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.