Air Services

The Hong Kong Special Administrative Region (HKSAR) is home to three
international airlines. Cathay Pacific Airways (CPA), the largest of the
three, concentrated its expansion in 1997 by increasing frequencies on
existing routes. To cope with the increasing scale of operations, CPA
acquired one A330-300 and one A340-300. At the end of 1997, its fleet
comprised seven B747-200, six B747-300, 19 B747-400, four B777-200,
11 A330-300, six A340-300, four B747-200F and two B747-400F - a total
of 59 aircraft.

Hong Kong Dragon Airlines (Dragonair) commenced scheduled passenger
services to Chongqing in April. At the end of 1997, the airline operated
scheduled services to 11 cities in the Mainland and eight other destinations
in Asia, together with non-scheduled passenger services to other cities in
the region, mostly in the Mainland and Japan. In addition, Dragonair
continued to participate in the joint services between Bandar Seri Begawan
and the HKSAR operated by Royal Brunei Airlines. With the introduction
of an additional A330-300 aircraft, the airline now operates seven
A320-200 and five A330-300 aircraft.

AHK Air Hong Kong (AHK) continued to operate scheduled all-cargo
services to Manchester, Brussels, Dubai and Osaka, and non-scheduled
cargo services to various destinations in Asia using three B747-200
freighters. The airline terminated its scheduled all-cargo services to
Chicago at the end of May.

During the year two new Air Operator's Certificates (AOC) were granted.
Helicopters Hong Kong Limited was granted an AOC to operate helicopter
service within the territorial boundaries of the HKSAR using a Bell 206.
Metrojet Limited was granted an AOC to operate non-scheduled passenger
services using an HS125-700B.

Three new carriers introduced scheduled services to the HKSAR during
the year - Japan Air System in June, Transaero in July and Kampuchea
Airlines (replacing Royal Air Cambodge) in October. As a result of these
changes, the number of scheduled airlines serving the HKSAR increased
to 67. At the end of the year, these airlines together operated about 1 500
direct round trip services weekly between the HKSAR and over 120 other
cities. In addition to these scheduled services, an average of 200
non-scheduled flights were operated each week.

The HKSAR Government continues to negotiate air services agreements
(ASAs) and air services transit agreements (ASTAs). It also continues to
hold air services consultations with foreign aviation partners to review and
update current bilateral arrangements to cope with changing market
circumstances. In 1997, 13 rounds of air services consultations were held
with 12 countries. Seven more ASAs were signed - with Japan, Myanmar,
Thailand, USA, Philippines, Indonesia and the United Kingdom - bringing
the total of such agreements to 22.

In 1997, the Air Transport Licensing Authority granted two licences: one
to Dragonair and the other to AHK. At the end of 1997, CPA held licences
to operate scheduled services to 75 cities, Dragonair to 79 cities and AHK
to 38 cities.

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