Cathay applies for China flights


Cathay said it was hoping to win flights to China after its affiliate Dragonair won flights on the profitable Taiwan route

HONG KONG, China -- Hong Kong's largest airline, Cathay Pacific, has applied for formal approval to fly to three Chinese cities.

Cathay stopped flying to China 12 years ago in a deal to aid its affiliate Dragon Airlines, also based in Hong Kong.

But Cathay told CNN in July that it was conducting market research about flying into China again, after Dragonair won the right to fly to Taiwan. (Full story)

A government spokeswoman told wire services Friday that Cathay has now officially filed to fly from Hong Kong to the cities of Beijing, Shanghai and Xiamen.

Those are three of the most profitable routes. There is heavy Hong Kong investment in Shanghai property, and most multinationals operate an office out of Beijing.

Xiamen is a coastal city directly across from Taiwan, in Fujian province. Cathay has said it believes increased business from passengers to and from China will be essential in offsetting any declines if China and Taiwan approve direct flights.

Pressure from direct flights

Cathay is one of the main beneficiaries from the political tensions between China and Taiwan, with all passengers between the two required to fly indirectly, typically via Hong Kong or Macau.

That has made the Taiwan-Hong Kong route one of the most profitable in the world. Analysts suggest Cathay would lose out considerably if direct flights between Taiwan and China begin.

The two largest domestic Chinese carriers, China Southern and China Eastern, have conceded that competitive pressure from Cathay would cut into profits.

Cathay stock closed up 2.55 percent to HK$12.05, outperforming the Hang Seng index, which lost 0.17 percent to 10,043.87.

Interested parties now have two weeks to comment on Cathay's request.