Cathay Pacific will face fight to keep Dragon flight routes

Cathay Pacific will have to vie with rivals for rights to serve the flight routes operated until now by subsidiary Cathay Dragon after abruptly shutting the unit this week as part of a major restructuring. Cathay Dragon, originally a startup rival known as Dragonair, was grounded on Wednesday after 35 years of connecting Hong Kong to regional cities, mostly in mainland China. The move came as Cathay announced it would cut 8,500 jobs to cope with the grounding of most of its passenger flights amid the COVID-19 pandemic and would focus on serving premium customers with Cathay Pacific-branded flights, with budget unit Hong Kong Express serving other fliers. Stock analysts following Cathay applauded the move as a boost for efficiency. "We think that simplifying the brand structure for the business should help to reduce overlaps and streamline the business," wrote Ben Hartwright of Goldman Sachs in a client note. However, calling Cathay Dragon's traffic rights "important public resources that belong to the HKSAR government," a spokesman for Hong Kong's transport and housing bureau told Nikkei Asia that Dragon's rights "shall be returned to the government for reallocation and cannot be automatically transferred to other airlines." Other local airlines will be able to submit applications for the 40-some routes previously operated by Cathay Dragon and the bureau "will reallocate the traffic rights in accordance with the established mechanism," the spokesperson said.<br/>