Washington has warned it may restrict flights from local carriers such as Cathay Pacific Airways over objections to Hong Kong’s quarantine rules, which it says are denying “fair and equal opportunity” to US airlines.
The US Department of Transportation said in an order on Tuesday it was considering retaliating against Hong Kong’s aircrew quarantine regulations, which forced American cargo carrier FedEx to move 180 pilots out of the city to protect its flight schedules against future disruption.
The American agency also asked Cathay Pacific to submit its schedules for all US flights within seven days so it could assess whether they might “be contrary to applicable law or adversely affect the public interest”.
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Hong Kong on February 20 imposed quarantine measures on any flight crew members who had stayed outside the city – but excluded from the rule those arriving from mainland China and Anchorage, Alaska. Alaska is a critical cargo transit stopover for Cathay flights.
“The manner in which Hong Kong has imposed its restrictions disproportionately impacts US carriers to the exclusive benefit of Hong Kong carriers. This imbalance denies US carriers their bilateral right to a fair and equal opportunity to compete in the US-Hong Kong market,” the department said.
It added that the “carve out” allowed Cathay’s cargo operation to continue “without impact” from the crew quarantine requirements. It pointed out FedEx’s Hong Kong crew, who flew within Asia, would not benefit from such an exemption.
The fact that only Anchorage was exempted from the crew quarantine requirement can support the argument that the playing field is not level
Jae Woon Lee, aviation law expert, Chinese University
FedEx was forced to relocate its Hong Kong-based flight crew to San Francisco to maintain the stability of its operations, and so as not to force them to undergo repeated isolation and be separated from their families.
The US consulate in Hong Kong has repeatedly raised the issue with the city’s government, while FedEx has also proposed strict health and safety measures for its crew to secure a quarantine exemption.
The consulate wrote to the government on February 26 “to take actions as a matter of urgency to restore the level playing field in the US-Hong Kong market”. It said the American authorities might otherwise be left with no choice but to consider regulatory action.
Washington previously took action against China and India for not permitting US carriers to operate routes amid the pandemic, while the other countries’ airlines had unfettered rights to fly to the States.
US carriers also lodged grievances in Washington against Qatar and the United Arab Emirates under the “fair and equal opportunity” clause over airline subsidies they said put American jobs at risk.
A FedEx spokeswoman said the company would continue to work with the US and Hong Kong governments and its pilots’ union to address the quarantine restrictions.
“We hope the action taken by the US Department of Transportation on March 16 will aid in resolving this matter.”
HK Express and Hong Kong Airlines were also cited in the order, but neither flies to the US.
Jae Woon Lee, an aviation law and policy expert and an assistant professor at Chinese University, explained international air transport had mainly been governed by around 4,000 bilateral air services agreements.
“The fact that only Anchorage was exempted from the crew quarantine requirement can support the argument that the playing field is not level,” he said. “However, this is not a clear-cut case, as the exemption is not based on the nationality of airlines.”
He added: “A bigger question is whether and to what extent Hong Kong’s international aviation hub status could be affected.”
Cathay Pacific has also been hit hard by the quarantine requirements. It cut its already skeletal passenger and cargo flight schedules by 60 and 25 per cent, respectively.
The measures increased its monthly cash burn by HK$300 million (US$39 million) to HK$400 million a month, taking its total losses to up to some HK$1.9 billion every four weeks.
Last week, Cathay announced a record loss for 2020 at HK$21.6 billion.
Hong Kong earlier imposed three weeks of quarantine on any flight crew arriving to the city who had previously been in four “extremely high-risk” countries, including Britain, over the preceding 21 days.
The city’s quarantine restrictions have also fallen foul of expats, diplomats and the business community lately, including bankers, who warned the measures could harm the Asian financial hub.
The Transport and Housing Bureau said the US accusations were “unfounded”.
“Such [accusations] do not serve the best interest of all airlines serving Hong Kong and the US,” a government spokeswoman said.
She added authorities were discussing with FedEx how “to address the company’s business and operational issues while upholding the need to safeguard the public health of our community”.
Cathay Pacific said it would comply with all aviation regulations in Hong Kong and destinations it flies to.
“Cathay Pacific believes the matter should be resolved as soon as possible in the interest of the general and travelling public,” a spokeswoman for the airline said.
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