$26b cost of HK expansion worries airlines

Hong Kong airport last year handled 63 million travellers. Photo / NZME.

Airlines have welcomed plans to build a third runway at Hong Kong Airport but are worried about how it will be paid for.

The airport, under pressure from other Asian and Middle Eastern hubs, is still seen as a critical link in global connectivity.

Last year the airport handled 63 million travellers and 4.4 million tonnes of freight and Hong Kong's rulers have just announced a US$19.3 billion ($26.4 billion) expansion by 2023 to handle more growth.

The International Air Transport Association said the airport was expected to serve 100 million passengers and handle nine million tonnes of cargo by 2030. It is a key hub for many New Zealanders travelling to Asia or Europe.

"IATA has long been an advocate of the need for a third runway in Hong Kong. And it is in the interest of everyone in Hong Kong to see the aviation industry flourish," said the association's director-general and chief executive Tony Tyler. However, in a speech to the Foreign Correspondents Club of Hong Kong he warned that expansion should be built, financed and funded wisely.

Airlines fully backed the user pays approach on infrastructure development and were not asking for anyone to foot the bill for their growth, he said.

"Airlines would pay for the infrastructure - through increased volumes, not increased charges. And that would apply to existing infrastructure as well as newly built facilities," Tyler said.

"The growth in traffic that the extra runway and terminal will bring will see the airport's success over its first 17 years repeated all over again - provided its airport charges are kept competitive."

He said airlines should not be asked to pay for infrastructure before it is built.

"While the new facilities are being built, the airport's dividend to the government will reduce. Any normal business faces the same situation when it makes a major capital expenditure to support its future success," said Tyler, a former chief executive of Hong Kong-based Cathay Pacific.

The association estimated that a 10 per cent increase in user charges could lead to annual reductions in passenger numbers by up to 80,000 which would place some 600 jobs in jeopardy.

Hong Kong International Airport

• Airport opening: July 1998.
• Connectivity: More than 100 airlines operate flights to about 180 locations worldwide, including 45 destinations on the Chinese Mainland.
• Passenger throughput (in 2014): 63.4 million.
• Air cargo throughput (in 2014): 4.38 million tonnes.
• Flight handling capacity: 66 flights an hour at peak hours.