I have to say that Cathay has been very selfish. They should either get Air China into oneworld right now or just allow Hainan to participate. Clearly Cathay have failed once already when Air China joined Star. Will they succeed in near future? No. If I were Cathay I would propose Hainan to give up JetStar idea but allowing them joining oneworld on the condition of Hong Kong Airlines could not join as the affiliate or members of oneworld in whichever way. But i am not CX. And unfortunately CX is driving many Chinese members away as many people could not earn qualifying miles on any Chinese domestic carriers. Even CX member can not get qualifying miles when they travel on CA. So what is the point to join oneworld FFP (for many Chinese members)?

Oh by the way the lawyers in CX are not 100% right. Hainan and Qantas can register a company in Hong Kong as JetStar Hong Kong and/or change the name of Hong Kong Express to JetStar Hong Kong. JetStar Hong Kong can exist as a Hong Kong residing company and operate independantely out of JetStar Australia. As a company name JetStar Hong Kong still could be a Hong Kong headquartered company rather than JetStar (aka JetStar is JetStar, JetStar Hong Kong as JetStar Hong Kong). However it requires a lot of trust and special treatments to be given by JetStar to Hainan Airlines or Hong Kong Express. So instead of doing business together, Qantas just need to rent the right of using the name of JetStar to JetStar Hong Kong holding company (in this case even not HKE or HNA).