Hong Kong with China cities'
Sep 2004, Orient Aviation

A new low-cost carrier (LCC) will connect Hong Kong with up to 20 Mainland cities next year in a joint venture between Udom Tantiprasongchai, owner of Bangkok-based Orient Thai, and an unidentified property firm listed in Hong Kong, writes David Fullbrook in Bangkok.

Services will start with four Boeing 737s, gradually increasing to 10 as more routes open. The venture aims to exploit unutilised traffic rights between Hong Kong and Mainland destinations particularly those within a few hours flying time such as Changsha, Jinghong and Hainan. Northern cities such as Tianjin and Jinan are also prime targets.

“For me it doesn’t matter where we fly because there are so many cities in China that are home to millions,” said Udom.

Udom will model the new unnamed carrier on One Two Go, Orient Thai’s low-cost subsidiary, which operates domestic services between major Thai cities. “It will be a high-frequency, simple shuttle service,” says Udom. Unlike other low-cost carriers, such as AirAsia or Thailand’s Nok Air, which use differential pricing, One Two Go sells all seats on a route for the same price. Passengers are encouraged to turn up and go, rather than book in advance.

Udom declines to identify the property firm until it completes due diligence later this year prior to taking a minority stake in Orient Thai, either through cash or a share swap. He will be a minority shareholder in the new Hong Kong-based carrier.

Meanwhile, Orient Thai plans to list on the Stock Exchange of Thailand. Proceeds raised from new investors will buy aircraft to replace leased aircraft and also refurbish interiors

Air Hong Kong gets 6 new planes
By Yap Lih Huey
Sept. 27, 2004

http://www.theedgedaily.com/cms/images/logo_edgeasia.gif

Air Hong Kong will significantly strengthen DHL’s US$100 million (RM380 million) central asia hub in Hong Kong and its dedicated regional air network with the recent delivery of six new Airbus A300-600F aircraft.

The cargo carrier, a joint venture between DHL and Cathay Paficic Airways, would be the first carrier in the world to operate this new freighter variant, which flies to Bangkok and Penang.

DHL holds a 40% stake in Air Hong Kong while Cathay Pacific holds the remaining 60%.

In a statement on Sept 27, DHL said the new aircraft was part of an order for six A300-600GF freighters placed by Air Hong Kong in January 2003 as part of its fleet expansion programme.

Deliveries of the remaining five wide-body aircraft would be completed by the end of the first quarter of 2005.

With progressive deliveries of the new aircraft, Air Hong Kong will significantly strengthen DHL’s dedicated regional air network, which currently comprises 25 destinations in 16 countries served by 40 dedicated cargo flights and over 800 commercial flights daily.

Air Hong Kong currently operates a fleet of leased freighters comprising one Boeing 747-200, one Airbus A300-600, two Airbus A300B4 and one Boeing B727. The route network includes Bangkok/Penang, Osaka, Tokyo, Taipei, Seoul and Singapore.

Copyright 2004 South China Morning Post Ltd.
September 27, 2004

Near miss south of HK denied; Aircraft were 304 metres apart, within safety limit
Cheung Chi-fai

Aviation officials yesterday denied a near miss between two airliners south of Hong Kong last week.

Responding to a press report on the incident, the Civil Aviation Department said there had been a safe distance between the two planes.

The report said the incident happened at 5.18pm on Thursday when a Boeing 747 was leaving Hong Kong for Kuala Lumpur and a Boeing 757 from Beijing was preparing to land in Hong Kong.

Both aircraft were flying about 55 nautical miles south of Chek Lap Kok when they reportedly came close to each other.

The department said the Boeing 757 was a Malaysia Airlines cargo flight and the Boeing 747 was a China Southern passenger flight.

It said the two planes were about 304 metres apart at their closest, which was acceptable according to international standards.

It said the Boeing 757 was flying at about 5,180 metres while the Boeing 747 was at 4,875 metres at the time.

The department stressed that flight safety had not been compromised and there was no risk of a collision.

"Flight safety is always the prime objective of the Civil Aviation Department. The department takes every step to ensure safe, orderly and efficient air traffic control," a spokesman said.

In June 2001 an Airbus 320 travelling to Shanghai and a Boeing 777 arriving from Seoul had a near miss 110 nautical miles east of Chek Lap Kok. The aircraft had been 210 metres apart.

Copyright 2004 South China Morning Post Ltd.
September 28, 2004

Travel industry looks to polish city's image
Paggie Leung

The tourism industry will campaign to lure long-haul travellers to Hong Kong and the region when the world's biggest association of travel agents holds a six-day conference in the city this week.

Delegates to the annual conference of the American Society of Travel Agents will see a presentation promoting the Pearl River Delta region, comprising nine mainland provinces, Hong Kong and Macau.

The conference, which runs from today to Sunday, has been co-organised by the Hong Kong Tourism Board. It will feature seminars, networking sessions, eight tours of different Hong Kong landmarks and a trade show featuring travel -related products from more than 380 exhibitors.

More than 1,000 members of the 20,000-strong association are expected to attend.

The tourism board says on its website that it hopes to convince delegates to recommend Hong Kong to their clients and include the city in their tour itineraries.

While tourism figures indicate long-haul tourism has rebounded to levels seen before last year's Sars outbreak, Travel Industry Council executive director Joseph Tung Yao-chung said travel from the United States and Europe had not fully recovered. He said the conference would help promote and rebuild Hong Kong's image.

"It will help the delegates know more about Hong Kong and that there are no problems with visiting this city now," he said.

Mr Tung welcomed the idea of promoting Hong Kong with mainland provinces, as itineraries would be enriched if tourists visited different cities during one trip.

A highlight of the programme will be the Pearl River Delta pavilion, a joint promotional booth organised by Hong Kong, Macau and the delta's nine provinces.

Hong Kong last hosted the conference in 1965.

Copyright 2004 South China Morning Post Ltd.
October 2, 2004

The new pilot should ensure smooth flight Ronny Wong, an apparent Tung loyalist, is expected to minimise air licence turbulence

For the second year in a row, the Air Transport Licensing Authority (Atla) could soon find itself at the centre of a local aviation industry storm.

Last year, the independent statutory body charged with licensing presided over a bitterly contested 11-day hearing, played out over four months of melodrama. This ultimately resulted in Cathay Pacific Airways winning rights to resume mainland operations over objections from Dragonair.

The coming months should produce another public hearing after CR Airways, backed by locally-listed ChinaRich Holdings' chairman Robert Yip, applied for mainland routes, a move that is again likely to draw protest from Dragonair and startup carrier Hong Kong Express, spun-off from Helicopters Hong Kong, which runs the Hong Kong-Macau helicopter services and also has designs on those routes.

CR Airways has applied for an Atla licence to fly from Hong Kong to Guilin, Haikou, Changsha, Tianjin, Sanya and Wuhan - six cities to which Dragonair holds Atla licences and already operates.

One difference between the two hearings is the man presiding over the bench. The meticulous but thoroughly non-partisan High Court Justice William Stone, who had chaired the Hong Kong regulatory body since 1999, recently stepped down to be replaced by former Bar Association chairman Ronny Wong Fook-hum.

While an unknown quantity in aviation circles, Mr Wong is no stranger to public service, having served on numerous government boards and committees. He has been chairman of the Town Planning Appeal Board Panel and the Inland Revenue Board of Review and a member of the Hongkong Futures Exchange and the Independent Commission Against Corruption.

Atla is the appointed licensing body - a state of affairs originating largely from the government's "one route, one airline" policy - and is called upon to arbitrate competition policy, with one of its prime objectives to help avoid uneconomical overlaps.

Mr Wong's appointment comes at a crucial juncture. CR Airways and Hong Kong Express plans for mainland-focused services from Chek Lap Kok mean the comfortable 20-year duopoly of Cathay Pacific and Dragonair will end.

The bigger question bedeviling the government is whether Hong Kong's aviation market should be thrown open to all comers, so ending the need for a government-appointed body to manage the competition process.

For now, Mr Wong prefers not to face such questions and declined to comment for this article.

So what can be gleaned about the new Atla chairman and how he will face these challenges? Barrister colleagues paint Mr Wong as a serious figure yet personable, highly respected, well-regarded and successful in the profession.

"Ronny is normally involved in big cases. He is a good organiser ... and prepares his cases well," said one barrister who preferred to remain anonymous. He said Mr Wong was a "very successful barrister".

He recalled that Mr Wong was once at the University of Hong Kong, teaching trust law: "He was a good teacher and also practical, helping prepare students for their legal careers."

Mr Wong's political leanings are not widely known, although another prominent barrister noted "he is believed to be very pro-government, with all that that statement implies".

His chairmanship of the Bar Association lasted, unusually, for only a one-year term in 1994. "That is unusual in that most people would normally serve for two years," a legal source said.

The source recalled a tempest in a teapot following a proposal from Mr Wong to alter the association's logo, which is a combination of the Four Inns of Court in London.

"It was Mr Wong's opinion that the logo should be changed in anticipation of the resumption of Chinese sovereignty in 1997. There were a number of different new designs put forward and one by Mr Wong that included a bauhinia design," the source said.

More recently, Mr Wong served on the tribunal to probe alleged political interference into the polling activities of political scientist Robert Chung Ting-yiu.

The affair followed efforts by the personal assistant of Chief Executive Tung Chee-hwa to massage polls highlighting the unpopularity of his boss.

The tribunal concluded that Mr Chung had been wronged by the university but the question of whether he was acting under higher authority was not answered.

The affair revealed little about Mr Wong's political leanings but a barrister commented "one interpretation could be that there was some element of protection for the chief executive".

So Mr Wong seems to be a Hong Kong, as well as perhaps a Tung administration, loyalist.

What his chairmanship of Atla will mean for the development of the local airline market as more competitors emerge remains to be seen. But given the bitterness that emerged between Cathay and Dragonair from last year's Atla hearings, Mr Wong appears to be a safe pair of hands, ideal for a government keen to avoid more controversy.

joseph.lo@scmp.com

The Big Picture - China & Hong Kong Aviation
China: Beijing and back for a buck?

27 September 2004
Economist Intelligence Unit - Business China

China’s flying public may be ready for discount airlines, but is the government?

The September 15th announcement by a Chinese-Singapore consortium of plans to begin discount airline services from Guangzhou’s new Baiyun airport has upped the stakes for other budget carriers jostling for access to Chinese skies.

While the as-yet-unnamed group is not the first to develop plans for discount air travel in China -- Malaysia’s AirAsia is currently negotiating to begin flights to Chengdu and Kunming at the end of this year -- it is a more significant development for two reasons. First, the consortium is majority-owned by the well-connected state-owned travel company, Guangzhou China Travel Service, which has the clout to fight both red tape from Beijing and entrenched opposition from China’s major airlines. And second, it is focused on starting domestic services.

Whether or not the new group will get off the ground is still unknown: plenty of industry participants and observers doubt Beijing’s willingness to expose China’s protected and largely inefficient carriers to the rigours of such an ultra-competitive market. Years of overexpansion and price wars have led to large losses for domestic carriers. Costs are high at China’s three major airline groups, Air China, China Eastern and China Southern, while load factors currently languish around the 60% mark, compared to the 70%-plus commonly found at other Asian airlines. Moreover, the big three are still digesting the absorption of a dozen smaller (and even less efficient) carriers completed in 2002.

The way to fly

Undoubtedly, however, the naysayers have become less vociferous of late. This is perhaps because of the dramatic impact discount airlines are having on other aviation markets, especially in Europe. Travellers flying into any major low-cost hub these days -- London’s Gatwick airport, for one -- are confronted with a host of newly-painted jets from carriers that did not exist a couple of years ago. While cut-throat competition may see many of these quickly disappear, the market trend is clear. And with the birth of a regional low-cost model in south-east Asia, where 10 budget start-ups have begun flights in the last 18 months, the introduction of the discount-flight phenomenon in China is only a matter of time, says Peter Harbison, managing director of the Centre for Asia Pacific Aviation (CAPA), a Sydney-based consultancy.

The transition, however, will not be easy. Quite likely, analysts say, any opening will be introduced in increments, with international services the first to figure. Setting up domestic services will be considerably more difficult. Not only can the incumbents be expected to protect their turf fiercely, but finding a way through the morass of required approvals for ticket pricing, aircraft imports and route structures will throw up further delays. These kinds of obstacles may explain why the new Guangzhou-based consortium is not anticipating starting flights until 2006.

While the consequences of deregulation are unlikely to be positive for China’s big three carriers, other parts of the aviation industry should fare better. In particular, a budget airline boom would help at least some of China’s many loss-making airports. During the 1990s, dozens of small regional airports were constructed across China, either as local government vanity projects or as a result of over-ambitious central government plans to open up the west of the country. Guangdong’s Zhuhai airport, which opened in 1995, is a perfect example of bureaucratic folly. Aimed at stealing business from more established Pearl River Delta rivals at Shenzhen, Guangzhou and Hong Kong, it flopped miserably. Last year it handled just 585,000 passengers and 7,500 tonnes of freight. According to local media reports, it is now losing US$2.4m per month.

Zhuhai is not alone: few other city airports make money, and in 2002, Beijing instructed local governments to take over ownership and management of such money-losing white elephants, an exercise completed in June this year. A discount airline boom could change things markedly for the better at such places. Because discount carriers depend on a business model that cuts costs to the bone, cheaper, underused regional airports near large population centres make ideal operational hubs. Macau airport, a tiddler by any standards, is already AirAsia’s base in the Pearl River Delta. Should Beijing agree to open its market, even Zhuhai may have hope. “China has a lot of small airports it needs to build out but which lack the economics to make that happen by themselves. So if foreign companies choose to make them bases for discount airlines, they are likely to welcome that,” says Michael Chan, a transport analyst at Bank of China International.

Harder for Hong Kong

Greater deregulation of China’s aviation market is also likely to have an impact on Hong Kong’s Chek Lap Kok airport. Although Hong Kong has for years benefited from Chinese capacity restrictions by acting as a transit point for both cargo and passenger traffic into China, more access to mainland skies will mean less reason to use Hong Kong’s expensive facilities.

The threat here comes not only from the region’s discount carriers. China has recently made a number of agreements allowing more foreign airlines to fly directly to the mainland. The signing in June of a new Sino-US Air Services Agreement will allow an additional 195 weekly flights by US carriers by the end of a six-year phase in period, up from a current total of 54. By 2010, airlines from both countries will be able to serve any point in either country.

