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Hong Kong airport proposes levy after third runway approved

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The Hong Kong government approved a third runway at the city's international airport, pledging to fund the HK$141.5 billion (S$25.3 billion) expansion through a mix of internal funds, external borrowing and higher user fees.

[HONG KONG] The Hong Kong government approved a third runway at the city's international airport, pledging to fund the HK$141.5 billion (S$25.3 billion) expansion through a mix of internal funds, external borrowing and higher user fees.

Airport Authority Hong Kong is proposing to levy a HK$180 additional fee on departing, non-transit passengers until the end of the construction, Chief Executive Officer Fred Lam said at a press briefing in Hong Kong on Tuesday. It will also retain operational surpluses for a decade and halt annual dividend payments to the government, he said.

"The three-runway system is more than a transport infrastructure project, it is essential to keep our economy going," Anthony Cheung, Hong Kong's secretary for transport and housing, said at the same briefing.

Slated to open by 2023, the third runway would help Hong Kong compete with regional rivals seeking to benefit from growing passenger traffic and cargo demand in Asia, particularly China. Singapore recently announced plans to spend S$3 billion to develop a fifth passenger terminal at Changi International Airport over the next decade.

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The new facility would help Hong Kong International Airport, the world's largest handler of air cargo, boost capacity to 100 million passengers and 9 million tons of cargo a year by 2030, Financial Secretary John Tsang said in his budget speech last month. The airport said it handled 63.4 million passengers and 4.38 million tons of cargo last year, both records.

The third runway would be situated to the north of the airport and would be used only for landing, because of safety reasons. It would raise the airport's capacity to 102 flights per hour, Cheung said, from 68 now.

Cathay Pacific Airways Ltd., the city's largest airline, expressed reservations about the fee-increase proposal, saying that the Airport Authority is capable of paying for the project without imposing additional financial burdens on users.

"The Airport Authority, as a public body, should reinvest its income in the development of the third runway so that the airport can maintain its premier hub status and continue to make an important economic contribution to Hong Kong," Cathay said in an e-mailed statement on Tuesday.

The announcement didn't mention any increases in airline charges to fund the project. The International Air Transport Association warned Hong Kong could lose competitiveness if the airport authority seeks to pay for the runway by raising the fees it charges carriers, IATA CEO Tony Tyler said last week.

"Given the Airport Authority's excellent credit rating, external borrowing is financially viable," the government's Cheung said on Tuesday. He urged the authority to consider reducing the proposed surcharge on travellers and instead raise more of the total by borrowing.

Still, Hong Kong's government sees room to increase airport charges. Airport charges in Hong Kong were among the lowest in a survey of 55 airports recently undertaken by consultants, Leung said.

"We think this is the fairest way," the Airport Authority's Lam said. "If we ask the Legislative Council for funding, it may mean that tax payers will have to fund overseas travellers." All cost overruns will be borne by the Airport Authority, he said.

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