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The Week in Asia Business - 2002-12-09


Hong Kong-based airline, Dragonair, has received the go-ahead to fly to five new Asian destinations: Manila, Seoul, Tokyo, Bangkok and Sydney.

In September, Hong Kong regulators granted the airline permission to fly between Hong Kong and Taipei - one of Asia's most lucrative routes. That move put the company in direct competition with Hong Kong's largest carrier, Cathay Pacific, which holds a stake in Dragonair.

Cathay Pacific is now seeking approval to fly to destinations in mainland China, currently serviced by Dragonair.

Philip Wickham is an airline analyst with ING Barings investment bank. "It's another sign of the relationship between Dragonair and Cathay starting to evolve into one of competition from one previously pretty much working together," he says. "The thing, which Cathay is weighing, is the value of investment in Dragonair versus what the potential of loss could be in terms of market position."

Analysts say consumers are not expected see price discounts on the new Dragonair routes in the near future, as the extra flights will have little impact on capacity.

Disney says it will delay plans to open a theme park in mainland China now until 2010 - so it can make sure its park being constructed in Hong Kong is successful first. The Hong Kong site is due to open by 2006 and is expected to attract millions of visitors from the mainland. The company revealed only months ago that it was talking with Shanghai officials, sparking concern in Hong Kong about too much nearby competition.

One of Asia's largest port operators PSA says labor unrest that shut down U.S. West Coast ports earlier this year has had little impact on its overall bottom line. The state-owned Singaporean company says purchases of terminals in China and Belgium have helped it boost cargo traffic by close to 30 percent.

In Australia, Prime Minister John Howard announced a $200 million aid package for the next three years to help farmers survive the country's worst drought in nearly a century.

Under the government program, drought-stricken farmers will be eligible for at least six months income and loans with subsidized interest rates.

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