While the Sino-US agreement promises to make real inroads into Hong Kong’s role as a passenger transit hub, the impact on its air-cargo business may be even more profound. Hong Kong has long dominated the Pearl River Delta’s market for air-cargo. In 2003, it processed 2.64m tonnes of freight, or about 90% of all regional air shipments -- more even than the 2.19m tonnes handled in all of the mainland. But with 70% of its business originating in the Pearl River Delta, Hong Kong’s traditional stranglehold over the sector is tenuous. Already, despite its superb facilities, frequent flight connections and years of accumulated expertise, it is losing market share to rival airports across the border.

In addition, with Beijing also agreeing to allow US cargo carriers to establish hub operations in China, air freight companies are looking to make large investments in new Chinese facilities, many of which will be built at the expense of their operations in Hong Kong. Fedex, for example, is negotiating with Guangzhou’s Baiyun airport to make it the location for its second Asia-Pacific hub after its current operation at the Philippines’ Subic Bay.

As a result, Hong Kong’s longstanding take-it–or-leave-it attitude to its high-cost structure is starting to be modified, with airport executives talking about ways in which airport charges could be discounted. The airport is also negotiating to buy a stake in rival facilities at either Shenzhen or Zhuhai. Hong Kong Air Cargo Terminals Ltd, meanwhile, which handles about 80% of Hong Kong’s air cargo shipments, has commenced bonded barge and truck delivery services between Hong Kong and the Pearl River Delta with the goal of reducing cross-border bureaucracy.

Pie for all

That said, Hong Kong’s dominance in air-cargo is unlikely to be lost any time soon. Mainland airports have nowhere near the same international flight frequencies and lift capacity demanded by customers. Besides, there will be plenty of business to go round. A recent independent study commissioned by the Hong Kong Airport Authority projects that annual air cargo volume in Hong Kong is set to rise to 4.5m tonnes by 2020. At the same time, Hong Kong’s share of the cargo market will shrink dramatically, to just 47% of a Pearl River Delta total of 9.6m tonnes. The share for Guangzhou’s new Baiyun airport is set to rise to 27%, Shenzhen’s to 17%.

While a half-share of a market four times bigger may be no bad thing for Hong Kong, over the longer term, even this proportion may not be sustainable. Rapid deregulation in the mainland -- for which the discount airline phenomenon will act as a catalyst -- is likely to cause large problems for those who benefit from things as they are now. For China’s major carriers, as well as the Hong Kong Airport Authority, that is an unsettling prospect, and one they can be expected to resist.

Dragonair warns it may increase fuel surcharge
Danny Chung, HK Standard

Hong Kong Dragon Airlines (Dragonair), the local carrier 43 per cent owned by China National Aviation Corp, said it may apply for an extension and increase of the fuel surcharge when the current three-month period expires at the end of November.

Dragonair chief executive Stanley Hui said on Tuesday that the decision to increase the fuel surcharge would hinge upon oil prices in November.

"I don't want to add [surcharges], but if oil prices continue to go up like this, I don't have any choice,'' he said.

The price of crude oil rose above US$50 per barrel (HK$390) for the first time last week on concerns that supply may be interrupted by political tension in Nigeria, one of the main oil supplying nations.

Hui said for every one US cent increase in fuel costs, operating costs would increase by HK$12 million, with fuel costs at Dragonair expected to hit HK$500 million for this year.

Dragonair's fuel costs are expected to jump from 8 per cent of general costs two years ago to 16 per cent this year, and oil prices would have to drop to below US$40 before fuel surcharges could be withdrawn, he added.

Although fuel surcharges for passengers were imposed in March and April last year and starting from June this year, Hui said the airline had not seen any noticeable effect on passenger numbers.

Civil Aviation Department spokeswoman Stella Tse said, as of Tuesday, 38 airlines had applied for fuel surcharges ranging from US$4 to US$19.

Cathay Pacific corporate communications manager Maria Yu said it was still too early to consider applying for an extension of the fuel surcharge period.

"Of course, we would monitor oil prices before making any decision,'' she said.

Yu said high fuel prices this year accounted for an estimated 25 per cent increase in operating costs.

For cargo, a fuel surcharge was imposed in May by about 70 airlines, according to a schedule of levy bands approved in 2002.

"So far, the surcharge has reached the highest [band],'' Tse said.

Current levies are at the sixth and highest level, which are HK$1.20 per kilogram for short-haul flights and HK$2.40 per kilo for long-haul services.

Air Hong Kong general manager Alex Lau said the dedicated air cargo carrier was also closely monitoring the current high oil prices.

He said higher bands of surcharges may be required.

6 October 2004 / 02:00 AM

Copyright 2004 South China Morning Post Ltd.
October 6, 2004

Cathay warns of $ 1b extra costs The carrier is undecided about applying for an extension to the fuel surcharge
Russell Barling

Cathay Pacific Airways yesterday said its fuel costs were expected to rise HK$ 1 billion this year as surging oil prices continued to add to operating expenses.

Meanwhile, Hong Kong Dragon Airlines (Dragonair) said it would apply to the Civil Aviation Department (CAD) next month for an extension to its fuel surcharge, with no sign that jet fuel prices would recede in the short term.

"We may have to pay in excess of HK$ 1 billion more for fuel over the whole year," Cathay spokeswoman Carolyn Leung Yuet-fong said yesterday, adding that the company would have to renew efforts to keep other costs down and increase productivity to offset the impact that would have on earnings.

The airline remains undecided whether to seek an extension to its fuel surcharge.

Dragonair said fuel costs accounted for 20 per cent of its operating expenses in August, up from 8 per cent two years ago. However, 20 per cent of the rise was due to a comparative 28 per cent jump in the size of its passenger fleet.

"If fuel prices remain at current levels for the remainder of this year, it would result in additional costs for us of HK$ 400 million to $ 500 million," Dragonair spokeswoman Laura Crampton said. "We plan to apply for extension of the surcharge given that the cost of fuel remains at such a high level."

Crude oil for November delivery surged to a record US$ 50.70 a barrel in New York on Monday.

Dragonair was allowed by the CAD on September 1 to add HK$ 54 per flight to partially compensate for higher fuel costs, but that deal expires at the end of next month. Cathay was allowed to charge an extra US$ 7 for short-haul and $ 19 for long-haul flights.

Cathay chairman James Hughes-Hallett said in May that every one US cent rise in the price of a gallon of fuel added HK$ 60 million to the airline's operating costs.

At the time, jet fuel trading in Singapore was priced at US$ 48.60 a barrel. The commodity was trading at US$ 58.15 a barrel on Monday, a level which would increase Cathay's fuel-based operating costs by HK$ 1.36 billion if the higher level was maintained for the full year.

The airline's fuel bill was HK$ 3.43 billion in the first half, up 39 per cent year on year. Fuel has since risen to 25 per cent of operating costs for the carrier from 21.8 per cent in the first half.

Cathay is strongly hedged this year, pre-buying at lower rates 65 million to 70 million gallons of fuel per quarter, according to its annual report last year. That drops dramatically next year to less than 10 million gallons in the first two quarters.

"Our hedging positions are limited," Ms Leung said. "With fuel prices at record highs we will increase our cover cautiously, as the downside risk is at present greater than the upside protection."

Continental Airlines to launch direct flights between Hong Kong and Saipan

The Marianas Visitors Authority (MVA), the official tourism board of the Commonwealth of the Northern Mariana Islands (CNMI), has welcomed Continental Airlines’ decision to launch non-stop flights between Hong Kong and Saipan, the capital of CNMI. Beginning November 1, 2004, passengers on flight CO910, will fly direct from Hong Kong to Saipan, then continue to Guam after about an hour stop-over in Saipan. The returning flight, CO909, will fly from Guam to Saipan for passenger pick-up, then directly back to Hong Kong.

Ms Victoria Benavente, Managing Director of MVA said, “Continental Airlines’ decision to operate a non-stop service to Saipan from Hong Kong is excellent news for visitors to the Marianas – Saipan, Tinian, and Rota. The increase in accessibility shortens their travel time and allows for travelers to explore our destinations’ attractions. With the direct flights, we welcome our Hong Kong vacationers and invite them to create their adventure either through sports tourism, gourmet, cuisine, entertainment, health, spa, and beauty.”

China (including Hong Kong) is a key growth market for the MVA. It posted a tremendous increase in visitor arrivals with a record breaking total of 4,405 for the month of August which is its greatest gain in fiscal year 2004. (Visitors in August 2003 were 1,485.) In fiscal year 2003 visitor arrivals totaled 13,368 for China and in fiscal year 2004 (ending the 30th of September) the arrival figures are expected to double.

Ms Benavente added, “The MVA is gearing up for the anticipated influx of Hong Kong tourists. Our members have begun to invest in upgrading their services and facilities to welcome these tourists. For instance, the DFS Galleria in Saipan has been doing reconnaissance trips and planning to train staff in Chinese language and culture so as to provide even better services. Renewal projects, such as the Garapan Revitalization project includes the pedestrian walkway in the Garapan district, a popular attraction for visitors.”

Mark A Erwin, President and Chief Executive Officer of Continental Micronesia at Continental Airlines said, “We are delighted to see the investment by the CNMI. We have observed the demand from tourists to visit the CNMI and the large potential of the market. We, therefore, decided to launch this direct flight between Hong Kong and Saipan. Continental Airlines is committed to making travel more convenient for our customers and we also would like to support the efforts of the CNMI government and its people.”

In addition, Continental Airline and Cape Air forged a partnership in the summer this year, through its Continental Connection program to provide more flights within the CNMI and the Micronesia. The increase in accessibility for inter-island travel provides a more efficient and comfortable choice to the travelers.

Qantas & Cathay?
Qantas best placed for Asian alliance
06 October 2004
By TANSY HARCOURT

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The ducks were all in a row for Geoff Dixon to bow out at the top. At 63 years of age, after one of the most difficult periods in Qantas' recent history, he had just steered Australia's flagship carrier to its highest profit.

But instead of retiring when his contract expired in August, Mr Dixon accepted the invitation of the board to sign up for another three years to pilot Qantas through what could be the most exciting period in its history.

Its drawn-out alliance deal with Air New Zealand is dead, leaving a clean slate for both parties to go forward.

Suddenly, British Airways is gone from the Qantas share register and Mr Dixon is free to explore opportunities in Asia as never before, after being strategically restricted by the decade-long equity alliance with British Airways.

For Qantas, the public focus has been on Singapore – where the airline's main Asian hub is – and talk of an alliance or even merger with Singapore Airlines.

But Singapore may not be the only game in town for Mr Dixon.

Qantas' decision last week to "out" the Singapore Government's investment vehicle Temasek, which owns 57 per cent of Singapore Airlines, as a 2.9 per cent shareholder in Qantas after BA sold its 18 per cent stake showed there might be other things afoot in Mr Dixon's Asian plan.

The Singaporeans are believed to have been miffed by the Qantas revelation, but perhaps it was just Mr Dixon keeping his rivals on their toes.

Though Qantas wants to do a deal in the region, it has to be on its terms, and the airline wants its competitors to know that it has options. And Qantas does not want another airline, or an investment company that controls another airline, sneaking up on its share register without approaching it first.

There is no doubt a deal with Singapore Airlines makes sense. Both airlines are among the most profitable carriers in the world.

Both face growing competition from Middle East carriers, such as Emirates Airline, picking off lucrative Asian and European routes, and relentless pressure on costs.

Qantas wants to tap the enormous number of people who live in Southeast Asia and the Singapore Government needs Qantas' business to protect its economic viability.

AdvertisementAdvertisementBut the centre of Asian economic activity is gravitating north to China, making Hong Kong-based Cathay Pacific an attractive alternative as an alliance partner for Qantas.

Freight and passenger loads from China have increased at a hefty rate of about 10 per cent a year, growth rates that analysts expect will be maintained for the foreseeable future.

The United States Department of Commerce estimates that by next year China will have notched up cargo turnover of 2.7 million tonnes and passenger volume of 100 million.

The booming Chinese economy is attracting business in droves and recently the US and China negotiated a bilateral agreement to allow for greater air services between the two countries.

For Australia, China is still a growing market, but in a few years it is expected to be a major destination for Qantas.

The problem for Qantas is that it has a lot more leverage to do a deal with Singapore Airlines than it does with Cathay, because aviation is crucial to Singapore's economy and Qantas is the second-biggest user of its Changi Airport as a hub.

But perhaps the way for Qantas to deal itself a seat at the table with Cathay's owners, the Swire Group and the Chinese Government, is the fear of what it could do instead – that is, a deal with Singapore Airlines to create a regional super airline.

That same fear of Qantas tying up with someone else could partly explain why Temasek has bought shares in Qantas.

It is worth noting that the motivations of state-owned Temasek may not necessarily be the same as those of the companies it owns, such as Singapore Airlines.

"Governments are incentivised by gdp growth and not necessarily by the return on equity of their investments. The distinction is important when assessing aviation policy," says Merrill Lynch analyst Simon Gresham.

He notes that it is in the Singapore Government's best interest to promote healthy competition between Singapore Airlines and Qantas, given their status as the two biggest users of Changi Airport.

But if Qantas is determined to do a deal and regional consolidation is to take place, then the idea of that happening with any carrier other than Singapore Airlines would be an even less attractive prospect to the government than having its two biggest airline customers tie up.

Hence Temasek's move on Qantas could be perceived as an attempt to grab a blocking stake rather than necessarily being a precursor to a full-blown merger.

Before British Airways' sell-down of its 18.25 per cent stake in Qantas last month, the region's airlines had been trying to position themselves as strongly as possible in anticipation of a consolidation in the next few years.

But with British Airways' sudden decision to sell out of Qantas and focus on aviation consolidation in Europe, the jostling in this region has begun in earnest.

Until recently, a deal between Cathay Pacific and Qantas would not have made much sense. The two are already part of the oneworld alliance and therefore have code-share agreements in place, plus they both have had a safe hold on the Australia-to-Hong Kong route.

But with Virgin Atlantic due to start flying Australia-to-London via Hong Kong at the end of this year, and China-based Dragonair also about to start the Australia-Hong Kong route, and the doubling of air-service rights between the two countries, that route could be about to get a lot tougher.

If there is increased competition, some analysts say there could be a strong case for Qantas and Cathay Pacific to enter a joint services agreement on Australia-Hong Kong, similar to the one Qantas has with British Airways on the "kangaroo route" between Australia and Britain.

Be it with Singapore Airlines or Cathay Pacific, Qantas has the potential to be in a very powerful position in Asian aviation consolidation.

Lucrative Shanghai flights to be distributed; Cathay and Dragonair have battled for the 12 weekly cargo flights that the government is due to grant next week
Russell Barling
9 October 2004
South China Morning Post

The government will decide next week on the distribution of the first tranche of mainland flights won in last month's air services agreement with Beijing.

