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Advance runway fees rapped 2015.03.13
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CATHAY Pacific Airways (國泰航空公司) and the International Air Transport Association (IATA, 國際航空運輸協會) both agree that the ‘users-pay’ principle is the way to go on funding construction of the third runway at Hong Kong International Airport (香港國際機場).

But the airline and trade association both oppose any advance charges until the project is completed.

The new runway – expected to be finished by 2023 – is vital to the local economy, but the Airport Authority (AA, 機場管理局) should not seek to finance the HK$140 billion project by levying charges on the public before then, IATA chief executive and director-general Tony Tyler said on Monday.

“You cannot charge a toll for a bridge that is not yet built, or for a tunnel that is yet to open,” Tyler said in a speech at the Foreign Correspondents’ Club (FCC, 外國記者俱樂部).

The former chief executive of Cathay said he believes there is ample scope for the airport to fund the construction on its own through bonds or commercial loans.

Meanwhile, user fees paid by airlines should be enough to cover loans.

Tyler said it is possible for the airport to develop its facilities without raising charges or adding new ones, with debt making up only 10 percent of total capital.

The authority earlier proposed a financing plan for the runway that would see a bond issue and the implementation of a construction levy.

Under its proposal, all fliers would pay a HK$150 to HK$200 fee, on top of the current HK$120 departure tax.

The bond issue plan would be launched at the end of this month, with the market expecting it to raise HK$80 billion to HK$100 billion.

Tyler said making the airport more expensive to use would weaken its competitiveness, as a 10 percent increase in charges would reduce passenger numbers by up to 80,000 and cargo by up to 7,000 tonnes annually, lowering the GDP contribution from aviation and putting jobs in the industry in danger.

Tyler’s successor at Cathay, Ivan Chu Kwok-leung (朱國樑), agreed with the self-funding idea, given that the airport enjoys the highest net profit in the world with strong cash flows and a gross profit margin of approximately 40 percent.

(The Standard, Jennifer Li and Kenneth Lau, 10 March, 2015)

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