Cathay Pacific Airways Ltd. won swift approval Monday for new routes to North America over the objections of rival Hong Kong Dragon Airlines Ltd.
On the first of three days of hearings by the Air Transport Licensing Authority, it was granted permission to serve Toronto.The Canadian city is an important destination because of its large population of former Hong Kong people, said Cathay's counsel, Richard Stirland. But it could not fly direct and so needs potential stopovers.
The application suggests the service will be routed via Tokyo and Vancouver.
Because of the "protracted" negotiations between governments needed to secure air rights, the Toronto service won't begin until mid-1988 at the earliest, Mr. Stirland said.
The judge who heads the panel, Ross Penlington, dismissed Dragonair's objections on the grounds that it had not provided sufficient arguments. But he granted only a two-year license instead of the five years Cathay sought.
Cathay is also applying for scheduled services to a number of Southeast Asian destinations. They are being contested by Dragonair, a start-up that has been frustrated in its bids for many lucrative routes.
For its part, Dragonair is seeking permission to fly regular services to Kota Kinabalu, Johore and Kuala Lumpur in Malaysia.
This is challenged by Cathay Pacific, which already serves Kota Kinabalu and Kuala Lumpur.
The Hong Kong government says it plans to stick to its general rule of one carrier a route.
Cathay has recently gone to some lengths to show it is not a monopoly except in the strict legal sense. It competes in an open local market against some two dozen airlines and for some 80 percent of its revenue in markets elsewhere, it says.
Before it invested heavily in new aircraft and other equipment last year, however, Cathay sought - and obtained - a government statement that it has no immediate plans to change its one-carrier-a-route policy.
It is committed to buying two new aircraft and has options on seven Boeing B747-400s and two B747-300s over the next few years. The total package comes to some HK$13 billion (US$1.6 billion).
Dragonair, meanwhile, got some comfort from China. Mainland interests indirectly hold about 7 percent of the carrier, which is primarily owned by shipping magnate Sir Yue-Kong Pao.
The airline's managing director, Helmut Sohmen, and other executives were told by vice premier Li Peng that the airline has an important role to play in cargo and passenger traffic between the mainland and Hong Kong.
This reassurance is seen as psychologically important because a mainland entity, China International Trust & Investment Corp., recently bought a 12.5 percent stake in Cathay Pacific.