Cathay Pacific's brand merger hits roadblock from China's aviation regulator: Sources

China's aviation regulator may make it difficult for Hong Kong's Cathay Pacific Airways to merge regional arm Cathay Dragon into its main brand because of infractions during last year's pro-democracy protests, two sources said. The airline is looking to cut costs, streamline marketing and consolidate pilot contracts around Cathay Pacific and low-cost arm HK Express, the sources said on condition of anonymity. Singapore Airlines is doing the same with regional arm SilkAir and budget arm Scoot. But the Civil Aviation Administration of China (CAAC) would view such a move as an expansion and could block Cathay from keeping access to 20 mainland routes flown only by Dragon. The Cathay Pacific brand flies only to Beijing and Shanghai, while Dragon destinations include smaller cities like Fuzhou and Nanjing. China's aviation regulator stepped up inspections of Cathay planes last fall after warning the airline that staff participating in anti-government protests in Hong Kong would no longer be allowed to fly to mainland destinations or even in Chinese airspace. During that period, Cathay's CE resigned and the brand received enough demerit points for minor infractions under the strict CAAC system that the regulator can deny an application to add mainland destinations and aircraft, including Dragon's, three sources said. The six demerits received, according to two of the sources, mean it could take a year from the date of the most recent one, near the end of last year, to be allowed to expand, CAAC demerit rules posted online say.<br/>