Cathay Pacific Airways reached a preliminary agreement on Wednes-day to buy 9.9 percent of Air China, a step that airline experts said signaled the opening of the Chinese aviation market to international competition, and a move by Chinese carriers into global markets.
The alliance, outlined in a memorandum of understanding, ties together two of Asia's more successful airlines, which have profited handsomely from China's extraordinary economic growth over the last quarter of a century. Cathay will buy the stake at Air China's initial public offering, which will be held here late this year or early next year.
PHOTO: AP
The short-term effects on air travelers in and through Hong Kong and China, however, are less clear. Cathay Pacific and Air China said in a joint statement that they planned to coordinate their marketing and sales on service between cities that both carriers serve -- a step that could reduce competition and make lower fares less likely.
Kapil Kaul, a senior vice president in New Delhi for the Center for Asia Pacific Aviation, a consulting group based in Sydney, said that Wednesday's deal would clear the way for similar foreign investment in China's other two major carriers, the China Eastern Airlines Co and the China Southern Airlines Co.
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 more likely to weigh such deals in geopolitical terms than in financial terms, Kaul said.
The 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, it increasingly portrays itself these days as a Hong Kong company.
Air China has already applied for permission to issue H shares on the Hong Kong Stock Exchange; the two companies gave no hint on Wednesday of how these shares, including the 9.9 percent stake for Cathay, would be valued.
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. Cathay Pacific is the dominant carrier in Hong Kong and also flies to Beijing. It received approval earlier this week to increase its flights to Beijing, according to Bloomberg News.
Peter Harbison, the managing director of the Center for Asia Pacific Aviation, said on Tuesday that Beijing appeared close to giving permission for four Chinese budget airlines to begin operations. The arrival of such airlines could force Air China and Cathay Pacific to cut costs, and is part of a general move by Beijing to begin liberalizing air traffic in and out of China.
The Taiwanese passport ranked 33rd in a global listing of passports by convenience this month, rising three places from last month’s ranking, but matching its position in January last year. The Henley Passport Index, an international ranking of passports by the number of designations its holder can travel to without a visa, showed that the Taiwan passport enables holders to travel to 139 countries and territories without a visa. Singapore’s passport was ranked the most powerful with visa-free access to 192 destinations out of 227, according to the index published on Tuesday by UK-based migration investment consultancy firm Henley and Partners. Japan’s and
NATIONAL SECURITY THREAT: An official said that Guan Guan’s comments had gone beyond the threshold of free speech, as she advocated for the destruction of the ROC China-born media influencer Guan Guan’s (關關) residency permit has been revoked for repeatedly posting pro-China content that threatens national security, the National Immigration Agency said yesterday. Guan Guan has said many controversial things in her videos posted to Douyin (抖音), including “the red flag will soon be painted all over Taiwan” and “Taiwan is an inseparable part of China,” while expressing hope for expedited “reunification.” The agency received multiple reports alleging that Guan Guan had advocated for armed reunification last year. After investigating, the agency last month issued a notice requiring her to appear and account for her actions. Guan Guan appeared as required,
Japan and the Philippines yesterday signed a defense pact that would allow the tax-free provision of ammunition, fuel, food and other necessities when their forces stage joint training to boost deterrence against China’s growing aggression in the region and to bolster their preparation for natural disasters. Japan has faced increasing political, trade and security tensions with China, which was angered by Japanese Prime Minister Sanae Takaichi’s remark that a Chinese attack on Taiwan would be a survival-threatening situation for Japan, triggering a military response. Japan and the Philippines have also had separate territorial conflicts with Beijing in the East and South China
A strong cold air mass is expected to arrive tonight, bringing a change in weather and a drop in temperature, the Central Weather Administration (CWA) said. The coldest time would be early on Thursday morning, with temperatures in some areas dipping as low as 8°C, it said. Daytime highs yesterday were 22°C to 24°C in northern and eastern Taiwan, and about 25°C to 28°C in the central and southern regions, it said. However, nighttime lows would dip to about 15°C to 16°C in central and northern Taiwan as well as the northeast, and 17°C to 19°C elsewhere, it said. Tropical Storm Nokaen, currently
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