Use golden rule in pricing jet parking
Jake van der Kamp
Hong Kong, as one of the world's largest markets for initial public offerings, needed to support the growth of private jets, a key element in a service-based economy, he said.
SCMP, Feb. 19
That 'he' is a private jet salesman, of course, but I do have a little sympathy for his point of view, emphasis on 'little'.
He gets that little sympathy because he is up against a Hong Kong airport authority that shows clear evidence in the matter of private jet parking of having placed itself in the pockets of the big airlines.
They have no reason to favour private business jets that compete with their first-class seats. They have therefore managed to limit parking for business jets to at most 12 additional spaces in the big HK$126 billion airport extension that they want our government to put up for them.
Well done, fellows. Did the airport just jump to your bidding and tell the planners to squeeze the private jet people in the third runway plans, or did you also have to twist arms at a higher level of government to get your way?
But there my sympathy ends for the Business Aviation Centre and its plea that space for private jet parking at Chek Lap Kok is already so tight that the government should turn over some of the space it has to spare in the apron for the Government Flying Service.
'We have been lobbying hard with the GFS over the years ... it's tough but we are still working on it,' says BAC's general manager.
Methinks, madam, that you are lobbying the wrong way. What you want for lobbying in this case is a chequebook. You open it, make out it out to the GFS, they fill in a number and you then sign the cheque. It works that way because all you have to offer them is money. They hold all the cards.
I would be happy to see private jets get more than 12 spaces in the airport extension, but what we must first do is calculate the amount of space we give them as a percentage of the total new space to be built. We shall then apply this percentage to the final price tag for the extension and that will be the starting point for what we expect to see in a cheque.
It will be the starting point, mind you. I think the figure in the cheque should be at least twice as large. And if they want to rent the space rather than buy it, we should set the rent to give us an annual yield of about 10 per cent on the price we would have charged them. That would be about fair.
After all, the owners of those jets didn't get to own them by charging cost to their own customers. We will only be doing business with them as they do business with others.
And if they then protest that they bring us initial public offerings that are a key element in a service-based economy, we shall thank them very much and keep the charge clock ticking.
The fact about these IPOs is that they bring us headlines in financial league tables, which has such great value that with one of them you can get a ride on the bus ... if you also bring your Octopus card. The real value added to our economy is minimal.
But, even if it were greater, why make it less by doing things for these people without charging them what their market will bear? The only result of doing so will be to widen income polarity even further. If we have made this town so attractive to them let us reap the full benefit.
The same goes for those marina owners who whinge that they don't have enough space for all the white plastic gin palaces that mainland nouveau riche owners want to berth so as to shirk mainland taxes on yachts.
Just keeping writing zeros on that cheque, fellows, until someone in government says, 'well, maybe...' Accessible waterfront space is hugely valuable and the public purse ought naturally to demand top dollar for it every time.
If this means that yacht owners will take their yachts elsewhere, then so be it. In a territory with sky-high land costs, the price of yachting has to be as much about the berth as it is the boat. It's just natural commercial sense, the sort that made boat owners wealthy in the first place.