Jake's View

Taxpayers should not pay for a third runway … but they will

Making airlines bid for landing and take-off slots at Chek Lap Kok would be the best way for airport to build revenue and fund new landing strip

PUBLISHED : Tuesday, 04 March, 2014, 5:09am
UPDATED : Monday, 16 November, 2015, 4:46pm

One airline executive has suggested a radical solution to the peak hour problem. Airlines should be allowed to bid for the best time slots, as was done at Heathrow, Hong Kong Express Airways deputy chief executive Andrew Cowen said.

But analysts said that would be a last resort move because of objections from incumbent airlines.

SCMP, March 1


Join me in a hopeless stand, Mr Cowen. You are absolutely right. Auctioning off landing and take-off slots at the airport is a brilliant idea. But these so-called "analysts" are also right. It will never happen.

I accept that at some level of aircraft movements there will be a need for a third runway at Chek Lap Kok and, given the lead time for building one, we may already be past the point at which we should have started work on it.

But a crucial element of the debate about this third runway has always been pushed quietly to the side. Who will pay for it? We could be presented with a bill here for much more than even the mooted HK$130 billion if construction costs keep rising as quickly as they are at present.

The original consultation document on the third runway, a glitzy triumph of the public relations art with plenty of green talk and embedded videos for online readers (it even mentioned engineering studies), said nothing on the subject other than that it would be dealt with later.

I assume it had already been dealt with. We, the taxpaying public will pay for this project out of sales of our greatest treasure, public land. A little of the cost will be made up by squeezing yet more shops into the terminal, and the airlines will then call this a return on investment and get the new facility effectively for free. It is the established pattern.

This cabal of airlines and hoteliers thinks itself entitled to ready access to the public purse

Their pitch is that the airport is crucial to the fundamentals of the economy of Hong Kong and therefore the government has a responsibility to ensure that airline passengers find it very convenient (and cheap).

Even more fundamental to our economy, however, is the food we eat to sustain economic effort, but do we think government under obligation to provide our grocers with supermarkets at construction cost? Do we believe government should provide clothing retailers with rent-free shops because we need clothes more than we do air transport?

It has always amazed me that our bureaucrats so quickly fall in line with the wishes of that cabal of airlines, hoteliers and tourist shop operators, which thinks itself entitled to ready access to the public purse.

Auctioning off landing and take-off slots is the obvious way to go. As the airport becomes busier the best times for embarking and disembarking passengers become more valuable and the best way to take advantage of this is to put these times up for auction.

Business travellers to whom timely travel is crucial will have to pay more for the privilege and budget travellers will have to put up with red-eye flights. They may not like it but they will have the choice of how much they want to pay.

And as the money from these auctions rolls in, the airport will find it ever easier to raise the necessary funds for expansion on its own credit rating. Commercial pressure for expansion will by itself create the revenues for that expansion. That's why it is the perfect solution. That's why Heathrow is going this way.

If the cabal then tells us that the consequent rise in air fares will stop people from coming, very well, these people could not possibly bring our economy much benefit if so little extra is enough to deter them. We will have a very good acid test then of how important the visitor dollar really is to us.

We are talking about spending a great deal of money on this third runway. It will be the single most expensive capital project in Hong Kong's history, more than triple the cost of the original airport platform and terminal.

It is irresponsible to talk of building it on the blithe assumption, never properly considered, that construction will be entirely funded again from the general public treasure chest.

But that is the way it will happen. I'm a realist.