Airport operations shake-up

PUBLISHED : Monday, 25 March, 2002, 12:00am
UPDATED : Monday, 25 March, 2002, 12:00am

The Airport Authority is preparing a radical overhaul that will see its operations broken into five independent business units and greater emphasis placed on performance-based pay.

Under the overhaul plan, each business unit will have responsibility for generating as much value as possible from its slice of the airport's HK$55 billion in assets.

Airport Authority chief executive David Pang Ding-jung said the plan would make the authority and its employees more accountable for the overall development of the airport and its investments.

The authority's announcement comes at a time when some other government corporations such as the Kowloon-Canton Railway Corp have been criticised for overpaying executives. It also follows the Government's plan to slash civil service salaries by 4.75 per cent in October.

Mr Pang said the airport's HK$55 billion in assets - of which HK$36 billion was taxpayer-funded shareholder equity and HK$19 billion was borrowings - would be 'divided into five bags of money'.

'Staff will be divided into five groups, each of which will be accountable for creating more value out of each bag of money,' Mr Pang said.

A sixth services unit, comprising functions such as planning, procurement, corporate communications and human resources, would act as the 'glue' holding the authority together, Mr Pang said.

The five working groups are terminal operations, airfield, commercial (including retailing and advertising), aviation logistics services and property development.

At the same time, the plan would see the authority's 19 seniority levels streamlined to just nine to create a more horizontal system for management responsibilities.

Staff would be moved progressively towards a variable compensation scheme that will reduce fixed salaries.

Instead, calculation of annual remuneration would be according to the performance of the airport, the employee's own business unit and the individual.

A formula had been devised that would take all three into account. But Mr Pang said the standards would not be uniform for each unit, and would also change from year to year depending on performance targets discussed in advance.

Mr Pang said the plan, which has been in development with an outside consulting firm for a year, was complete and would be implemented once board approval was attained.

'We will table [the programme] to the board in the next several months,' he said.

The changes in remuneration strategy would begin first with senior-level staff but eventually would be extended to all of the authority's 950 employees, Mr Pang said.

Mr Pang said the changes could conceivably affect his own contract with the authority, although he declined to reveal which performance-based remuneration clauses in his existing employment agreement might be changed.

In addition to its desire to make changes in its internal operations, the authority is chasing an increased role with its four rival airports around the Pearl River delta.

Mr Pang said the Group of Five regional airports would meet again this week in Shenzhen to discuss future co-operation.

Last week, the Government reintroduced to the Legislative Council a previously defeated bill that would expand the authority's geographical scope and allow it to operate beyond the confines of Chek Lap Kok island.