• Wed
  • Dec 24, 2014
  • Updated: 9:42am
Jake's View
PUBLISHED : Tuesday, 22 July, 2014, 12:01am
UPDATED : Tuesday, 22 July, 2014, 12:01am

Let spoiled airlines fund Hong Kong's third runway, not the public purse


Jake van der Kamp is a native of the Netherlands, a Canadian citizen, and a longtime Hong Kong resident. He started as a South China Morning Post business reporter in 1978, soon made a career change to investment analyst and returned to the newspaper in 1998 as a financial columnist.

An association representing 2,500 pilots in Hong Kong has voiced support for a third airport runway, saying air traffic congestion during peak hours is already forcing planes to wait 15 minutes or more to take off.

SCMP, July 21

This third runway crowd is certainly getting mighty casual with our money in its demands that we lay out up to HK$200 billion to save airline customers the inconvenience of taking a flight at a not entirely suitable time.

These travellers must wait for 15 minutes if they travel at peak hours. What horror. How can they possibly put up with it? Surely Hong Kong is obliged to remedy this breach of human rights.

Don't get me wrong. I am all in favour of a third runway if air passengers and cargo shippers are willing to pay for it. Any financier, given data that the airport authority has ready to hand, can work out in less than 10 minutes what this would amount to per traveller.

If airline customers are willing to pay it, well and good. We can call in the dredgers and start work tomorrow. If they are not willing to pay it, then here is the big question: Why should the Hong Kong public purse pay for something that the beneficiaries themselves say is not worth their while?

Just auction the landing slots at peak hours and we will soon find out what price airline passengers set on reducing a 15 minute wait. It will be a good deal less than HK$200 billion, however you cut it.

The airlines misuse our airport at present with flights of unsuitably small aircraft to unsuitably minor destinations in China. These should be served by other regional airports. We run 57 per cent more flights at Chek Lap Kok than we did at the old Kai Tak airport for the same number of passengers.

And here are some further examples of how casual the Airport Authority is with your money:

Did you know that these people have so far spent HK$694 million on consultancy for this third runway project although the go-ahead stage is not even in sight yet? It certainly was the fanciest all-singing, all-dancing consultation paper in Hong Kong's history.

But what's a hundred million here or there? Or a billion, which it will soon be at this rate. Loose change, that's all, nothing really compared to what they expect us to spend if the project actually gets going.

And another example, courtesy of that sleuth of uncomfortable corporate facts, David Webb. Did you know that the airport's landing and parking charges are now an average of 15 per cent less than they were in 1998?

It's a fact - reduced from 1998. This same airport authority that wants to dig into our pockets for HK$200 billion is itself so in the pockets of the airlines that, while begging money from us, it substantially cut what it charges them.

Let's put this into further perspective. It did so despite having on hand an independent study by a reputable British air traffic consultant, LeighFisher, that our airport's charges were far lower than worldwide counterparts, the 54th lowest of 55 international airports covered.

You wonder how it happens. It's our airport. We paid for it. But the people we hire to run it do so not in our interests but in the interests of corporations that have not put a cent into it. Why?

I imagine their excuse is that the airport is already profitable enough, with earnings for the last financial year of HK$6.45 billion representing a 15.1 per cent return on equity.

It's notable, however, that this included income of HK$7.5 billion from shop rentals and other commercial revenue. The airport operations themselves ran at a loss or pretty close to it.

Oh, but you have to put the two together, say the airlines.

Nonsense. Shall shops in Causeway Bay be made to subsidise the Mass Transit Railway for bringing in their customers? Actually, I like that idea. We shall see if the airlines will join me in proposing it. They argue it for the airport. Why not for Causeway Bay?

The fact is, we spoiled them rotten and now they think it's their right.



For unlimited access to:

SCMP.com SCMP Tablet Edition SCMP Mobile Edition 10-year news archive



This article is now closed to comments

John Adams
Yet again Jake hits the nail on the head.
Having paid tax all my working life in HK my heart bleeds to think that much of that tax was wasted in such ways.
(I recall that once I calculated my total HK salaries tax paid in all my life was actually more than CX's corporate tax in one year due to CX's clever off-shore tax filings )
It is perfectly alright that the third runway is fully privately funded, WHEN HKIA itself is privatized. When the airport is privatized and the consequent high fees ensue, you will provoke once again with some other hideous nonsense.
As usual, you purposedly take information out of context just to fit your groundless rant.
Who does not spend royal sums on environmental impact assessment these days? FRA, JFK, LHR, etc. all do. Once again, the percentage of widebody flights for HKG is unusually high already. Airlines will not absorb the costs due to slot auctions; they will pass on the costs to you and all other hopelessly ignorant, ridiculously spoiled and incredibly spiteful passengers .
These days in Hong Kong, everything seems to be an economic burden and an instrument of some sinister mainland integration plot. The only things that matter are the dolphins and the local resistance against the mainland. Hong Kong should resist mainland´s tightening grip, but silly self-destructive acts of willfulness like shooting down the airport expansion project only reduce Hong Kong´s chips on the table.
The airport itself is an undisputed economic engine for the local employment market at large, the logistics industry, the financial sector, the tourism trade etc. The airport also serves a large number of Taiwanese and Western passengers.
Sure would have been nice to have put that 600 mil into the hospital sector of overworked doctors, but I guess the new runway would be pretty cool for my vacations.
Indeed - its obscene and inexcusable, that any permanent resident of HK should have to wait up to 10 years for a simple 10 minute cataract operation
Globally, airports turn to commercial ventures because the old-fashioned operations depending on runway fees until the 1980s were NEVER profitable. That´s why flights to most remote islands that depend on air services are subsidized through and through, from airport constructions, airport operations to airfare. It is the same story with many railway operators worldwide; they make profits from real estate developments. Here is another blatant nonsense of yours. Indeed, IFC and ICC at least subsidized the construction of the airport express. When a new MTR station arrives in a new district, the rents from and sales of the station property developments subsidize the operations of MTR. The rents in the rest of the district also go up in response. Indirectly, those that rent the shops and other properties subsidize MTR because of the premium on the MTR services. If there were no MTR in Causeway Bay, the rents there would be so much lower.
Indeed, Jake´s false rationale once again has hit the nail on your head with your scandalously subjective and comically erroneous impressons. Your descriptions of JFK, LHR and FRA are way off. Hong Kong itself is actually a corporate tax heaven. You should be thankful how little income taxes of all sorts you paid in connection with your job, probably a highly lucrative corporate one by local standard, over the years.
It is obscenely idiotic to make this imaginary trade-off up.


SCMP.com Account