(Bloomberg) -- Hong Kong International Airport, the world's largest handler of air cargo, risks hurting its competitiveness if the operator raises the fees it charges airlines to pay for a third runway, the International Air Transport Association said.
Instead, the airport should take advantage of its "successful financial situation" by seeking loans or issuing bonds to pay for the runway, IATA president Tony Tyler said at a Monday lunch meeting in Hong Kong. The runway is projected to cost about HK$150 billion ($19.3 billion).
"Airlines and passengers using the airport today would be paying for those who use it tomorrow," said Tyler, who served as chief executive officer of Hong Kong's Cathay Pacific Airways Ltd. from 2007-2011. "This is not only wrong in principle. It would be unfair."
Hong Kong plans to start building a third runway next year that would open by 2023 as regional rivals step up efforts to capture growing passenger traffic and cargo demand in Asia, particularly China. Singapore recently announced plans to spend S$3 billion ($2.2 billion) to develop a fifth passenger terminal at Changi International Airport over the next decade.
The new facility would help Hong Kong's airport 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 Feb. 25. The airport said it handled 63.4 million passengers and 4.38 million tons of cargo last year, both records.
Profit Jump
Hong Kong International Airport's net income rose 20 percent to HK$3.8 billion in the six months ended September, it said in a Nov. 24 statement.
Hong Kong's Transport and Housing Bureau declined to comment on Tyler's remarks in an e-mailed response to questions. The Airport Authority said in an e-mail its cost and funding proposal is under government review, and declined to provide more information.
Cathay Pacific, Hong Kong's largest airline, said in an e-mailed statement it supports Tyler's views on funding the new runway.
Raising airport charges by 10 percent could cut passenger numbers by as much as 80,000 people a year and reduce air cargo by as much as 7,000 tons annually, and could endanger 600 jobs, Tyler said, citing an IATA study.
IATA, a global industry body representing 250 airlines, has long backed a third runway for Hong Kong and has been involved in an environmental impact assessment, Tyler said.
Market Share
Hong Kong's share of the market connecting China to the rest of the world shrank to 17 percent in 2013 from 20 percent in 2005, Tyler said. Over the same period, its share of passenger traffic between Southeast Asia and North America has remained at 10 percent, while its share of traffic between Southeast Asia and Europe has fallen to 2.4 percent from 3.3 percent, Tyler said.
In a separate report Monday, IATA said the global jet accident rate in 2014 was the lowest in history.
There was less than one commercial aviation accident for every 4.4 million flights in 2014, or a global accident rate of 0.23 hull loss per 1 million flights, IATA said.
The number of fatalities last year -- 641 -- was higher than the average of 517 for the last five years, primarily because of several high-profile accidents in Asia, IATA said.
Source: Bloomberg News by Clement Tan
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