Cathay Pacific Airways and Dragonair are competing fiercely for the 12 additional weekly all-cargo flights to Shanghai, with both thought to have applied for at least seven new services to central China's manufacturing heartland.

"We expect to make our decision public within a couple of days," said an official from the Economic Development and Labour Bureau, which is tasked with allocating the new frequencies. "However, the flights will not be available until the end of the month."

Cathay has also applied to increase its thrice-weekly passenger service to Beijing and to fly to Xiamen, in Fujian province. The airline is not authorised to launch passenger services on the Shanghai route until 2006.

Four more weekly flights to Beijing are available, as is daily service to Xiamen, but the immature Fujian market is unlikely to make a daily flight an attractive proposition for any carrier.

As Dragonair did not apply to increase passenger services in this month's allocation, Cathay is expected to receive its Xiamen and Beijing allocations.

But it is Shanghai which remains the key target. "Shanghai is certainly not an immature market and there is room for more carriers," director of corporate development Tony Tyler said yesterday.

"Our serving the mainland will not pose a threat to existing operators. We will focus on funnelling international travellers through Hong Kong - a very different market proposition to existing operators which primarily focus on passengers from Hong Kong, Taiwan and other mainland cities."

Compared with other major Asian markets served through Chek Lap Kok, Shanghai remains the most restricted.

With 2.26 million passengers flying on the route in the year to May, it is Hong Kong's No3 market behind Taipei and Bangkok. But the route is served by only two carriers - Dragonair and China Eastern - while 13 airlines ply the Hong Kong-Bangkok route and six offer services to Taipei.

Mr Tyler, set to become Cathay's chief executive next year, said liberalisation of the Shanghai sector would help Hong Kong further develop its regional hub status.

"Cathay Pacific makes its living out of attracting traffic from right across our network, over Hong Kong and on to other points. More than half our passengers make connections here," he said.

"We know how to get traffic flowing over Hong Kong to and from the mainland, and we are itching for the opportunity to help build the hub by doing this. The only way to consolidate Hong Kong's hub status is by linking our international network to our own flights to the major mainland cities."

Seven more passenger flights to Beijing and Shanghai will become available to Hong Kong carriers in March next year.

Hactl wins "Air Cargo Terminal of the Year" for third year running

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(8th October 2004) Hong Kong Air Cargo Terminals Limited (Hactl) has been named "Air Cargo Terminal of the Year" at the Asia Logistics Awards 2004. This is the third consecutive year that Hactl has won this prestigious award. The award presentation gala dinner was held last night at the Sheraton Imperial Hotel in Kuala Lumpur, Malaysia.

The Asia Logistics Awards is organised by leading trade publication, Lloyd's Freight Transport Buyer Asia, and has become an annual highlight for the Asian logistics industry since its inauguration in year 2002. The Awards recognise the industry's top-performing players in 13 categories. Readers of Lloyd's Freight Transport Buyer Asia cast their vote to select finalists from each category, and the final winner is chosen by an independent panel of 15 judges, comprising professionals in various sectors of the supply chain, across different Asian countries.

Speaking at the award presentation dinner last night, Mr. Anthony Wong, Hactl's Managing Director said, "It is a great honour to have won the 'Air Cargo Terminal of the Year' title three years in a row. This recognition is a testament to our efforts to provide efficient and reliable cargo handling services at the world's most modern air cargo terminal, as well as our dedication to serving Hong Kong and maintaining its position as the premier air cargo and logistics hub in the Asia Pacific region. This award is not just an achievement for Hactl, but for the entire Hong Kong International Airport community, and my heartfelt thanks go to our valued customers and business partners, who have given us their trust and support over the years."

Air Cargo Growth Sustained in the Third Quarter

(7th October 2004, Hong Kong : ) Hong Kong Air Cargo Terminals Limited (Hactl) released its air cargo tonnage figures for September and for the third quarter of 2004 that showed continued volume growth.

A total of 199,501 tonnes were handled in September 2004, up 12.4% compared with the same month last year. A new weekly tonnage record of 49,097 tonnes was set in the week of 20 September to 26 September, breaking the previous record of 48,428 tonnes achieved in the week of 17 November to 23 November last year. Tonnage for the third quarter was 568,594 tonnes, up 13.2% year-on-year. Cumulative tonnage for the first nine months of the year was 1,637,757 tonnes - an increase of 15.2% against the same period last year.

Export volume in September was 114,058 tonnes, representing a year-on-year growth of 14.4%. Total export tonnage for the third quarter was 320,740 tonnes, up 15.9% compared with the same period last year. The European market, which accounted for over 30% of the total export tonnage, continued to lead the growth in the export sector, with year-on-year increase of 31.7% and 29.0% registered in September and in the third quarter respectively. Buoyant export tonnage growth was also recorded in the U.S. market - up 12.6% for September and 17.8% for the third quarter. Cumulative export tonnage for the first nine months of the year was 905,676 tonnes, up 19.6% against the same period last year.

In the import sector, a total of 57,578 tonnes were handled in September, up 2.1% year-on-year. Total import volume for the third quarter was 170,318 tonnes, up 4.8% year-on-year. Strong growth was seen in the U.S. market (+42.4%), as well as in Mainland China (+38.8%) and Japan (+14.7%) in the quarter. Aggregate import volume for the period January to September 2004 was 520,257 tonnes, up 10.0% year-on-year.

"Growth in the third quarter was fuelled by the surge in export volume in the latter half of September amid the pre-National holiday rush," said Warren Bishop, Hactl's Marketing Director. "The new weekly handling record set in September shows that Hong Kong International Airport is still the preferred air cargo hub in the region. Hactl's ability to handle these volumes reflects our on-going efforts to maintain our service standards and enhance efficiency. We expect growth momentum to be sustained throughout the last quarter, and are confident that we can manage this growth, while delivering service according to our customers' expectations," Mr. Bishop added.

Data
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Flight From Hong Kong Diverted in U.K.
October 14, 2004

LONDON - A Virgin Atlantic plane heading from Hong Kong to London was diverted to an airport north of London on Thursday after receiving a bomb threat, police said.

Flight VF201, carrying 214 passengers and 18 crew members, was diverted to Stansted after a bomb threat was made by phone. Essex Police Chief Superintendent Sue Harrison said officers established that the call was a hoax before the plane was searched but questioned passengers individually.

"Information we received has been thoroughly investigated. We are now satisfied it is a hoax," she said.

No explosives were found aboard the plane, police said.

The plane landed at 5:23 a.m. Everyone on board was evacuated safely and taken to a secure area at the airport, Harrison said.

"We never treat threats of this nature as routine. We take it seriously and we have tried and tested procedures to deal with it," she said.

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Crew re-board a Virgin Atlantic Airbus A340 after the plane was diverted following a bomb alert to Stansted airport near London, October 14, 2004. Police confirmed on Thursday that the bomb threat, which forced the plane to divert to Stansted on route from Hong Kong to Heathrow, was a hoax. REUTERS/Toby Melville

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Virgin plane Flight VR201 from Hong Kong sits on the tarmac at London's Stansted airport after being diverted on route to Heathrow following a bomb threat, October 14, 2004. The plane, with 233 people on board, landed safely on Thursday an airport spokeswoman said. REUTERS/Toby Melville

Friday October 15, 9:43 AM
HK Dragonair Sep Passengers Fall; Cargo Hits New High

HONG KONG (Dow Jones)--Hong Kong Dragon Airlines said Friday the number of passengers it carried in September fell slightly from August's record high, but cargo shipments rose to a new high.

The city's second largest airline carried 415,343 passengers in September, down 6.6% from 444,498 in August.

"September is a traditionally slower month for travel, following the busy holiday month of August," said Chief Executive Stanley Hui.

Dragonair's cargo operations continued to grow, reaching a new high for the third consecutive month, the airline said.

The company shipped 33,829 metric tons of cargo in September, up 10.5% from the previous record of 30,613 metric tons in August.

"The shipment of goods out of eastern China to Europe and Taiwan, increased flights to Europe and in the region, and high demand throughout most of our network pushed us to our third monthly freight record in a row," Hui said.

High oil prices continue to worry the airline, the executive said.

"It continues to be of great concern to us, given that our hedging program and the surcharges in place can only do so much to reduce the overall impact on the bottom line, and oil looks set to test new highs," Hui said.

Dragonair operates a fleet of 10 A330-300s, six A321s and 10 A320s, as well as four Boeing 747-200/-300 freighters and one wet-leased A300B4 freighter.

The company's major shareholders are China National Aviation Co. (1110.HK), which holds a 43.29% stake, CITIC Pacific Ltd. (0267.HK), with 29.35%, Cathay Pacific Airways Ltd. (0293.HK), with 17.79%, and Swire Pacific Ltd. (0019.HK), which holds 7.71%.

14-10-2004:
Cathay Pacific the best in North Asia

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Cathay Pacififc Airways has again been voted Best North Asian Airline and Best Airline Business Class by TTG Asia and TTG China readers in this year's TTG Asia Travel Awards.

"We are honoured that industry partners in the region have acknowledged the quality of our product and service and our continued efforts to seek improvement," said Cathay Pacific director of sales and marketing James Barrington in a statement on Oct 14.

Cathay Pacific offers scheduled passenger and cargo services to 90 destinations in 30 countries.

Orient Thai, CR Airways To Start Joint-Venture Airline
William Dennis
6 October 2004
Aviation Daily - Volume 358, Number 2

Thai private carrier Orient Thai Airlines and CR Airways plan to set up a joint-venture airline that will be based in Hong Kong and fly mainly to China.

Orient Thai CEO and owner Udom Tantiprasongchai reports that the company will be set up soon and start operations as early as the second quarter next year. The aircraft type will be decided after the company is established. CR Airways will hold a 60% stake, while Orient Thai, which will be responsible for the day-to-day operations, will hold the remaining 40%. -WD

New Airbus jet spins off runway; Embarrassing debut for Air Hong Kong freighter may have been down to an idling engine
Simon Parry
17 October 2004
South China Morning Post

A training captain and the pilot he was supervising have been grounded after a newly delivered Air Hong Kong freighter aircraft spun off the runway during takeoff from Bangkok.

The Airbus A300-600F, delivered in September to a VIP reception at Chek Lap Kok, is the first of six aircraft carrying the new Air Hong Kong and DHL livery and the first Airbus freighter of its kind to go into service worldwide.

In the incident on October 2, the jet ended up on the grass on the side of the runway. It was towed back to the terminal and taken out of service for 24 hours for checks.

A newly hired pilot at the controls and the training pilot supervising him have been removed from flying duties, normal practice in such circumstances, while an investigation is conducted by Air Hong Kong.

Industry insiders said the plane may have ended up on the grass because its left engine had been warmed up while the right was left idle before takeoff, resulting in far more thrust from one engine than the other when the pilot applied maximum power.

The embarrassing incident comes less than a month after executives from Cathay Pacific and DHL, who hold 60 per cent and 40 per cent stakes in Air Hong Kong respectively, posed for pictures beside the Airbus after it was delivered from France on September 9.

Bearing a striking mustard and white livery, the aircraft went into service on September 12, operating a freighter service between Hong Kong, Penang and Bangkok. Its arrival is the first step towards a major fleet expansion which will see five more A300-600F jets delivered by the middle of next year.

A spokeswoman for Air Hong Kong said: "The aircraft veered off ... the runway shortly after commencing take-off procedures. It was then towed to the airport hangar area for inspection.

"The Department of Aviation in Thailand carried out a routine investigation and subsequently released the aircraft for commercial services. Air Hong Kong also reported the incident to the Hong Kong Civil Aviation Department and will keep the department informed of the result of its own internal investigation."

After the plane was found to be undamaged, a different crew flew it to Penang the following night to catch up with its triangular Hong Kong-Penang-Bangkok flying schedule.

The spokeswoman confirmed the flight was a training flight but denied the pilot was inexperienced. "He is experienced on many other big jets, including the Boeing 747, 777 and 737, but he was relatively new to the A300, which is why it was designated a training flight. The pilot was being supervised by a training captain."

She declined to comment on the possible causes for the incident.

One London-based pilot said: "It may have been that the pilot used one engine to manoeuvre the plane into position before being given the order to expedite takeoff.

"In general, aircraft engines wind up quite slowly from idle but once you get to 50 per cent power they wind up pretty quickly.

"For that reason, pilots are normally advised not to use the engine on one side and leave the other one idle during ground manoeuvres. In this case it may have been that the right-hand engine had been left idle when the pilot put the plane to maximum thrust."

He added that grounding of the two pilots was standard practice. "It's not a punishment," he said. "There are good reasons for keeping people on the ground, firstly because investigators want to see if they need retraining in any way.

"Secondly, they will have what happened preying on their minds so they may not be in a fit state to fly. And thirdly, it also means they are available for investigators if they are needed."

Air Hong Kong has conducted an Asia-wide recruitment campaign for pilots to work on its rapidly expanding fleet.

Size matters, says new Virgin arrival

Steve Creedy Aviation writer
16 October 2004
The Australian

VIRGIN Atlantic will launch a $1 million advertising campaign next month to introduce its Upper Class suite to business travellers as it moves to take on Qantas, British Airways and Cathay Pacific on the Hong Kong-Sydney route.

The campaign will seek to establish Atlantic's credentials as a premium carrier and clear up any confusion in travellers' minds between the international operator and its low-cost sister airline, Virgin Blue. It will centre on the award-winning Upper Class suite, touted by Virgin as "first class at business class prices".

The seat, introduced to travel trade representatives at a Sydney function this week, converts to a fully flat bed with a mattress and is currently the biggest of its type.

The suite also boasts an ottoman seat that allows passengers to entertain, conduct business meetings or dine with guests.

"It is vastly superior to the business class offerings of our competitors on the Sydney to Hong Kong route," said Virgin Atlantic sales and marketing manager Australia and New Zealand Gia Acitelli.

"Size does matter to business travellers and, simply put, ours is bigger than theirs."

Virgin Atlantic will start a daily service to Sydney on December 8 using 306-seat Airbus A340-600 aircraft with 45 Upper Class seats, 28 premium economy seats and 233 economy seats. It will pit its Upper Class suite against a somewhat dated BA business class, a significantly improved Qantas product and a well-regarded Cathay offering.

Features offered by Virgin include an in-flight entertainment system offering 50 movies and 300 hours of video, an in-flight bar and in-seat massages and beauty treatments.

Virgin also chauffeurs its business class customers to and from the airport.

Ms Acitelli said the airline would offer fares in line with those of Qantas and BA into London, and in line with those of Cathay into Hong Kong. She said the airline would target business travellers in all three cities on the route and viewed the BA-Qantas alliance as its biggest competitor.

