One step forward for cross-Straits relations, one step back for Cathay Pacific. The Hong Kong-based airline is one of the biggest beneficiaries of China’s refusal to recognise Taiwan’s sovereignty, since there are virtually no direct flights across the Straits. Now that rapprochement is pending – the two sides aim to resume direct flights in July – Cathay faces erosion of its busiest route.

Travellers are now obliged to detour via Hong Kong, helping fill the more than 100 weekly Cathay flights that shuttle between Taipei and Hong Kong. These account for perhaps 17 per cent of Cathay’s passengers and some of its most profitable flights. There is minimal competition: Chinese airlines are unable to fly the Taiwan leg, so the only competitors are Taiwan’s two main carriers. Fortunately, for Cathay at least, the protracted spats which have delayed direct flights mean the carrier is better placed to handle the inevitable loss of traffic. Since talks about direct flights first surfaced, Cathay has diversified earnings, boosted by subsidiary Dragonair’s extensive China network. Year-on-year revenue growth of 24 per cent last year comfortably outstripped revenues on the Taiwan route.