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Cathay plays down 3rd runway price tag

Hong Kong's flagship airline says the multibillion-dollar cost of a third runway at Chek Lap Kok does not seem so much compared with the amount it has committed to new aircraft in the coming decade.

Coming out in support of the project, Cathay Pacific Airways chief executive John Slosar said that while the runway was estimated to cost HK$86.2 billion - or HK$136.2 billion after inflation - the airline had budgeted HK$180 billion - at today's prices - for 87 new planes.

Slosar said it would be bad business for the airline if it could not expand, which is what the Airport Authority has warned will happen in about 2020 without the third runway.

Cathay was the world's second most profitable airline last year, with a net profit of HK$14 billion, beaten only by its strategic partner Air China, which made HK$14.23 billion.

'The airport is a foundation for the many pillar industries - finance, professionals in the legal, trade, logistics and tourism sectors,' Slosar said. 'Once the critical mass is gone, it may be hard to have it back.'

Airport Authority chief executive Stanley Hui Hon-chung said yesterday that apart from bank borrowing and government cash, the user-pays principle could be used to help pay for the project. Users range from passengers, airlines and cargo handlers to hotels and retailers.

But as one of the biggest users, Cathay was cautious in committing to any possible rise in parking and landing charges. Slosar said the company would study the 'economic justification' when the need arose.

The public has been given three months to decide if they want a third runway by 2030. Funding details will not be available until after that. But figures in a document that outlines the airport's development for the next two decades offer some hints.

The airport is expected to generate a net profit of HK$102.7 billion in the seven years to 2030 - the period when the third runway would be under construction. The government usually receives 80 per cent of the profit as a dividend, and is estimated to rake in HK$78.9 billion over the period. If it uses that for the runway it will leave a shortfall of about HK$57.3 billion. The authority has said it could raise HK$11 billion in bank loans, leaving HK$46.3 billion to be raised elsewhere, including from users.

23m

The number of passengers the Airport Authority predicts the city will lose every year without the third runway

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