Hong Kong to increase airport charges to fund runway

Hong Kong to increase airport charges to fund runway

HONG KONG - Hong Kong officials have rejected calls to freeze user charges at the city's airport as preparations begin to build a controversial third runway.

Transport Secretary Anthony Cheung Bing-leung estimated Tuesday that the project, which will include expansion of a passenger terminal, will cost 141.5 billion Hong Kong dollars (S$25.4 billion) at current price levels. Officials hope to open the runway by 2023, with construction to start next year. With a third runway, the airport will be able to handle 100 million passengers and 9 million tons of cargo a year. Hong Kong International Airport is by far the world's busiest airport for international cargo traffic, handling almost 76 per cent more tonnage than second place Incheon International Airport near Seoul, and is the world's third busiest for international passenger traffic, behind Dubai International and London Heathrow.

Despite worries about the cost and the project's environmental impact, government officials argue that without expansion, the airport will reach its maximum capacity by 2020. "It is imperative for us to take forward the development of a three-runway system in order to meet our long-term air traffic demand and to maintain our status as an international and regional aviation centre in the face of fierce competition from other airports in the region," said Finance Secretary John Tsang Chun-wah in his annual budget speech last month.

Cheung said Tuesday that the project would be funded out of a mix of borrowings, charges on airlines and passengers and reduced dividend payouts to the government from the Hong Kong Airport Authority, which holds ownership over the airport. He cited a consultant's study that showed Hong Kong's charges to be relatively low on a global basis. "There is room for increasing airport charges," he said. Airport officials said the fee on departing passengers could be as high as HK$180.

The decision goes against the appeal made to officials last week by Tony Tyler, the director general and CEO of the International Air Transport Association, a global trade association for airlines, and a former CEO of Cathay Pacific Airways, Hong Kong's biggest airline. Arguing that the airport is among the world's most profitable and carries little debt, Tyler said in a speech in Hong Kong that the city could wholly fund construction upfront from borrowings and reduced dividends then recover costs from users when the new facilities come into use.

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