tim's experiment

Jetstar Hong Kong is a local company which wishes to run a low-cost, no-frills airline of the kind which everyone in Europe uses on shorthaul routes. If you are wondering why it has taken more than two years — with no end in sight — to achieve this modest objective, an interesting light is shed by a piece on the back page of this morning’s Business Post.

This is misleadingly headlined “Why is Jetstar so keen to become a Hong Kong airline?”. Jetstar is already a Hong Kong airline. It is a Hong Kong airline not allowed to operate. The reason for this is historic. When Hong Kong was returned to the bosom of the Motherland the rules about airlines were of necessity rewritten. Normally this would have involved the sort of local ownership rules imposed on television stations. But this would have had the unwanted effect of kicking both of the two incumbents out of business, because Hong Kong Airlines was owned on the mainland and Cathay Pacific in the UK. So the drafters came up with a new phrase. You could be a local airline if your “principal place of business” was Hong Kong. This is not a criterion used in other places. So when Jetstar applied to be a Hong Kong airline there was an opportunity for a long and expensive legal argument. This was eagerly taken up by the two incumbent airlines, who have the usual aversion to low-cost competition. Hence the two years and counting. Meanwhile Jetstar is, ironically, the only participant in the process which is Hong Kong-owned, mostly by Shun Tak.

The piece lurking under the headline offers an interesting conspiracy theory. The author, David Dodwell, asserts that no low-cost airline can hope to make a profit in Hong Kong, because of the “ferocious competition” here. So there must be some other reason for the project. It is, Mr Dodwell suggests, because a “local airline” will be represented in negotiations over landing rights and such matters between Hong Kong and other places. So they will know what is going on. Qantas, from which Jetstar rents its trade name, is a “troubled airline” so this does not matter too much, but Singapore Airlines is taking a stake in Hong Kong Airlines, so the Hong Kong government now has two “Trojan horses” to worry about.

This is a bit of a scare story. One part of it struck me as a bit odd. Mr Dodwell says he “sat through the tedium of the ATLA arbitration drama”. And you have to wonder why a sane person with no stake in the matter beyond a lingering suspicion of Trojan horse manure would do such a thing. Mr Dodwell, the newspaper informs us, is the “executive director of the Hong Kong Apec Trade Policy Group”. But this is not a full-time job. Mr Dodwell is also (where would we be without Google?) a senior counsellor for Vriens and Partners, and chief executive of Strategic Access Limited, “a Hong Kong-based strategic advisory and government relations firm.”  We are on the trail of something here. Never mind the strategic advice – Mr Dodwell earned an honest crust as a journalist for many years. What we are dealing with here is public relations for companies which do not have to worry about what the public thinks of them. They can work directly on the government.

And which of the local industrial behemoths does Mr Dodwell ply his pen for, which might involve him turning up for the tedium of the the ATLA hearings? No doubt this is a commercial secret, and there is more than one, and Mr Dodwell likes being bored in a public spirited sort of way. Still, in 2005 it appears that “David is account director for the Swire Group, Hong Kong Air Cargo Terminal (Hactl), Ocean Park, Hongkong Electric, Bechtel, Jardine Matheson, Mandarin Oriental Hotel Group and a number of Government clients”. The Swire Group includes Cathay Pacific.

Clearly Mr Dodwell is doing a good job for his clients, whoever they are. Whether the South China Morning Post is doing a good job for its readers is another matter. Articles like this should be clearly labelled as press releases from one of the parties concerned.