Authority's relief plan not enough, say airlines

PUBLISHED : Saturday, 26 April, 2003, 12:00am
UPDATED : Saturday, 26 April, 2003, 12:00am

$363 million is criticised as inadequate in the light of heavy landing charges

The Airport Authority has unveiled a controversial $363 million relief package for airlines, retailers and airport franchise operators whose businesses have been hit by the unparalleled downturn in air travel through Chek Lap Kok, as fears over the spread of severe acute respiratory syndrome (Sars) continue to cripple the air travel industry.

The package, which comes just days after the government unveiled $11.8 billion worth of measures to help the local economy ride out the Sars crisis, offers nearly $100 million in reduced charges, with the remainder comprising interest-free deferrals on a range of payments for up to 10 months.

Airlines expressed outrage at the package, however, saying that it completely failed to address the need to reduce Chek Lap Kok's high landing charges and, as such, would do little to help them ride out the downturn.

Vice-chairman Gilbert Chow of the Board of Airline Representatives - which represents the 70 airlines operating in Hong Kong - said the group planned to 'go back to the Airport Authority and try to convince them' of the need to do more to help the airlines. Airlines have been offered concessions worth a total of $208 million. Half of airport charges incurred by airlines over the next three months will be deferred interest-free for 10 months. The same will apply for airline lounge and office rents at Chek Lap Kok, with additional rent reductions also being considered.

Taking into account that many airlines have grounded their planes as passenger numbers have fallen, the authority said carriers would be offered up to a 75 per cent reduction for long-term parking. The remainder of the concessions are largely aimed at retailers and restaurants at the passenger terminal. They have been offered $70 million in rent reductions and the same in deferred payments.

Franchise operators, such as for those in-flight catering, would also be allowed to defer half their rent over the next three months for 10 months.

Airport Authority chief executive David Pang Ding-jung said yesterday there was little more that could be done to help the airport business community, given the airport's high level of fixed costs compared with airlines.

Mr Chow, who also heads Northwest Airlines' local operations, said he was 'quite disappointed with the package', especially given that other leading airports in the region, including those in Singapore and Taiwan, had moved quickly to slash landing charges and rents.

'We do not understand why the Airport Authority does not consider something similar,' he said.

To illustrate the authority's high prices, Mr Chow said airlines were being asked to pay $31 per square foot for office space at Chek Lap Kok, despite rents supposedly being pegged to prices in Central.

Association of Asia Pacific Airlines director-general Richard Stirland called the package 'pathetically inadequate'.

Dragonair chief executive Stanley Hui said the measures were a 'step in the right direction, but more needs to be done given the seriousness of the situation. We call on the Airport Authority to reduce regular charges, such as landing and parking fees, as these are the most significant airline cost components among all levies'.