Cathay Pacific Airways Ltd., Hong Kong's biggest airline, is "cautiously optimistic" it would be given more flights to Beijing as well as approval to start flights to Shanghai during talks between Hong Kong and mainland officials later this month, general manager Andrew Pyne said.

"We are cautiously optimistic of making a breakthrough on flying to Shanghai and operating more services to Beijing," Pyne said in an interview with Cathay's in-house magazine CX World.

"We have every confidence that the (Hong Kong) government will secure a positive outcome for Hong Kong and Cathay Pacific."

Last year, Cathay was granted a license to operate 21 services a week to both Beijing and Shanghai and three a week to Xiamen, its first flights to mainland in more than a decade. It began flying three times a week to Beijing on Dec. 2, the maximum it is allowed under Hong Kong's current air service agreement with mainland, and is still awaiting the go-ahead for flights to Shanghai and Xiamen.

"The bottom line is that we need daily passenger services to Beijing and Shanghai, plus a freighter service to Shanghai", said Pyne, adding, however, that he didn't expect the airline to be granted unlimited access.

Pyne said that an agreement that increases capacity would be "worthless" without scrapping the "one-route, one-airline" restriction in force on all flights between Hong Kong and mainland -- apart from the Hong Kong-Beijing route.

Under that policy, Cathay's smaller rival Hong Kong Dragon Airlines was given the right to fly to mainland in 1990. Cathay owns about 18 percent of Dragonair, while its parent Swire Pacific Ltd. holds 7.71 percent.

"Any agreement on increased capacity will be useless unless that nut (on designation of flights) is cracked," Pyne said.

Pyne said an agreement will be the "acid test" of Hong Kong's policy of liberalizing its air transport sector.

Last month, China signed an "open-skies" agreement with Thailand that threw open all routes between the two countries and included fifth-freedom rights, which allows airlines to pick up passengers and fly them to another country. Singapore, Australia and Japan have similar deals with China.

Hong Kong, on the other hand, has no open skies deal with mainland, though it last year signed more relaxed air agreements with the United States, which accounts for 7 percent of total traffic at Hong Kong's Chek Lap Kok international airport, and the U.K., which makes up 1.5 percent.

(Shenzhen Daily February 10, 2004)