Cathay Pacific sues Australia

Cathay Pacific sues Australia

SYDNEY (AFP): Hong Kong-based Cathay Pacific has launched a court action against the Australian government here to try to prevent its rights to fly here from being suspended from June 30, airline officials said yesterday.

The action follows the failure of talks to settle the increasingly intractable tit-for-tat row between Hong Kong and Canberra over the intra-Asia traffic rights of Australian flag- carrier Qantas.

Cathay said yesterday the dispute was threatening more than A$1 billion (US$720 million) in revenue for the three airlines -- Cathay, Qantas and Ansett Australia, as well as the travel plans of tens of thousands of visitors to Australia from Hong Kong.

"The court action is very nearly our last resort because the negotiations to try to settle the dispute were not showing any result," a spokesman for Cathay Pacific said yesterday.

The action, initiated in the Federal Court here yesterday and adjourned until Tuesday, followed Canberra's decision not to renew Cathay's Australian operating permit beyond June 30 in reprisal for action by Hong Kong against Qantas.

The Australian government, understood to have been caught offguard by the litigation, said earlier this week it was still optimistic about finding a settlement and that talks would continue when in fact Cathay says they have virtually collapsed without solution.

The Hong Kong administration, which has accused Qantas of exceeding passenger limitations on flights from Hong Kong to other Asian destinations, had imposed a 50-percent cap on Qantas passengers who could be picked up in Hong Kong from July 1.

That meant that for every two passengers flying from Sydney to Bangkok, for instance, one extra passenger could be picked up in Hong Kong.

Hong Kong has threatened reciprocal action not just against Qantas but against Australia's fledgling international carrier Ansett as well.

However, Cathay told AFP it is arguing that the Australian government-imposed sanction was not only an excessive retaliation, but one which breached two particular laws under which the court action has been initiated.

Cathay Pacific manager for Australia, Christopher Pratt, said the ban on Cathay was "heavy-handed and bore no relationship to the issues at dispute between Qantas and the Hong Kong government.

"We are only asking the Australian government to treat Cathay Pacific in accordance with the agreement and according to the same policy and principles it espoused during the recent air services dispute with Northwest Airlines," he added in a statement.