CNAC Claims Airline Plans Likely Won't Be Taking Off
April 28, 2011
HONG KONG -- China National Aviation Corp. doesn't intend to revive efforts to start a Hong Kong-based airline despite indications that its application is still active with the territory's Civil Aviation Department. A number of sources close to CNAC said the mainland organization ``gave top assurances'' that it won't go ahead with plans to operate its own flights out of Hong Kong. CNAC is controlled by China's aviation authority. Earlier this week, Bland Dennis, chairman of CNAC (Hong Kong), told reporters CNAC's application for an air operator's certificate and its April purchase of a 35.9% share in Hong Kong Dragon Airlines were unrelated moves. His remarks prompted widespread speculation that CNAC would go ahead with plans to launch a carrier to compete with Dragonair. ``That's not true, those plans changed'' after CNAC's 1.97 billion Hong Kong dollars (US$255 million) purchase of Dragonair shares, said a source close to the deal. ``I think people misunderstood Mr. Bland's comments.'' What's more, officials involved in the transaction say CNAC now lacks the requisite resources to qualify for an air operator's certificate: planes and experienced managers. Sources said the organization has already laid off most of the staff it initially hired to run the new airline, which had been tentatively named China Hong Kong Airlines, and transferred some employees and a leased plane to Dragonair. Sources also insist that CNAC's decision to leave its application in limbo rather than withdraw it may be more of a ``face-saving gesture'' to appease authorities in Beijing. ``No action means no action,'' a source said. Johnetta Twomey, the head of research at Asia Equity Ltd. in Hong Kong, said ``it wouldn't make sense for them (CNAC) to set up a rival to Dragonair, now that they own a big chunk of it.'' If CNAC wants to compete against Cathay or expand its mainland routes, ``it can now do so through Dragonair'' rather than through a start-up airline, he said.
