Prospective Hong Kong airlines say any potential tie-up between Air China, Cathay Pacific Airways and Dragonair highlights the need for more transparent legislation to protect consumers.
But government and travel industry officials said they were satisfied that market forces would be deterrent enough against anti-competitive behaviour from the trio.
On Wednesday, in response to a report in the South China Morning Post, Cathay and parent Swire Pacific confirmed progress in wide-ranging talks with Air China, holding out the possibility of a cross-shareholding agreement and the sale of Dragonair.
An executive from one prospective local airline said that 'while the statement was necessarily vague, it raises warning flags to me'.
'The government says it will take a wait-and-see attitude and that it would move to protect airline start-ups,' he said. 'But CR Airways and Hong Kong Express have been locked in a licensing dispute, first with Dragonair and now between themselves, for nearly a year without a government decision.
'It worries me that the environment for start-up airlines will go from bad to worse. What we need is more clarity for the industry - ultimately it is the Hong Kong consumer that will benefit.'