Meanwhile, Emirates will double its capacity to Perth from October next year when it introduces two daily flights to Dubai using A340-500 aircraft.

Also yesterday, Jetstar announced it would start flying to Cairns from Melbourne and Sydney in January, increasing Qantas Group capacity into the town by 350 seats per week.

AFX - Asia
October 18, 2004

Hong Kong airport Sept passenger traffic up 15 pct yr-on-yr, cargo up 19.2 pct

Hong Kong International Airport received 3.04 mln passengers in Sept, up 15 pct year-on-year, while cargo throughput reached 280,000 tons, an increase of 19.2 pct.

A total 19,995 aircraft movements were recorded in Sept, up 18 pct on year, comprising 16,770 passenger flights and 3,065 cargo flights, the Airport Authority said in a statement.

19 October 2004
Cathay Pacific Granted Further Rights for Mainland Services

Cathay Pacific Airways was today informed by the HKSAR Government that it has been granted rights to operate additional passenger services to Beijing as well as new cargo services to Shanghai and passenger services to Xiamen.

The airline has been allocated rights to operate four additional weekly services to Beijing during the Winter 2004 season and a further seven weekly flights from Summer 2005.

The airline will also be allocated rights upon designation to operate three weekly passenger services to Xiamen and 12 weekly freighter services to Shanghai, both with effect from Winter 2004.

With these allocations Cathay Pacific intends to increase its three-times-weekly service to Beijing to a daily service from December 2004, operate a three-times-weekly passenger service to Xiamen and launch twelve weekly freighter services to Shanghai in 2005, subject to operational requirements.

Cathay Pacific Director and Chief Operating Officer Philip Chen said: “Cathay Pacific is committed and ready to serve key cities in the Mainland in order to strengthen Hong Kong’s position as a global aviation hub and the primary gateway to the Chinese Mainland.

“Being able to operate a daily service to Beijing is welcome, yet still a small entry into this market. There also remains a need to secure an early start of Cathay Pacific passenger services to Shanghai, currently the third-busiest passenger route out of Hong Kong after Taipei and Bangkok. This would be the most effective way to increase the volume of passenger traffic to and through Hong Kong.”

Cathay Pacific has been licensed to operate 21 weekly services to each of Beijing and Shanghai, and three weekly services to Xiamen.

Wednesday October 20, 8:59 PM
HK's Cathay to take 9.9 pct stake in Air China
By Tony Munroe

HONG KONG, Oct 20 (Reuters) - Hong Kong's Cathay Pacific Airways Ltd. will buy a 9.9 percent stake in Air China when China's flag carrier launches an initial public offering, the airlines said on Wednesday.

The deal, which took observers by surprise, gives a boost to Cathay's long-frustrated China ambitions and could make Air China's planned IPO more attractive, one analyst said.

Beijing-based Air China, which is the mainland's third-largest carrier, has applied to the Hong Kong stock exchange for its IPO, the companies said in a statement.

It hopes to list its shares by late this year or early 2005 in an offer that could raise more than US$500 million and may also include a secondary listing in London, a source familiar with the deal said earlier on Wednesday.

"In my view, it's going to be a hard sell in this market. But with Cathay as a strategic investor, it may help," said Michael Chan, aviation analyst at BOC International.

Hong Kong-based Cathay is the territory's dominant carrier, but its access to fast-growing mainland China has been limited to just three passenger flights a week to Beijing.

This week it said it won rights to add additional passenger services to Beijing, as well as new cargo services to Shanghai and passenger service to Xiamen.

The agreement between Cathay and state-owned Air China calls for further cooperation between the two, including potential alignment of their networks.

"Strategically, it is immensely important for (Cathay)," industry consultant David Dodwell said.

Industry watchers had long expected Cathay to broaden its cooperation with China Eastern Airlines , which is based in Shanghai, a market Cathay covets.

Air China is expected to sell 27 to 28 percent of its enlarged share capital at eight to 10 times its forecast 2004 net profit, sources have said previously. It earned 93 million yuan (US$11.2 million) in 2003.

Cathay Pacific, which is 46 percent owned by property-focused conglomerate Swire Pacific Ltd. , will take 9.9 percent of the expanded share capital of Air China.

"We believe that there are many areas of our operations where we can cooperate together and leverage our respective strengths," Kong Dong, vice chairman of Air China, said in the statement.

Air China's IPO is being underwritten by Merrill Lynch and China International Capital Corp.

"We look forward to becoming Air China's strategic partner and to a mutually beneficial relationship between our two companies," David Turnbull, Cathay's chief executive, said in the statement.

As of June 30, Air China operated a fleet of 136 aircraft serving 69 domestic and 34 international destinations.

The tie-up would further complicate the ownership structures of the respective carriers.

Under the structure of its IPO, Air China will hold 69 percent of Hong Kong-listed China National Aviation Co. Ltd. (CNAC), CNAC said earlier this month. CNAC owns 43 percent of number-two Hong Kong carrier Dragonair, while Cathay owns a 19 percent stake in Dragonair and Swire holds 7.7 percent.

Subsidies ruled out for budget carriers
Danny Chung, Hong Kong Standard

Hong Kong has ruled out an open-sky policy, subsidies and other administrative measures to support low-cost carrier (LCC) start-ups, a government official said.

Permanent Secretary for Economic Development and Labour Sandra Lee said the progressive liberalisation of air services since 1998 "best serves Hong Kong's interests" and the growth of its airport.

"The pace of liberalisation must be in step with changes in our operating environment," Lee said.

She said Hong Kong's policy is to negotiate an "equitable exchange of air rights", adding: "An open-sky [policy] does not necessarily mean an equitable exchange."

Lee said the government would also maintain a level playing field and as such there would be "no justification" to support LCCs that have sprung up rapidly in Southeast Asia and elsewhere.

"One very important principle - the government does not subsidise," she said, when asked if Hong Kong could make it easier for LCCs to launch here.

Although the government could use Hong Kong International Airport, which is a public asset, to help LCCs, it would not do so since this would be a "form of subsidy".

Asked about lack of choice for consumers due to the absence of budget airline services, Lee said it is up to the airlines to decide whether to offer the service. "There will always be market niches."

Despite ruling out government help for LCCs, she expects some to become established in Hong Kong and ultimately survive the intense competition seen in the United States and Europe.

Lee said it is "anybody's guess" whether the proposed bridge linking Zhuhai and Macau to Hong Kong will boost business for LCCs such as AirAsia, a Malaysia-based budget airline that runs flights from Macau to regional cities such as Bangkok.

21 October 2004 / 02:03 AM

Orient Thai May Start $100 Mln Airline in Hong Kong

http://www.orient-thai.com/web/images/gallery/8S.jpg

Oct. 23 (Bloomberg) -- Orient Thai Airlines Co., which operates Thailand's largest discount carrier, may spend as much as $100 million to start a low-cost service based in Hong Kong to tap rising air traffic between the city and China.

Orient Thai, which operates Bangkok-based carrier 1-2-Go, may set up the new airline on its own if negotiations with its Hong Kong-based partner CR Airways Ltd. fail, Chief Executive Udom Tantiprasongchai said.

Orient Thai wants a Hong Kong-based venture to tap business from the 70 million travelers who are expected to go by land, sea and air to China from the city next year. By offering cheap fares, Orient Thai is aiming to compete for business with trains, buses or regular airlines like Hong Kong Dragon Airlines Ltd. and China Southern Airlines Corp.

"China is the target," Udom said in an interview in Bangkok. "In the very near future, there won't be any restrictions" for carriers to fly between Hong Kong and China.

China, the world's most populous nation and the fastest- growing major economy, also has the biggest untapped tourism market. About 20 million Chinese traveled abroad in 2003, their visits restricted to only two dozen countries.

"About 80 percent of the market hasn't been tapped," said Peter Harbison, managing director of the Center for Asia Pacific Aviation in Sydney. "The only thing that is stopping the growth is government rules."

Starting in September, restrictions were relaxed to make it easier for Chinese citizens to visit the 29 countries of Europe, including the U.K.

Budget Carriers

Closely held Orient Thai, which flies 14 aircraft, plans to buy as many as 10 new planes to expand its business in Thailand and abroad. The Bangkok-based company also plans to sell shares in an initial public offering next year.

Discount carriers have mushroomed in Southeast Asia, a region with a combined population of 500 million people. Up to nine discount carriers will fly in the region by the end of 2005.

Thailand, with a population of about 64 million people, has three discount airlines in addition to the national carrier Thai Airways International Pcl.

Orient Thai's 1-2-Go competes with Nok Air Co. and the Thai unit of AirAsia Bhd. Competition is also coming from Singapore Airlines Ltd.'s low-fare carrier Tiger Airways and Valuair Ltd., which both fly to Bangkok from Singapore.

That's forced airlines to look for business in North Asia, a region that encompasses South Korea, China, Japan, Taiwan and Hong Kong.

"We can use Hong Kong as a springboard to expand in other parts of Asia," Udom said.

Fuel Costs

Orient Thai, which also has a daily service to Hong Kong from Bangkok and the beach resorts of Phuket and Krabi, plans to fly to other Asian nations from Bangkok.

Rising oil prices may affect the company's plans. The price of jet fuel has surged 66 percent this year to a record $63.95 a barrel on Oct. 14. They were trading at $63.70 a barrel yesterday, according to Platts pricing service.

Orient Thai spends half of its operating costs on buying fuel, Udom said. Fuel costs typically account from between 15 percent to 25 percent for regular scheduled carriers such as Thai Airways. AirAsia's jet fuel make up about 43 percent of costs, according to the airline.

Hong Kong Visitors

As many as 10 million Chinese citizens may visit Hong Kong this year, half of the 20.5 million visitors expected by the city's tourism board. That will be 38 percent more than in 2003, when travel was crimped by Asia's SARS outbreak.

Hong Kong and China last month signed an agreement to increase passenger and cargo flights. China allows Hong Kong- based carriers to fly to more than 20 Chinese cities including Shanghai and Beijing, provided the destinations are not already served by more than two airlines based in Hong Kong, Udom said

Cathay Pacific, Asia's sixth-largest airline by sales, won rights on Oct. 19 to increase the frequency of its Beijing flights and started flying to Xiamen in southeastern China.

Orient Thai's competitor Nok Air Co., the budget carrier unit of Thai Airways International Pcl, plans to fly to China from cities in Thailand, Chief Executive Patee Sarasin said earlier this week.

CR Airways is a three-year-old air charter company based in Hong Kong. It flies a single 50-seat CRJ-200 regional aircraft made by Canada's Bombardier Inc. to Asian destinations including the casino resort of Laoag in the Philippines.

CR Airways, founded by businessman Robert Yip, also charters helicopters and private jets. Yip could not be reached to comment.

Last Updated: October 23, 2004 03:56 EDT


Orient Thai ends talks with HK carrier

[Boonsong kositchotethana , Bangkok Post : 22 October 2004]

Orient Thai Airlines has called off talks to acquire a substantial stake in CR Airways after finding the terms proposed by the Hong Kong-based carrier too tough to swallow.

Udom Tantiprasongchai, the chief executive and owner of Orient Thai, said he found the proposed equity holding percentage and valuation of CR Airways' assets unacceptable.

CR Airways, founded in 2001 to provide scheduled and chartered air services in the region, proposed that Orient Thai take a 40% share in the company with Hong Kong investors controlling 60%, while the Thai carrier suggested it hold 49% and the Hong Kong side 51%.

Orient Thai, better known in Thailand for its budget subsidiary One-Two-Go, also believed that the deal's negotiators had "excessively" valued CR Airways' assets, on which the pricing was based.

"As far as we are concerned, the negotiations are over," Mr Udom said. "We are not in hurry to acquire stakes in other airlines as there are many Asian carriers that have approached us for equity partnership."

He declined to give the names of the other airlines.

CR Airways has reportedly turned to a Singaporean entity to become a stakeholder in the airline, which specialises in flying from Hong Kong to small "exotic" cities in Southeast Asia and China, using Bombardier Aerospace CRJ-200 aircraft.

Its operation is still limited to two destinations: Laoag (northwestern Luzon, Philippines) and Siem Riep in Cambodia.

CR Airways also has a plan to open four destinations in mainland China _ Nanning, Jihan, Wenzhou and Meixian _ but has yet to fix the launch time, understood to be subject to conclusion of a joint-venture deal with another airline.

Meanwhile, Orient Thai has taken a more cautious approach in expanding its One-Two-Go's operations in the light of fierce competition by other low-cost carriers and slower-than-expected growth in domestic air traffic demand.

One-Two-Go will not add new destinations as quickly as planned earlier. In the pipeline had been services to Surat Thani, Ubon Ratchathani, Khon Kaen and Narathiwat.

A service to Krabi is scheduled to begin on Dec 5 while flights to Udon Ratchathani were "temporarily suspended" in July due to insufficient traffic demand.

However, the airline intends to increase frequencies from Bangkok to Chiang Mai to five flights daily from three at present, on weekends and holidays, starting next month to meet peak travel demand.

Similarly, flights from Bangkok to Hat Yai will be stepped up to three a day from two on weekends and holidays. It services to its two other destinations _ Chiang Rai and Phuket _ remain unchanged at one daily.

Orient Thai recently started daily flights between Bangkok and Guangzhou, China, adding to its three other routes _ Bangkok-Hong Kong, Bangkok-Seoul and Phuket-Seoul.

Orient Thai's current fleet consists of eight 747-200 jumbo jets and three Boeing 757s used for both international and domestic flights.

Orient Thai Starts Krabi - Hong Kong Service

Per changes to the winter schedule, OX will now fly between Krabi and Hong Kong in addition to regular scheduled services to Bangkok and Phuket in Thailand.

