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September 30, 2015

AA Hong Kong revises airport construction fee to fund construction of 3RS

Airport Authority Hong Kong (AA) has revised airport construction fee charging regime to fund for the construction of the three-runway system (3RS).

Airport Authority Hong Kong (AA) has revised its airport construction fee charging regime to fund the construction of the three-runway system (3RS).

According to an estimate by IATA Consulting, the 3RS will allow Hong Kong International Airport (HKIA) to handle 102 million passengers, 8.9 million tonnes of cargo and 607,000 aircraft movements per year by 2030.

The new proposed fee level follows after the Executive Council recommended AA to revisit the project’s financial arrangements, including a cutback on the originally proposed airport construction fee.

Under the revised structure, financial arrangement for the 3RS will be based on the ‘joint contribution and user-pay’ principle with the funding provided through three channels: bank loans and issue bonds, retaining HKIA’s operational surplus for project investments, and charging an airport construction fee to departing passengers.

According to AA, 70% of departing passengers will pay a fee of HK$90 or below, a large reduction from the originally proposed HK$180.

In addition, AA will also issue retail bonds for the general public to have the chance to benefit from the funding arrangement of the 3RS.

Under the revised airport construction fee structure, departing passengers will be charged according to flying distance as defined by the Civil Aviation Department when determining fuel surcharges, ticket class, and whether flight types are origin-destination or transit or transfer.

The charges at HKIA are expected to continue at a low level, following the implementation of the new financial regime.

Development of the 3RS is subject to statutory gazettal processes, following the completion of which the proposed airport construction fee will be implemented, and continued until all the related borrowings of the 3RS have been returned.

Hong Kong International Airport (HKIA) handled 5.1 million passengers in May 2014 which represents an 8.9% increase compared with the same period in 2013.

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