China Business

Jun 13, 2006

Cathay-Dragonair deal to strengthen HK as hub

HONG KONG - Hong Kong Secretary for Economic Development and Labor Stephen Ip welcomed on June 9 the recent spate of shareholding realignments involving Cathay Pacific and Dragonair, resulting in the former's effective takeover of the latter, saying that the move will strengthen Hong Kong's role as an aviation hub.

Combining the strength of both companies will enhance their efficiency, Ip said, adding "This should benefit the traveling public who should be able to have more choices, and it should be more

convenient for them to travel from the Chinese mainland through Hong Kong and then through Cathay Pacific's flights to many destinations all over the world."

When questioned whether the move effectively created a monopoly, Ip said, "[Cathay Pacific and Dragonair] have to compete with other airlines, whether foreign or mainland airlines. There is very keen competition in the aviation sector. Despite the shareholding realignments, it is essential for both companies to continue to compete with other airlines."

He said that he did not foresee any job cuts, and that staff matters are for the companies to decide. "But I do hope they will continue to spread their business. I do hope that they will continue to buy aircraft. So they would require, for example, more cabin crews," he said.

(Asia Pulse/XIC)

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