Cathay's Air China deal signals market opening
By Keith Bradsher The New York Times

Thursday, October 21, 2004

HONG KONG Cathay Pacific Airways reached a preliminary agreement Wednesday to buy 9.9 percent of Air China, the first step in what airline industry analysts predict will be the opening of the Chinese aviation market to international competition and will allow Chinese carriers to move into global markets.
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The alliance, outlined in a memorandum of understanding, would tie together two of Asia's most successful airlines, which have profited handsomely from China's extraordinary economic growth over the past quarter of a century. The planned deal is to be completed when Air China conducts its initial public offering here late this year or early next year.
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But the short-term impact on air travelers in and through Hong Kong and mainland China is less clear. Cathay Pacific and Air China said in a joint statement that they planned to coordinate their marketing and sales activities for services between cities that both carriers serve, a step that could reduce competition and make reduced fares less likely.
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Kapil Kaul, a senior vice president for the Center for Asia Pacific Aviation in New Delhi, a consulting firm based in Sydney, said the deal would clear the way for similar transactions involving China's two other major carriers, China Eastern Airlines and China Southern Airlines.
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Investments in either carrier are more likely to come from other Asian carriers than from European or American carriers, as Chinese authorities in Beijing are likely to consider such deals from a geopolitical perspective more than purely in financial terms, Kaul said.
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Swire Group of Britain controls Cathay Pacific, but the airline has its hub in Hong Kong. While the carrier used to promote itself here as a British airline, especially before Britain returned Hong Kong to China in 1997, these days it is increasingly portraying itself as a Hong Kong company.
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Kong Dong, the vice chairman of Air China, said that his company had concluded its pact with Cathay because "we believe that there are many areas of our operations where we can cooperate together and leverage our respective strengths for the future prosperity of both companies."
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Air China has already applied for permission to issue H shares on the Hong Kong Stock Exchange. The two companies gave no hint Wednesday regarding how much these shares would be valued.
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Air China dominates air travel in and out of Beijing and the rest of northeastern China, while China Eastern is strong in Shanghai and east-central China and China Southern dominates Guangzhou and the rest of southeastern China.
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Cathay Pacific and China National Aviation Corp., the state-owned parent of the Chinese carriers, each own large stakes already in a third company, Dragonair.
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Dragonair is one of the most active carriers on routes from Hong Kong to mainland cities.
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Air China and Cathay Pacific did not address in their statement how their planned alliance would affect Dragonair or the level of competition in Hong Kong, which has the biggest airport in Asia in terms of international passenger departures and arrivals.
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Peter Harbison, the managing director of the Center for Asia Pacific Aviation, said Tuesday that Beijing appeared close to giving its permission for four Chinese budget airlines to begin operations.
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The arrival of such low-cost airlines could force Air China and Cathay Pacific to cut their costs, and is part of a general move by Beijing to begin liberalizing air traffic in and out of China.
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If the budget carriers begin international flights, they could even put pressure on U.S. carriers like United and Northwest that are now trying to expand their service to China.
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Sandra Lee, Hong Kong's permanent secretary for economic development, announced a new air services agreement last month between Hong Kong and mainland China that somewhat expanded Cathay's access to mainland markets.
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But the agreement did not expand the access of airlines based outside of Hong Kong or the mainland, a decision strongly criticized by Fedex Express, which would like to operate more cargo flights through Hong Kong.

Hong Kong at hub of air access fight

By Keith Bradsher The New York Times
Friday, October 22, 2004

HONG KONG Cathay Pacific Airways' pact to buy a stake in Air China has highlighted a struggle across east Asia, and especially in Hong Kong and mainland China, over how vigorously airlines should be allowed to compete with each other on international routes.
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At stake is the world's fastest-growing regional aviation market, with China at its core. The fight over market access has drawn not only airlines but investment bankers seeking deals and consultants, lawyers and lobbyists seeking contracts.
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At the heart of the debate lies Hong Kong, home to Asia's biggest airport for international passenger traffic and the world's biggest hub for international air cargo shipments. Many of the arguments here echo those at hubs dominated by a single carrier in the United States.
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Cathay Pacific is the biggest carrier here, and has opposed allowing other carriers, especially American and Australian carriers, greater rights to fly through Hong Kong and pick up passengers to carry to other Asian destinations. At the same time, however, Cathay and the Hong Kong government have been pressing Beijing to allow more flights between Hong Kong and mainland Chinese cities.
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The most immediate question now is whether Cathay's planned 9.9 percent stake in state-owned Air China will help soften objections from Beijing to allowing more Cathay flights to the mainland. Beijing has strictly limited the number of these flights while trying to prepare its domestic carriers for international competition, although it raised the ceiling somewhat last month and has allowed more nonstop flights lately from the United States.
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Antony Tyler, who oversees Cathay's route negotiations as its director of corporate development, said at a forum on Thursday that Wednesday's Air China deal made sense even leaving aside access to the Chinese market.
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"This is an investment, and getting additional traffic rights into China is
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a totally separate issue," he said.
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But Tyler also voiced earlier in the forum Cathay's continued desire to offer flights from Hong Kong to Shanghai. DragonAir, a carrier in which the Chinese government is the biggest stakeholder, though Cathay also owns a sixth of the shares, conducts a thriving business on the route.
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Hong Kong has moved steadily to allow more flights from other countries, sometimes over Cathay's objections, but not fast enough to suit FedEx Express, which is now in talks to open an Asian hub 130 kilometers, or 80 miles, up the Pearl River in Guangzhou instead. It has been strongly critical of Cathay.
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"When you look at Hong Kong, Hong Kong is a market of monopolies and duopolies," said David Cunningham, the president of Asian and Pacific operations for FedEx. "My concern for Hong Kong is that, living here and loving it, the world has moved beyond that."
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Cathay Pacific carries a third of the passengers passing through Hong Kong; holds a minority stake in DragonAir, which has another tenth of the market; and is now moving to invest in Air China, with another several percentage points of the traffic here.
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Limits on competition have tended to mean high prices but also superb service. Cathay's numerous and fast-moving flight attendants manage to serve every economy-class passenger a hot meal even during 80-minute flights aboard packed jumbo jets to Taipei.
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Tyler acknowledged that air fares here are somewhat higher than in other markets, but attributed this to historical factors, notably differences in exchange rates. He insisted that Hong Kong was a competitive market, adding that DragonAir and Cathay compete not only with each other but with at least one other carrier on every route.
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Last year's lethal outbreak here of severe acute respiratory syndrome, or SARS, underlined the value to Hong Kong of having a locally based carrier, because other airlines were quick to suspend service here while Cathay kept flying, Tyler said.
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"We kept Hong Kong connected to the world," he said.
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In a gibe at the United States, which has sought greater access for its carriers here over the years, Sandra Lee, Hong Kong's permanent secretary for economic development, pointed out that Hong Kong's policies did not include giving soft loans to airlines or allowing airlines to take refuge from creditors in Chapter 11 bankruptcy proceedings.
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As in Europe, decades of nationalistic policies in Asia aimed at protecting flag carriers from foreign competition are gradually being dismantled.
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Limits on the numbers of international flights between any two cities are being raised and, in some cases, eliminated entirely.
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Together with the arrival of budget carriers like Air Asia of Malaysia and Virgin Blue of Australia that make use of the expanded air service rights, the new freedom to compete is forcing established airlines to control costs and, in some cases, reduce fares.

Cathay Pacific adds more flights from Delhi, Mumbai

NEW DELHI: Cathay Pacific Airways today announced the addition of three flights each from Delhi and Mumbai schedule during the open skies period from November to March.

The Hong Kong-based carrier currently operates four flights a week from the country's busiest metros.

With the addition of three new flights from both sectors, the airline will now have daily flights from Mumbai and Delhi, offering greater choice and flexibility to its customers.

The first additional flight from Delhi to Hong Kong starts on November 1 and the Mumbai-Hong Kong flight, which is via Bangkok, will commence on November 16.

Cathay Pacific's country manager for India, Nepal and Bangladesh Mr Rupert Bray said all flights have been performing well since the year began.

"We have been working very hard to increase the frequency and schedules to a number of destinations on our network with the aim of making travel more convenient for our passengers. This new service of additional flights will give customers greater choice and further enhance Hong Kong as a global aviation hub".

Cathay Pacific offers scheduled passenger and cargo services to 80 destinations in 30 countries and territories. It flies to Asia, North America, Australia, Europe and Africa.

The aircraft deployed on the Delhi route is Airbus A330-300 and on the Mumbai routes is the Boeing 777-300. Cathay Pacific Airways also has a freighter network of 22 destinations with four flights to Mumbai and four flights to New Delhi per week. - UNI

http://www.thehindubusinessline.com/businessline/blnus/09251306.htm

CAD to host major civil aviation conference in November
Monday, October 25, 2004
Government Press Release

The Civil Aviation Department will host the 41st Conference of Directors General of Civil Aviation, Asia and Pacific Regions, from November 1 to 5, 2004. The theme of the conference is "Partnership in Achieving a Safe, Secure and Efficient Air Transport System through Effective Safety Oversight."

The Director-General of Civil Aviation, Mr Norman Lo, said the hosting of the conference would enhance Hong Kong's position as an international civil aviation hub, project the image of Hong Kong as Asia's world city and provide an opportunity for counterparts in the region to witness Hong Kong's development.

"Hong Kong was the host of the conference in 1962 and it is a pleasure to be the host again this year," Mr Lo said.

More than 170 delegates from 38 states/territories in the region, including the United States, the United Kingdom, Canada, France, Australia, Japan, Singapore, Thailand and the Macao Special Administrative Region, will participate in this year's conference to be held at the Conrad Hong Kong. The Secretary-General of the International Civil Aviation Organization (ICAO), Dr Taieb Cherif; Regional Director of ICAO, Mr Lalit Shah; and Vice Minister of the General Administration of Civil Aviation of China, Mr Wang Changshun, will also attend.

Items on the agenda include the theme of the conference, air navigation planning and implementation, Communications Navigation Surveillance/Air Traffic Management (CNS/ATM) implementation, aviation safety, aviation security, air transport and technical co-operation.

During the five-day conference, apart from the presentation of discussion papers and information papers by the states/territories in the region, a study tour for delegates will also be included. Participants will be invited to take a day trip to see some of Asia's world city. Briefings on past and future developments of particular interest will be given during the tour. Visits to some civil aviation organisations will also be arranged to increase understanding of the aviation industry in Hong Kong.

For the purpose of enhancing communication and cooperation among aeronautical authorities of member states, the ICAO saw the advantage of organising a high-level conference aimed at participation by Directors General of Civil Aviation on a regional basis. The first conference for the Asia-Pacific Region was held in 1960. The conference has since become more or less an annual event.

Although organised under the auspices of ICAO, the conference is held around cities in the region with the aeronautical authority of the state/region concerned as the host.

Hong Kong is a supporter of the conference and has actively participated in the event in its capacity of Hong Kong, China.

Peace breaks out in the Chinese skies: Cathay Pacific's deal with Air China will clear it for take-off on the mainland

By DANIEL BOGLER
25 October 2004
Financial Times

It is a well established tradition that Hong Kong companies help out Beijing by buying into the initial public offerings of Chinese state companies.

Li Ka-shing's Hutchison, for example, has purchased shares in China Life and China Shipping over the past year and may take a stake in China Netcom. But while Mr Li is just storing up political credit, Cathay Pacific is surely hoping for a pay-off from its deal to buy 9.9 per cent of Air China, which is floating soon.

At the very least, this coup brings Hong Kong's de facto flag carrier back into the game. Cathay had been frozen out of the rapidly growing mainland aviation market for 12 years. It was allowed to resume a limited service to Beijing only last year and won rights to fly cargo to Shanghai only last week. Meanwhile, Dragonair and China Eastern, two regional carriers, have shared the lucrative Shanghai passenger route. Both were supposed to become cosy partners of Cathay - it actually owns 18 per cent of Dragonair and was long thought to want to buy into China Eastern. But they turned into increasingly fierce competitors.

The alliance with Air China turns this situation on its head. Cathay is again aligned with one of the mainland's three big carriers, and one politically more powerful than the similar-sized China Eastern and the larger China Southern.

More important, the deal has repaired Cathay's relations with state-owned China National Aviation Co, which has long fought the territory's carrier for dominance of the greater Hong Kong airspace. CNAC is now part of Air China following a restructuring earlier this month, as well as being the controlling shareholder of Dragonair.

In the long term, one could envisage a three-way merger in which Cathay covers the world, Air China the mainland and Dragonair becomes a regional feeder airline serving their longer-haul flights. Even without that, the three carriers will dominate Hong Kong's Chek Lap Kok airport, still the biggest in Asia.

For Cathay, this must easily be worth whatever investment in terms of cash, training and management time it will take to overhaul ailing Air China. As passengers, meanwhile, we must hope that low-cost airlines like Air Asia will keep this new alliance at least somewhat honest.

Cathay Pacific to launch new India flights

AIRLINE INDUSTRY INFORMATION-©1997-2004 M2 COMMUNICATIONS LTD

Hong Kong's Cathay Pacific Airways has announced that it will be extending its service to India by introducing three new flights from both Delhi and Mumbai from November 2004 to March 2005.

The airline said that the new services are part of its effort to increase frequency across its international network and to make travel more convenient for its passengers. The new flights will mean that Cathay Pacific will be flying daily between Hong Kong and Delhi starting on 1 November 2004 and between Hong Kong and Mumbai via Bangkok from 16 November 2004.

A spokesperson for Cathay Pacific said that its flights to India, Nepal and Bangladesh had been performing well since the start of 2004.

Thursday October 28, 6:52 PM
Hong Kong airlines seek to extend fuel surcharge hike amid rising oil prices

Hong Kong's two airlines said Thursday they are seeking to extend their fuel surcharges on passengers amid rising oil prices.

Cathay Pacific Airways Ltd. and Hong Kong Dragon Airlines Ltd. asked the Hong Kong government for permission to extend their surcharges beyond their current expiration date of Nov. 30, their spokesmen said.

They declined to say whether they have applied to raise the levies as well, but the South China Morning Post newspaper reported on Thursday that they did.

This would mark the second time Cathay and Dragonair have applied to the Hong Kong government to increase and prolong fuel surcharges since first charging levies in June.

Civil Aviation Department spokeswoman Stella Tse said the department is currently handling requests from three airlines, asking to both raise their fuel surcharges and keep them for a longer period. She declined to identify the airlines or provide further details.

Foreign airlines that use Hong Kong's airport can also apply for fuel surcharges in the territory.

Cathay currently imposes a surcharge of US$7 (euro 5.50) per passenger for flights within Asia and US$19 (euro 15.00) for flights to other destinations, while Dragonair charges US$6.90 (euro 5.50) for all flights.

Oil prices declined in Asian electronic trading Thursday afternoon, but on Monday crude hit an all-time high of US$55.67 a barrel on the New York Mercantile Exchange.

Lufthansa upbeat
Danny Chung, Hong Kong Standard
29 October 2004

Lufthansa German Airlines, Europe's third largest carrier, has brushed off concerns that Cathay Pacific Airways' proposed stake purchase in Air China may affect its relationship with the Chinese carrier.

"In my opinion it won't affect our co-operation," Lufthansa executive vice-president of marketing and sales Thierry Antinori said, adding that the airline was working on its codeshare routes between China and Europe while Cathay was looking to increase flights to China from Hong Kong.

Lufthansa signed a codeshare agreement with Air China three years ago for several international and domestic routes. Cathay last week said it would take a 9.9 per cent stake in Air China's proposed initial public offering, a move that may help it expand in the mainland.

