Airport sell-off arouses Link Reit fears

PUBLISHED : Tuesday, 01 February, 2005, 12:00am
UPDATED : Tuesday, 01 February, 2005, 12:00am

Consultation extended by three months as government allows for further queries on privatisation

The public consultation on the Airport Authority's privatisation plans has been extended by three months, with the government keen to avoid a repeat of the Housing Authority's Link Reit debacle.

The move was announced yesterday after more community groups spoke out against the proposed privatisation, the latest being the Real Estate Developers Association (Reda), which has sent a letter to the Legislative Council secretariat outlining its objections.

Secretary for Economic Development and Labour Stephen Ip Shu-kwan told legislators the main concern raised so far was that airport charges for airlines would be raised after the privatisation.

'We understand that people don't want to see a huge increase in airport charges and that the consultation is not long enough,' Mr Ip said.

The original three-month consultation period, which was to have been completed at the end of this month, would now be extended until the end of May.

'That will give us more time to work out the issues,' Mr Ip said. 'For example, talks are ongoing between the Airport Authority and the airlines to work out charging mechanisms and how the airport will be regulated in the future.'

The government is still smarting over having to suspend the Link Reit indefinitely after a legal challenge by a pensioner to the planned US$3 billion initial public offer of government-owned shopping centres and car parks.

Groups concerned about the airport sell-off say the administration has not sufficiently spelled out the reasons for the privatisation or the benefits that would follow.

International Air Transport Association (Iata) assistant director of user charges Peter Bysouth, who was one of a group of industry representatives invited by legislators to give their views on the privatisation yesterday, said: 'It's a question of why the government is doing this.

'Iata always supports a government's right to privatise public assets, as long as it's being done for the right reasons. But if it's done to raise money, as seems to be the case here, it is not right.

'The time frame [for consultation] is also dubious. The government asked the [authority], Iata and the airlines to come up with an agreement on charges going forward ... but more time is needed.'

Travel Industry Council of Hong Kong chairman Ronnie Ho Pak-ting said his group was taking a neutral stance on the proposed privatisation, although he admitted to being 'very concerned about the competitiveness of the airport going forward'.

'As a private company, the [Airport Authority] would have to be responsive to its shareholders,' Mr Ho said. 'But the health of our members is related to how competitive the airport is to those of our neighbours.

'Infrastructure should support the economy.'

Reda's letter to Legco outlined its concerns that the airport would be sold too cheaply. 'Upon reviewing the [government's] consultation document ... we do not find the rationale for the privatisation of the Airport Authority convincing,' it stated.

'There is certainly no convincing argument to say that the [government] requires the money, nor any convincing case that the [Airport Authority] needs capital for expansion.

'The airport itself is already run along commercial lines by individuals largely drawn from the private sector and there is no obvious basis for improvement.'

'[The Airport Authority] really needs to clearly explain its ongoing strategy to a sceptical public.'