China is taking strict measures against Hong Kong’s flagship carrier Cathay Pacific airline, in response to the airline crew members joining protests against China.
Almost half of the airline’s revenue is generated from mainland China and Hong Kong combined. From a total of HK$111 billion, HK$ 57 billion is generated from Cathay Pacific’s services to mainland China.
Cathay Pacific owns 18.13 percent of Air China and has a director seat in its board of Directors. Air China in turn owns 29.99 percent stake in Cathay Pacific and has five seats in its board of directors group. Cathay also has a 49 percent stake in Air China Cargo.
Cathay Pacific’s shares fell by 4 percent after the news of strict measures being taken against it by the Chinese authorities came out.
Also, China is all set to overtake US to become the largest aviation market in the world, due to which the current measures taken against the airline by China could threaten Cathay Pacific’s profitability.
Cathay Pacific, thus has to adhere to the regulations made by China’s aviation authorities.
Cathay Pacific airline is facing intense scrutiny from the aviation authorities of mainland China regarding its access to the mainland market and its reliance on the country’s airspace.
The mainland China is an integral part of Cathay Pacific’s business. A fifth of Cathay Pacific’s flights are directed towards China as Cathay Pacific provides flight services to 24 destinations in mainland China.
The Hong Kong population have been protesting from almost two months against a bill passed in China, which allows mainland China to extradite Hong Kong residents.
CAAC, the civil aviation administration of China, has banned Cathay Pacific’s crew members, who had joined the protest and demonstrations in Hong Kong.
The regulations made by the aviation authorities reflect the power possessed by Beijing over international companies who are financially dependent on China.