"It's two different segments of the market,'' Antinori said. Lufthansa's policy "is not to invest in airlines".

Lufthansa reported a 49 per cent jump in passenger numbers year on year to and from Hong Kong for the first nine months.

When all Chinese routes are included, passenger numbers rose an impressive 59 per cent.

"The growth in Hong Kong and China outstripped that of the airline's global network," Lufthansa said in a statement.

Revenue passenger kilometres for the Hong Kong route, which measures passenger numbers multiplied by distance flown, rose 49 per cent as the carrier increased capacity by 42 per cent in the same period.

Lufthansa operates seven flights a week between Hong Kong and Frankfurt and three flights a week between Hong Kong and Munich.

The airline said for the whole of China available seat kilometres rose 53 per cent during the first nine months and revenue passenger kilometres rose 55 per cent.

The increase in passenger numbers meant the seat load factor for China routes as a whole rose 2.5 percentage points to 81.9 per cent.

Row over exhibition venues takes new dimension as Paris joins in
French-invested firm's anger at use of Tamar site prompts top-level talks

Carrie Chan
29 October 2004
South China Morning Post

A French government minister and a top Hong Kong official will today discuss the future of a French-invested exhibition centre near the airport, which is threatened by plans to expand the Convention and Exhibition Centre in Wan Chai.

Gilles de Robien, whose portfolio includes infrastructure, transport and tourism, will meet Secretary for Economic Development and Labour Stephen Ip Shu-kwan.

A spokesman for the French Consulate-General said the minister would "definitely talk about" the AsiaWorld-Expo project.

"We attach a lot to its success," the spokesman said. "It is one of the biggest French projects in Hong Kong. There has never been any public-private partnership of this size. He will also visit the site."

French company Dragages Hong Kong invested $300 million in AsiaWorld-Expo, while the government invested $2 billion.

AsiaWorld-Expo managers have protested strongly against plans to expand the Wan Chai centre, saying they can take any overflow of exhibitors.

In two letters shown to the South China Morning Post, AsiaWorld-Expo chairman Mike Rowse objected in December and June to a Trade Development Council plan to use the Tamar site in Admiralty for exhibitions.

The government replied twice that it would support the TDC only "if we are satisfied that there will be unmet demand taking into account the additional 100,000 square metre" space provided by AsiaWorld-Expo.

But the government this month approved use of the Tamar site for exhibitions in April and October from next year to 2007. It has also not ruled out the TDC's plan to turn the atrium between the Wan Chai exhibition centre's two sections into more exhibition space.

A source close to AsiaWorld-Expo - due to open in December next year - said it reserved the right to take court action.

"It depends on whether the government can be considered as having broken a promise," the source said.

TDC council member Jeffrey Lam Kin-fung, also chairman of the Hong Kong Houseware and Gifts and Premium Fair organising committee, said the expansion was based purely on demand, as existing TDC show exhibitors preferred the Wan Chai location.

"There should not be any competition because AsiaWorld-Expo was built to accommodate new exhibitions that have never been held in Hong Kong before," he said.

He said the French should not intervene because staging exhibitions was a commercial decision.

Friday October 29, 3:41 PM
Qantas increases flights to Britain via Singapore and Hong Kong

SYDNEY, (AFP) - Qantas Airways said it will increase the number of flights from Australia to Britain with stopovers in Hong Kong and Singapore.

Qantas general manager John Borghetti said that from Sunday the airline would add an extra three flights a week on both the Perth-Singapore-London and Sydney-Hong Kong-London routes.

"These six new flights will increase the number of UK services offered by Qantas from 21 a week to 27 a week," Borghetti said. "This will mean nearly 2,300 more seats to London."

He said Qantas would add a fourth extra flight on the Sydney-Hong Kong-London route in 2005 and it had approval to operate a further three flights from April 2006.

"Hong Kong has been a popular Qantas destination in its own right for a long time and now it will also be available as a stopover destination to Europe," he said.

Qantas also announced a codeshare agreement with Air Frace which will see the Australian airline's customers connect with daily Air France flights in Singapore to reach Paris.

Bangkok Post, Thailand
October 29, 2004, Friday

Kenya Airways set to increase frequency of Asian service

By Sujintana Hemtasilpa

Kenya Airways plans to increase its weekly flights of its only Asian route -- Nairobi-Bangkok-Hong Kong -- to five from three currently with an aim to boost traffic by 35 percent.

Merita Ombuor, the Kenyan national carrier's manager for the Far East, said that after operating the route for only 18 months, the airline saw 98 percent growth in traffic and 167 percent revenue growth year-on-year. The number of passengers on the route, served by 216-seat Boeing 767-300ER jets, is expected to double this year from 6,000 in 2003.

The two additional flights, scheduled to begin in the middle of December and the end of March, respectively, are expected to generate another 35 percent increase in traffic, Ms Ombuor said.

She attributed the rising demand for the Nairobi-Bangkok-Hong Kong route to the increase in business and trade between Africa and Asia and the growing popularity in the African continent as a tourist destination among Asians, particularly people from Hong Kong, China, Thailand and Japan. The official visit to Thailand by the Kenyan president and his economic cabinet ministers was a sign of the growing relationship, she said.

Kenyan President Kwai Kibaki and his delegation arrived in Bangkok yesterday for a state visit to foster a closer economic relationship between the two countries.

The round-trip economy-class tickets for the Nairobi-Bangkok-Hong Kong route cost about 32,000 baht, and the business-class fare is about 60,000 baht.

New Dragonair Ads

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Friday October 29, 03:08 PM
SAS signs Gothenburg-Hong Kong cargo deal with Emirates

STOCKHOLM (AFX) - SAS AB said it signed a contract with Emirates SkyCargo for two weekly all-cargo flights between Gothenburg and Hong Kong. The contract replaces SAS Cargo's current contract with Lufthansa Cargo, which has expired.

27 October 2004
DRAGONAIR INCREASES SHANGHAI SERVICES IN WINTER SCHEDULE

(HONG KONG) Dragonair will operate three more flights every week to Shanghai in the winter schedule that begins October 31, giving passengers a total of 87 flights a week to choose from to the Mainland business hub.

"The three new Shanghai services ensures Dragonair remains the airline of choice when flying to the Mainland, and that Hong Kong is the most convenient gateway to the Mainland by far," said Stanley Hui, Dragonair's Chief Executive Officer.

Meanwhile, Dragonair Cargo plans to raise frequencies to Shanghai in the winter, with timings to be confirmed.

"We will operate three additional services to Shanghai for a total of 16 freighter flights a week," said Mr. Hui. "We want to build on the demand in the market and offer shippers even more flexibility."

The winter timetable is valid from October 31 to March 26, 2005.

Teamwork gets KLM recruitment airborne
30 October 2004
South China Morning Post

INTERVIEWING 120 people for 39 positions in just five
days might seem like an impossible task but, thanks to
excellent communication, great backup and, above all,
teamwork, nothing is impossible.

Because of the growing number of Putonghua-speaking
passengers on its Hong Kong-Amsterdam-Hong Kong route,
Dutch airline KLM needed to bump up the number of its
cabin crew with Chinese-language abilities.

Tremendous interest in such roles, coupled with the
carrier's tight time-frame and stringent requirements,
meant the recruitment process was difficult.

While KLM maintains a presence in Hong Kong, it does
not have the capability on the ground to recruit cabin
crew. It uses an Amsterdam-based recruitment team that
crosses the globe in search of the best players
through local recruitment agencies - in Hong Kong's
case, Manpower.

From start to finish, the recruitment project took
about eight weeks.

However, "our [main] brief was between October 20 and
25, to interview 120 people with the view to hiring 39
cabin crew", said Trevor Sunderland, permanent and
executive selection services manager at Manpower's
Hong Kong office.

Initially, what made this recruitment project stand
out was the large-scale volume of recruitment it
entailed, which "logistically possessed some
challenges and some problems", according to Mr
Sunderland.

In addition, it was unusual to have an airline as a
client. "It's not every day you have airlines coming
to you. Most recruit internally, particularly for
locally based [roles]," he said.

While this breed of project was not entirely new for
Mr Sunderland and his team, it was distinguished by
its strict time-frames, strict numbers and conversion
rates and the goal of building a five-day recruitment
package with a rapid-reaction time.

As the project planning unfolded, squeezing the entire
programme into a tight schedule and marshalling the
numbers became the overriding challenge.

The initial advertisement drew about 500 responses, of
which 250 looked good on paper and had to be processed
on a one-on-one basis by Manpower.

Due to the level of professionalism required for the
position, close scrutiny was given to each applicant
in the form of a comprehensive pre-screening interview
on the telephone, incorporating several fixed
questions.

"Most people didn't tell us [on the application form]
about their height or if they could swim, so we got
this out of the way quickly. If they didn't meet the
criteria, they couldn't proceed to the next level of
interviews."

That done, those still fitting the bill were invited
for an interview when the KLM team was in town. "[We
then had to] deal with 120 people, whose schedules
didn't always meet with our own," Mr Sunderland said.

Manpower handled this by using four teams of
recruiters, with one Manpower person and one
individual from KLM in each, and each team held six
interviews a day, resulting in up to 24 interviews per
day.

This proved to be a tight squeeze. Interviews had to
be scheduled closely and each one-hour slot included
preparation time before the candidate's arrival and
assessment after their departure. The interview itself
took 40 minutes. Mr Sunderland described the
experience as like trying to land 120 planes in a day.

However, not all applicants landed on time. While some
were caught in traffic, others had personal issues or
even muddled the interview location.

"We had to be very flexible with time frames. And KLM
was very good and added one or two interviews later."

Ploughing through this large number of interviewees
took some planning. Although no new staff were hired
for the project, Mr Sunderland's home team included 10
consultants, with a project leader to liaise with
Manpower staff and assign duties.

Above all, the work had to be centralised and well
orchestrated.

For example, one individual was dedicated to
contacting the 120 short-listed candidates.

Collecting documents was another must. "You need to
keep on at candidates and remind them these are
necessary within a certain period of time and that, if
they don't provide them, they won't move to the next
step," Mr Sunderland said.

Other issues included budgeting for consultants' time,
arranging interview rooms and sifting through
candidates' documentation, because of issues raised by
working under Hong Kong and Dutch employment
jurisdictions.

"People had to qualify to work in Hong Kong and have
valid work permits, so we had to confirm all of that
quite quickly," he said.

KLM made stringent demands regarding candidates'
educational backgrounds, so their qualifications also
had to be confirmed quickly.

In addition to establishing an educational benchmark,
KLM and Manpower worked to determine questions for
individuals.

"KLM looked at the competencies needed for the
position as well as how people behave in certain
situations," Mr Sunderland said.

"Competencies addressed the skills required to do the
job, while the situational questions were to find out
what [candidates] would do in a [certain] situation
and any experience they had."

Other challenges included the conversion rate - how
many candidates KLM needed to see before it could
realistically expect to hire. With a ballpark figure
of 3:1 this meant that, from every three applicants
interviewed, the client expected to make one hire.

Another KLM benchmark was to score candidates
according to a four-point system: (++, +, +- and -).

"KLM expected a certain number of double plusses in
each of the five days to be comfortable that they
would achieve what they wanted," Mr Sunderland said.

While the airline's parameters were acceptable, he
said the main difficulty in meeting the challenges
came down to different personalities, schedules and
expectations on the candidates' side, especially with
tight deadlines in place.

"Within a fixed time line, those issues play a more
important role than if you have an open-ended
schedule," he said.

HK hosts 41st Conference of Directors General of Civil Aviation

The Financial Secretary, Mr Henry Tang, and the Director-General of Civil Aviation, Mr Norman Lo, officiated at the opening ceremony of the 41st Conference of Directors General of Civil Aviation, Asia and Pacific Regions, today (November 1).

Also officiating at the ceremony were the Secretary-General of the International Civil Aviation Organization (ICAO), Dr Taieb Cherif; and the Regional Director of ICAO, Mr Lalit Shah.

Addressing the conference, the Financial Secretary, Mr Henry Tang, said that air transport facilitates trade and investment, promoted tourism, and brought people together.

"Apart from serving a vital support function, the aviation industry is, in its own rights, an important component of the global economy. Hong Kong is located at the heart of Asia and sits at the gateway of the Mainland of China. Our government and our aviation community have worked in a close partnership for the past decades to make Hong Kong a major aviation hub," Mr Tang said.

"In recent years, we have also stepped up our co-operation with other aviation authorities, particularly in areas such as rationalising airspace, streamlining air routes, and mutual recognition of certification. We devote these worthwhile efforts with an overall objective in mind: that is, to maintain the highest safety standards for air services whilst creating a facilitating environment for commercial operators.

"This conference provides a valuable platform for regulators to share experience and to strengthen the partnership required to support the long-term development of air services," Mr Tang said.

Speaking at the conference, the Director-General of Civil Aviation, Mr Norman Lo, said that every stakeholder in the civil aviation community had an individual role to play in contributing to the safe, secure and efficient air transport system.

"Through effective partnership, we were able to strengthen our capability in enhancing our air transport system through integrating the best people, equipment, knowledge and expertise available around us," Mr Lo said.

"Not too long ago, we worked together in difficult times during the economic slowdown and the outbreak of SARS in the region. With the concerted effort of the ICAO, authorities in the regions, airports and airline operators, the Asia and Pacific regions had experienced quite a robust growth in aviation business since the beginning of this year. I am proud to say that our Hong Kong International Airport has become one of the busiest airports in the world in terms of international passenger and cargo throughput."

The conference with a theme topic "Partnership in Achieving a Safe, Secure and Efficient Air Transport System through Effective Safety Oversight" is hosted by the Civil Aviation Department from November 1 to 5 at the Conrad Hong Kong Hotel. More than 170 delegates from 38 states/territories including the United States, the United Kingdom, Canada, France, Australia, Japan, Singapore, Thailand and the Macau Special Administrative Region have come to Hong Kong to participate. Also attended were the Vice-Minister of the General Administration of Civil Aviation of China, Mr Wang Changshun, and representatives from the ICAO.

Items on the agenda include the theme of the conference, air navigation planning and implementation, Communications Navigation Surveillance/Air Traffic Management implementation, aviation safety, aviation security, air transport and technical co-operation. A study tour will also be arranged for the delegates, with visits to some civil aviation organisations to increase their better understanding of the local industry.

For the purpose of enhancing communication and co-operation among aeronautical authorities of member states, the ICAO saw the advantage of organising a high-level conference aimed at participation by Directors General of Civil Aviation on a regional basis. The first conference for the Asia and Pacific regions was held in 1960. The conference has since become more or less an annual event.

