Virgin Atlantic Needs Clearance In Hong Kong for Sydney Route

Virgin Atlantic Needs Clearance In Hong Kong for Sydney Route by Lilly
Vitorovich Dow Jones Newswires

4 May 2004 SYDNEY -- Virgin Atlantic Airways' long-awaited arrival in
Sydney is being held up by red tape in Hong Kong, which should please
its rivals British Airways, Qantas Airways and Cathay Pacific Airways.

Virgin Atlantic's plans to start flying between London and Sydney via
Hong Kong by midyear have been dashed due to "technical issues"
relating to a deal between U.K. and Hong Kong officials, said
Mackenzie Grant, Virgin Atlantic's head of Asian operations.

"We still have not had the last element of approval from the Hong Kong
government," he said in an interview. "Even though the deal was agreed
last November, they haven't released it to us as yet, because they're
waiting on some clarification from the European Union on the
designation clause," Mr. Grant added.

The European Union is in the process of approving new legislation --
the designation clause, which states any rights given to a U.K.
carrier by a non-EU government also have to be given to any airline in
the EU.

"It's quite a complex issue, but obviously one that's giving concern
to some governments and not to others, but the overriding position we
take is that if the agreement is pro-competition and pro-consumer,
then it cannot be anything but good for aviation and for the
consumer," Mr. Grant said.

Virgin Atlantic plans to operate a daily service between London and
Sydney using 12 Airbus A340-600 aircraft when it receives the green
light. The planes have been configured to seat 311 passengers.

Mr. Grant is confident the deal will be approved, but concedes the
delay in Hong Kong is frustrating after waiting for so long to start
services.

The Hong Kong government hasn't given any indication of when it's
likely to hand down its final ruling, Mr. Grant said. Virgin Atlantic
hopes to arrive on Australian shores by the end of the year, most
likely in the fourth quarter.

"We are still planning to operate down to Australia by the end of the
year, but it will be later in the year, probably not until the very
end part of this year," Mr. Grant said.

Virgin Atlantic will likely expand the London to Sydney route, but
said it was difficult to give an indication of the scale.

"It's very difficult to say, because it's quite a complex market, as
Qantas points out there are over 20 other airlines flying to the U.K.
from Australia and we will be added to that number," Mr. Grant said.

"But, we do think that both Qantas and BA have an inordinate share of
that market, and we would like to get a share of that too," he said.
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