Although organised under the auspices of ICAO, the conference is held around cities in the region with the aeronautical authority of the state/territory concerned as the host. Hong Kong is a supporter of the conference and has actively participated in the event in its capacity of Hong Kong, China. Hong Kong was the host of the conference in 1962.

Ends/Monday, November 1, 2004

Freight operator's HK export volumes leap 30pc
Danny Chung, Hong Kong Standard
2 November 2004

UPS Hong Kong saw export volumes jump more than 30 per cent in the third quarter from a year earlier, fuelled by booming external trade.

Mainland export volume at UPS China surged 125 per cent during the same period. Overall in Asia, the express freight operator reported an almost 30 per cent growth in export volume.

UPS, an Atlanta, Georgia-based express delivery company, did not reveal actual tonnage figures of its units because of listing restrictions at the New York Stock Exchange, where its shares are traded. "With strong growth in global small-package business, we're seeing double-digit export growth in every region of the world with strong profit increases to match," general manager of UPS Hong Kong and Macau, Leung Kwok-kai said on Monday.

The strong performance in export volumes helped UPS report a 20.4 per cent gain in net income in the third quarter on a 7.7 per increase in revenue and a 49 per cent rise in international profit.

Last month, the United States Department of Transport allowed UPS to run 12 more flights to China, tripling its direct access there.

The US and China signed a new air services pact last July. In October, the company began six new flights between Hong Kong and its Philippines intra-Asia air hub via Singapore, thus expanding capacity between these three important trade markets. UPS opened the hub, based at the former Clark air force base two hours out of Manila, in April 2002.

In Hong Kong, the company recently opened a new operations centre in the ATL Logistics Centre in Kwai Chung. With an area of 36,000 square feet, the package-sorting facility is automated by technology that will allow future capacity expansion.

UPS plans operating a daily freighter service from Guangzhou to the US from next March and said earlier that volumes of its express cargo traffic through Shanghai had doubled each year since 2001. Hong Kong's exports of goods rose by 16.1 per cent in the first nine months, according to government figures, on the back of strong intra-regional and China trade.

Lufthansa in a forecast early this year said Asian airfreight shipments would grow by 6.8 per cent a year in the next two years, dropping later to 6.2 per cent every year until 2010 when total tonnage in Asia will top 10 million tonnes.

South China Morning Post
November 1, 2004

Ferry tale; Visitors are benefiting from easy links to the airports
Grace Liu

MORE CROSS-BORDER links from the Hong Kong airport will soon be available, as the popular service has taken off since its introduction a year ago.

Two new routes will be introduced in the next two months, to Panyu Lianhuashan and Zhongshan respectively, according to an airport spokesman. This is on top of the services to Shenzhen's Shekou and Fuyong ports, Dongguan's Humen, and Macau, which have carried a total of about 670,000 passengers so far.

After a slow start, growth has surged in the past nine months, with monthly passenger numbers doubling from 46,000 to the current 88,000, the spokesman said.

Business travellers still make up the largest part of the total. But tourists from the delta travelling to overseas destinations, especially Europe, prefer to transit through Hong Kong and the ferry is the easiest way for them to get there, according to Chu Kong, one of the two companies providing the ferry service.

Yu Chen-sheng, a senior manager at Chu Kong, said he expected the addition of two lines would increase the company's current load of 80,000 passengers per month to 100,000.

Mr Yu said Chu Kong didn't have any plan to expand the ferry fleet. "Since the traffic time is short, we can manage six lines by increasing the traffic frequency," he said.

The saving of time and convenience are the two biggest advantages of ferry services, Mr Yu said.

"Passengers can bypass immigration and customs procedures if they take ferries instead of the railway. In travel time alone, this can save them 25 to 30 minutes, never mind the time taken up by boarding and getting off," he said.

The two new lines will take 70 and 90 minutes respectively from Chek Lap Kok to Lianhuashan and Zhongshan.

One issue that still needs to be tackled, however, is the reimbursement of the airport's departure tax, as some ferry passengers find it difficult and time -consuming to find the counter. "We are negotiating with the airport about it and may reach a settlement soon," Mr Yu said.

An airport spokesman said the outlook for the ferry services' business next year was very positive. Chu Kong is predicting growth of 40-60 per cent annually for the next few years.

From the airport's perspective, the ferry service has added to its competitive strengths, an important consideration given the rise of regional rivals such as the new Guangzhou Baiyun Airport, analysts say.

Many predict the airport's second phase project and the opening of Disneyland next year will further benefit the ferry operators.

Bigger SkyPier to extend China service
Danny Chung, Hong Kong Standard
4 November 2004 / 02:40 AM

The Airport Authority's SkyPier ferry service, which carried more than twice as many passengers as expected during its first year, plans to add two berths and two destinations and eventually build a permanent pier.

Zhongshan and Lianhuashan will be added to the list of ports comprising Shekou and Fuyong in Shenzhen, Humen in Dongguan, and Macau.

The authority started SkyPier to encourage more mainlanders from the Pearl River Delta to use Hong Kong International Airport.

To meet the expected increase in passengers, two extra berths on a converted barge will be added to the three berths on the present temporary pier.

The authority plans to start the new services and open the new berths before the end of the year.

It said it continues to target 2007 for the replacement of its temporary pier with a permanent one, though it has yet to issue a cost estimate.

In the first half of next year, it hopes to transfer identity checking, airline check-in and luggage inspection to the mainland ports.

At a reception on Wednesday marking SkyPier's first anniversary, authority chief executive David Pang dismissed suggestions that the roll-out had fallen far behind schedule.

He said the service had to be co-ordinated with other nearby developments, such as SkyCity, and a proposed light rail system.

"Our plans right now are based on market demand," he said.

Jacqueline Wan, assistant general manager for passenger facilitation, said that in the first year of operation to last September, more than 770,000 passengers had used the ferry, far exceeding the 300,000 forecast.

The ferry operator, Hong Kong International Airport Ferry Terminals Services, is a 60-40 joint venture between Chu Kong Shipping Enterprises (Holdings) and Shun Tak-China Travel International Logistics Investment.

Wan said the authority expects passenger numbers to exceed a million for the next full year of service.

Passenger numbers have grown steadily, from 23,830 in the first month to 88,292 this September. In October, they exceeded 100,000.

Once the new berths are in operation, the number of trips per day should rise to about 60 from the current 45.

Pansy Ho, managing director of Shun Tak (Holdings), owner of Shun Tak-China, said the firm preferred not to invest directly in the pier but might consider a contract to run the ferries.

Separately, Secretary for Economic Development and Labour Stephen Ip told the Legislative Council that the airport had not been affected by the opening of Baiyun Airport in Guangzhou.

He said aircraft movements were up by 18 per cent year on year in September, with passenger and cargo throughput rising by 15 per cent and 19 per cent respectively.

HKIA landing situation
Government Press Release
Wednesday, November 3, 2004

Following is a question by the Hon Jeffrey Lam and a written reply by the Secretary for Economic Development and Labour, Mr Stephen Ip, in the Legislative Council today (November 3):

Question:

It has been reported that at the end of August this year, a landing flight had to switch to manual operation temporarily and abort landing at the Hong Kong International Airport (HKIA) due to a sudden encounter with windshear. In this connection, will the Government inform this Council :

(a) of the number of aborted landings at HKIA since its opening, and the situations under which such aborted landings took place;

(b) whether there are any data or signs to indicate that aborted landings are affected by changes in seasons or related to windshear;

(c) of the existing monitoring and contingency measures taken by the Civil Aviation Department and HKIA to deal with aborted landings and encounters with windshear by aircraft; and

(d) since the Hong Kong Observatory has spent $9.5 million on procuring the world's first Light Detection and Ranging System for use in airport weather alerts with a view to facilitating better detection of changes in wind direction and air current, whether the system has served its purpose during the aborted landing incident in August this year; if it has, of the details?

Reply :

Madam President,

(a)&(b) Between the opening of the Hong Kong International Airport (HKIA) in 1998 and September 2004, there were 822 incidents of missed approaches (or commonly referred to as "aborted landings"), representing 0.14% of the 600,000 landings at the HKIA. Past records indicate that missed approaches were more frequent between March and September of the year. About 37% of the missed approaches were related to windshear. Other factors leading to missed approaches included problems with the aircraft, low cloud, adverse weather conditions and poor visibility.

(c) The Hong Kong Observatory (HKO) monitors all the time any possible occurrences of windshear and provides timely warning to the Air Traffic Control Centre of the Civil Aviation Department (CAD). The Control Centre would convey such information to flight crew. The Control Centre and flight crew may then prepare, if necessary, for missed approaches. The CAD has also formed a Windshear and Turbulence Warning System Working Group comprising representatives from the HKO, CAD, airlines, and pilot associations. The Working Group meets regularly to revise and improve windshear detection and forecast, as well as the mechanism of communicating windshear information to flight crew.

(d) The Light Detection And Ranging (LIDAR) system is designed to detect windshear under rain-free conditions, whilst the Terminal Doppler Weather Radar (TDWR) and its network of wind sensors perform the detection function on rainy days. It was raining when an incident of missed approach happened on August 30, 2004. The TDWR system detected windshear and issued timely warning.

04 November 2004
Corporate Press Release

Cathay Pacific Adds Daily Beijing service

Cathay Pacific Airways today announced that it will launch a daily flight to Beijing from 1 December 2004, in a further step to strengthen Hong Kong as a gateway to the Mainland almost a year to the day after the airline resumed services to the capital.

Cathay Pacific resumed services to Beijing with three weekly flights on 2 December 2003 after a break of 13 years. Four additional weekly flights will offer passengers more options to connect with the airline’s international services through Hong Kong.

Cathay Pacific figures for the first nine months of the Beijing flight’s operation show that, even with only three weekly services, more than 40 percent of Beijing passengers made direct Cathay Pacific connections to over 30 cities in the airline’s international network.

The largest proportion connected with flights to and from Auckland, Bangkok, Jakarta, Los Angeles, London, Melbourne, Manila, Singapore, Sydney and Taipei, because certain flights to and from these cities had close connection times with Cathay Pacific’s current Beijing service. More than one-third more international passengers connected with the flight heading to rather than from Beijing because connection times were more convenient.

Other passengers flew to and from points on the airline’s network in Southeast and North Asia, Europe, Australia, the Middle East and Canada.

Cathay Pacific has been granted rights to operate a second daily service to Beijing from the start of the Summer 2005 season. If Cathay Pacific were able to operate that service at a different time of the day that would create wider opportunities for the airline to draw more connecting passengers over Hong Kong.

As of December 2004, four airlines, including Cathay Pacific, will operate 112 weekly services from Hong Kong to Beijing. According to latest Hong Kong Civil Aviation Department figures, from December 2003 through May 2004, about 110,000 passengers travelled from Hong Kong to Beijing and back every month.

Cathay Pacific Manager Beijing K K Leung said: “Ever since our Beijing service started last December, passengers have been asking for more flights on the route. They say the more daily flights we offer, the more convenience they will have for travel between Beijing and Hong Kong and to connect to CX flights to the rest of the world. We are glad that we are going daily yet this is still a basic service for this travel market.”

Cathay Pacific has also been allocated rights upon designation to operate three weekly passenger services to Xiamen and 12 weekly freighter services to Shanghai and will launch services early in 2005, subject to operational requirements. The airline was last year licensed to operate three daily services to both Beijing and Shanghai and three weekly services to Xiamen.

Air Transport Intelligence
October 29, 2004

Singapore's Valuair going double-daily to HK
Leithen Francis

Valuair, which started operating to Hong Kong on 7 May, will be offering a second daily service from 1 December, the carrier says in a statement.

It currently leases two Airbus A320s and expects to take delivery of another two in November.

Also on 1 December Valuair is to launch a daily Singapore-Perth service.

Airline Industry Information
November 4, 2004

Hong Kong airport reports record passenger numbers

Hong Kong International Airport has reported record passenger and cargo numbers, according the Hong Kong's Secretary for Economic Development and Labour Stephen Ip.

Ip said that despite competition from other regional airports Hong Kong airport saw aircraft movements rise by 17.9%, passenger traffic rise by 15% and cargo throughput increase by 19.2%. The Hong Kong Airport Authority re-introduced a destination incentive deal from September 2004, to combat increased competition from other airports, which offers a rebate of up to 50% on landing fees to airlines.

According to Ip the government of Hong Kong is keen to establish the region as an aviation hub and over the past two years has agreed bilateral agreements with a number of countries including the UK, US and states in Southeast Asia, reports Xinhua.

*****

November 3, 2004
HK airport strong despite competition: Stephen Ip
Government Press Release

Guangzhou's new airport has not affected growth at Hong Kong International Airport which has set new records for both passenger and cargo throughput.

This was the message today from Secretary for Economic Development & Labour Stephen Ip in response to questions from legislators.

Taking September as an example, Mr Ip said aircraft movements rose 17.9%, passenger throughput rose 15%, cargo throughput rose 19.2%, and transfer passengers grew 21.2% over the same month last year.

Mr Ip said the Airport Authority, in view of the competition from neighbouring airports, re-introduced a two-year new destination incentive arrangement in September.

The scheme offers a rebate of up to 50% on landing charges to encourage airlines to develop services between Hong Kong and new destinations.

Progressive liberalisation

Mr Ip said the Government has adopted a multi-pronged approach to enhance Hong Kong's position as an aviation hub. Through the policy of progressive liberalisation, airlines can continue to expand their service network through Hong Kong.

"In the past two years, we have concluded completely open direct services or substantially expanded bilateral arrangements with a number of aviation partners, including the UK, the US and countries in Southeast Asia," he said.

The new air services arrangement concluded in September allows more Hong Kong and Mainland airlines to enter the market and substantially expand the frequency of services between the two jurisdictions.

It also provides additional rights for Mainland airlines to operate via Hong Kong to Southeast Asia, and enables airlines of both sides to code-share with each other to link up Hong Kong's extensive international network with the enormous Mainland aviation market.

Plans to expand ferry services

Mr Ip said to extend Hong Kong's catchment area across the boundary, ferry services between Hong Kong airport and four cities in the Pearl River Delta were launched in September last year, which provide seamless sea-air transit services to Mainland travellers.

"Plans are in hand to further expand the network. Coupled with increasing cross-boundary coach services, these inter-modal links will enhance Hong Kong's position as the preferred gateway airport for Mainland residents making international travels," he said.

"In July, the Airport Authority also launched the Fly via Hong Kong one-stop ticketing platform to facilitate Mainland passengers using Hong Kong airport for travelling to the rest of the world."

Friday November 5, 2004
UPS Launches 12 Additional Weekly Flights to China

SHANGHAI, Nov 5 Asia Pulse - Cargo and package carrier United Parcel Service (UPS) has launched the first of 12 new flights to China with MD-11 service to Shanghai this week. The new flights will triple the current service from six to 18 flights a week.

The additional services follow on the heels of 129 per cent growth in China export volume in the third quarter for UPS, the company said in a statement.

UPS has been serving China since 1988 and is the only U.S. cargo carrier providing daily, non-stop service to and from the United States and China, which started when the company was first granted China aviation rights in 2001.

Next year, UPS will inaugurate the first-ever non-stop service between the U.S. and Guangzhou in the fast-growing Pearl River Delta.

UPS recently also launched an additional six weekly flights between Hong Kong and its intra-Asia hub in Clark Field, the Philippines.

DHL may open logistics centre in Tsing Yi; 'Cross-docking' facility would apply finishing touches to mainland shipments
Russell Barling
6 November 2004
South China Morning Post

DHL Express may add to its portfolio of Hong Kong logistics facilities by building a consolidation and distribution centre in Tsing Yi, catering to the increasingly complex needs of the vehicle, electronics and fashion industries.

Kelly Yu, DHL general manager for Hong Kong, said it was "highly probable" it would proceed with the project in Tsing Yi, an ideal location due to its proximity to the port, airport and highways to south China's manufacturing heartland.

"I think DHL has shown that if it's a viable economic proposition, we are willing to take the risks," Mr Yu said. "We did that with our spare-part management concept and we reaped the rewards - more than 25 companies ... signed on."

Mr Yu offered few details on the project, which he described as a "cross-docking" facility, other than to say it would be a "meaningful" size. Another senior executive within the DHL group yesterday described the project as still being a "primitive" concept but conceded that Tsing Yi had been earmarked as a suitable location.

DHL yesterday released its Pearl River Delta Supply Chain Study, which echoed earlier reports in finding that the comparatively high cost of moving goods through Hong Kong continued to jeopardise its role as the gateway to south China's retail production centres.

As with recent studies on the maritime trade sector, the report - conducted by the Chinese University's Centre of Cyber Logistics - found higher trucking costs were eroding Hong Kong's competitiveness as a conduit for air freight. Trucking a 5,000kg shipment direct from the delta was about $1,600 cheaper.

But the study also turned its sights on the high terminal handling charges at the airport, finding that it cost $6,000 to send a 5,000kg shipment through the cargo centres at Chek Lap Kok.

"If you are shipping a smaller shipment then the terminal fees may not make that much difference," said Professor Cheung Waiman, who led the research. "But if you are moving larger shipments, the terminal handling charge becomes a greater disincentive than the trucking costs."

The study found opportunities for Hong Kong's logistics industry in providing "cross-docking" service centres such as the one being vetted by DHL.

Such facilities typically are involved in last-minute, value-adding activities such as sorting, labelling, bar-coding, spare-parts assembly and putting the finishing touches on high-fashion garments.

Some of these activities require advanced infrastructure and a skilled workforce.

But, often more importantly, they also allow exporters to fulfil manufacturing requirements that help them to exploit Hong Kong's comparatively lower profit taxes - 17 per cent against 40 per cent on the mainland.

The report also suggested that specialised cargo-handling centres, such as for perishables like flowers and seafood, would be another area of opportunity.

"The objective is to offer comprehensive services which can offset the relatively higher cost of shipping through Hong Kong," said Mr Yu. "If we leave things as they are, more and more of the cargo will go direct from China."

Industry returns show mainlanders stick to the surface
Murray Bailey
8 November 2004
South China Morning Post

Hong Kong's travel industry traffic returns were 30 per cent up on the 2001 base year in August. The bulk of this growth is related to the impressive growth in travel to and from the mainland.

Without this, estimated growth in August - the latest month for which data is available - would have been a less-impressive 10 per cent.

But one segment, the number of passengers using the airport, is well below that top-line growth. The airport has managed only a 12 per cent increase in passengers - in other words, growth similar to non-mainland growth.

The reason is that numerous travellers from the mainland are entering Hong Kong through land borders. Many, after all, are travelling from Guangdong.

The good news for the airport is that this traffic base can be considered as future potential for the airport. A low-fare airline flying between Hong Kong and the mainland would also bring benefits. However, the bulk of low-fare traffic could go to a rival regional airport.

There are many to choose from - Guangzhou's new airport, Macau, Shenzhen and Zhuhai - and all are eager for the traffic boost that low-fare airlines bring.

HOTELS gather strength While Hong Kong is losing share in its position as an international aviation hub, its hotel sector is strengthening, growing much faster this year than its neighbours. Growth in hotel revenue was 20 per cent up on average to August - which compares with just 11 per cent growth in Macau and 12 per cent in Shenzhen.

This is not merely a Sars-related factor. When compared with the same period in 2001, hotel revenues in Hong Kong are up 19 per cent, compared with 11 per cent in Macau and 8 per cent in Shenzhen.

Newly released figures for international air travel, however, show that in 2003, Hong Kong lost ground as a result of Sars. Thus, its international air travel total is now less than twice the size of that in the mainland.

Since the change of sovereignty in 1997, Hong Kong's international air traffic has grown by only 14 per cent while the mainland's has grown 54 per cent.

But even if the growth rates from over the past five years were maintained, the mainland still seems unlikely to overtake Hong Kong before 2010.

The numbers of air passengers on the main long-haul routes from Hong Kong for the first half of this year were good, bad and indifferent - not quite what airline managers are saying they were.

According to data from the civil aviation bodies in Australia, Britain and the US, passenger travel to and from Hong Kong is at different stages of recovery from the setbacks that started with the September 11 terrorist attacks.

The number of passengers flying directly between Hong Kong and Australia, for instance, started recovering only this year. But the peak year for passengers was in 2000 and this year's January-to-June total - at 639,000 - was still below the 689,000 counted over the same period in 2000.

The number of passengers flying direct between Hong Kong and Britain, however, surpassed the 2001 half-year total in 2002 - the year following the 9-11 attacks.

Traffic between Britain and Hong Kong peaked in 2000 but this year's total of 612,000 passengers was comfortably above the 521,000 recorded in 2000.

Passenger travel between Hong Kong and the US is almost back to normal. In the first half of this year, there were 744,000 passengers flying direct between the two destinations. That compares with just below 800,000 in the first-half of 2001.

Full recovery may happen within this year, even though some monthly figures have been below those in 2001.

Compiled by Murray Bailey, research director and editor, Travel Business Analyst

South China Morning Post
November 6, 2004

Growth in cargo slows at airport terminal
Annette Chiu

Growth in freight volume at Hongkong Air Cargo Terminal slowed last month due a drop in imports and decelerating export growth.

The terminal, which is responsible for more than 70 per cent of air freight at Chek Lap Kok International Airport, handled 213,868 tonnes of cargo last month, up 7.6 per cent year on year, according to the provisional figures provided by the operator.

In the first 10 months, it handled 1.85 million tonnes of air freight, up 14.3 per cent year on year - a rate one percentage point lower than the growth of the first nine months.

The growth in exports slowed to 8.2 per cent last month to 125,697 tonnes, despite a comparative 18 per cent increase in the first 10 months, with volume reaching 1.03 million tonnes.

The growth rate of exports to Europe, the largest market for China's manufactured goods, dropped to less than 20 per cent for the first time this year. Volume last month rose only 13 per cent to 41,730 tonnes. The year-to -date figure was 347,175 tonnes, up 27 per cent year on year - two percentage points less than the 29 per cent seen in the January to September period.

Exports to the US grew 8.4 per cent to 38,798 tonnes, while year-to-date figures show a 13 per cent increase to 301,535 tonnes.

Import volume dropped 0.4 per cent last month to 57,510 tonnes.

GLOBAL LOGISTICS: Hong Kong
Ken Mark. Canadian Transportation Logistics. Don Mills:
May 2004

The major challenge that Hong Kong faces is crafting a new business and logistical model as China develops into the dominant economy in Asia. Simply put, as China prospers and modernizes, more firms will go around rather than through Hong Kong to do business there. In the short term, Hong Kong must stress the benefits and advantages of its higher-cost business services to Chinese and overseas users. But over the long term, it must adapt those existing strengths and advantages while marketing them as value-adding, specialized services. "Hong Kong has to evolve from its previous near-monopoly as the entry point for doing business with China," says Tony Burger, Canada's consul general in Hong Kong, "to a position where it can compete effectively with other emerging cities within China."

At present, of the 30,000 trucks crossing the boundary from Guangdong province into Hong Kong every day, about one third are destined for Kwai Chung despite an estimated US$200 premium per container in handling charges compared to Chinese facilities. Yet users are willing to pay more for Hong Kong's higher productivity, security and convenience. And to participate in growth on the other side of the boundary, HIT is exporting its expertise by entering into joint-venture agreements with Chinese partners to develop and operate new container operations in Yantian near Shenzhen. In the long run, HIT's Hong Kong assets will remain profitable by focusing on specialized services.

What does the future hold in store for Hong Kong? Says Gary Chan, Regional Director-North, BDP Asia Pacific in Hong Kong for Philadelphia-based BDP International, "Until direct trade with China becomes dominant, Hong Kong will continue to be the comfort zone for China's burgeoning global trade partners, playing the crucial part of middleman for trade financing, communication with factories, sound legal contracts, inbound logistics and added service value."

The most trusted entry point into the Chinese market faces the spectre of being bypassed as China modernizes its own logistics infrastructure. Contributing editor Ken Mark spent a week in Hong Kong to discover how this vibrant logistics centre plans to keep that from happening.

Hong Kong has successfully rebounded from the SARS outbreak with its characteristic gung-ho, can-do attitude stronger than ever. It remains one of the world's most vibrant business, commercial and logistics centres. Despite its tiny size (1,100 sq. km] and small population (6.8 million), Hong Kong enjoys significant trade relations with Canada. We rank in the top 20 of its import sources and in the top 10 of its export markets, (see sidebar story). However, those numbers pale in comparison to the growth potential with neighboring China, the world's fastest growing economy.

The major challenge that Hong Kong faces is crafting a new business and logistical model as China develops into the dominant economy in Asia. Simply put, as China prospers and modernizes, more firms will go around rather than through Hong Kong to do business there. In the short term, Hong Kong must stress the benefits and advantages of its higher-cost business services to Chinese and overseas users. But over the long term, it must adapt those existing strengths and advantages while marketing them as value-adding, specialized services. "Hong Kong has to evolve from its previous near-monopoly as the entry point for doing business with China," says Tony Burger, Canada's consul general in Hong Kong, "to a position where it can compete effectively with other emerging cities within China."

In more concrete terms, according to Sammy Chey, corporate manager Far East, PBB Global Logistics in Fort Erie Ont., Hong Kong's role as a re-export point from China and as a trans-shipment point is fading. The full impact of WTO (World Trade Organization) rules which China joined in 2000 will become more transparent after 2006.

But the first order of business is to make the boundary between Hong Kong and China irrelevant. For now, Chinese and foreign firms willingly pay premium prices to tap into Hong Kong's vast pool of financial, business and supply-chain expertise and use its ultra-efficient transportation infrastructure. But those advantages will diminish as China catches up.

Hong Kong's most obvious logistics shortcoming is boundary congestion - trucks can take up to three hours to cross. But there are massive plans to modernize the transportation infrastructure, simplify red tape and introduce innovative business solutions.

Ultimately, Hong Kong may wind up playing second fiddle to Shanghai as China's financial and transportation centre. But thanks to geography, it will never fade away completely because it is adjacent to the Pearl River Delta - home to more than 40 million people and extensive manufacturing facilities that make it southern China's production dynamo.

How successful that strategy will be remains unclear. But history is on Hong Kong's side. After losing millions of factory jobs to China and elsewhere, Hong Kong successfully transformed itself into a thriving service economy with more than 80% of its GDP and employment coming from that sector.

The following vignettes highlight the depth and breadth of the expertise, not to mention the optimism and determination, of executives and officials as they begin helping Hong Kong carve out its future niche in the Asia-Pacific economy.

Except for rail, Hong Kong's cargo-moving transportation infrastructure is unmatched in the world. It is the world's busiest container port handling 19.1 million TEUs in 2002. Of that total, the nine terminals and 22 berths at the Kwai Chung container port handled 62%. The rest is Pearl River traffic that continues to increase. Growth at Kwai Chung, however, has stalled - in 2003 it was more or less flat. Across the boundary in China, newer facilities - closer to manufacturing facilities - enjoy 40% annual increases albeit from a much lower base. John Meredith, group managing director, Hutchison Port Holdings, the operators of Hong Kong International Terminals (HIT), remains unfazed by the competition. "I would not mind handling less cargo," he says, "as long as we could do it more profitably by lowering our costs and level of investment. What's really important is not how much tonnage you handle, but how much money you make doing it."

At present, of the 30,000 trucks crossing the boundary from Guangdong province into Hong Kong every day, about one third are destined for Kwai Chung despite an estimated US$200 premium per container in handling charges compared to Chinese facilities. Yet users are willing to pay more for Hong Kong's higher productivity, security and convenience. And to participate in growth on the other side of the boundary, HIT is exporting its expertise by entering into joint-venture agreements with Chinese partners to develop and operate new container operations in Yantian near Shenzhen. In the long run, HIT's Hong Kong assets will remain profitable by focusing on specialized services.

The story and the strategy is echoed by HACIS, the operators of Super Terminal One at Hong Kong International Airport (HKIA), number one in the world in terms of air cargo volume. Its SuperTerminal One is the world's busiest air cargo facility. For 2003, the estimated total is about 2.0 million tonnes up from 1.9 million tonnes in 2002 or about 77% of Hong Kong's total. Another facility, Asia Airfreight Terminal handles the rest. Despite the current rosy picture, HACIS is aggressively protecting and augmenting its market share against emerging competitors within China.

To do so, HACIS must remove boundary-crossing bottlenecks. Besides traffic congestion, problems with customs documents and their transmission add to the delays. For example, cargo arriving from a 13-hour flight from Europe can sit for several days at HKIA waiting for paperwork to clear Chinese customs. To break the logjam, HACIS introduced its SuperLink China Direct service that whisks shipments quickly through customs, consolidates cargo for various consignees and delivers it in bonded trucks for next-day delivery in China. In addition, since all shipment-related data is now digitized, cargo can be tracked and traced electronically.

In October 2003, HACIS launched a supplementary southbound service routed through its new Futian Free Trade Zone consolidation warehouse in suburban Shenzhen. Phase I focuses on bulk cargo and Phase II will address pre-pack cargo. To speed up customs procedures, goods are pre-cleared at the facility before they are packed. Most important, the service