CommentInsight & Opinion

Hong Kong needs a third runway, but one paid for by users

Mike Rowse says airport expansion is the best solution to meet demand

PUBLISHED : Monday, 18 August, 2014, 4:30am
UPDATED : Monday, 18 August, 2014, 4:30am
 

I have some bad news for our beleaguered Transport Minister Anthony Cheung Bing-leung and the few remaining Chinese white dolphins swimming near our shores: we don't need one more runway to add to the existing two, we need at least two more for a total of four.

Maybe we need a whole new second airport.

But let us start by admitting there might, in theory, be an ideal way to cope with increasing demand for air transport in southern China which does not involve extra runways in Hong Kong at all: we reach agreement with Beijing and all the other airports in the region that we will each specialise in what we do best.

Hong Kong gets the long-haul international flights, Shenzhen gets all flights to and from mainland cities, Guangzhou gets all the cargo, Macau does the no-frills market, possibly sharing with Zhuhai. Our government gets together with Shenzhen to provide a free high-speed rail shuttle between the two places. Problem solved?

Unfortunately not. The only problem with this "solution" is that it doesn't work.

First, none of the airports will be willing to give up the services they at present provide outside their core area of expertise. Why can't I fly from Hong Kong direct to Shanghai, why do I have to take a train to Shenzhen first? Why can't I fly from Shenzhen direct to Paris instead of via Hong Kong? And so on. If you were Beijing, would you get involved in a fight like that?

The second problem arises from the way air services are licensed, which in turn is governed by air services agreements between different jurisdictions. Disentangling the spaghetti junction of interwoven approvals would take even longer than building a new airport.

So back to consideration of the third runway project we go.

To help minds focus on the issue, it is useful to bring the concept of "user pays" to bear. That way, we will not be misled by special pleading or propaganda.

If Chek Lap Kok is approaching capacity in terms of take-off and landing slots, then we have two options: we can either accept the constraints and auction off what slots we do have and see which services are prepared to support the higher costs; or we can refuse to accept those constraints and expand the capacity of the airport.

If we take this second route, then in principle it doesn't matter whether the third runway costs HK$130 billion, or HK$200 billion or some other figure. The amount, whatever it is, is only worth paying if those flying in and out are prepared to pay. Airlines are the direct users, but they are acting on behalf of their customers - travellers. That means higher ticket prices.

My colleague Jake van der Kamp has done some provisional calculations in this area. Suffice to say, we should be thinking of funding any airport expansion primarily by way of Airport Authority bonds, paying a reasonable rate of interest repayable in full over the life of the expanded facility. That will mean higher landing and parking charges, and probably a special "airport development" levy on individual passengers.

The green groups are still fighting a gallant battle on behalf of the dolphins and long may they continue to do so. But at the end of the day, I think it is a lost cause. After all, once the existing airport was finished, some dolphins did come back. Otherwise, how could they have been around to be disturbed by the Hong Kong-Zhuhai-Macau bridge project?

They will surely come back again as soon as that is finished so we can annoy them again with our third runway.

But the real battle will come when special interests try to make taxpayers pick up all or part of the tab. Good luck with that idea in the Finance Committee, Anthony.

Mike Rowse is managing director of Stanton Chase International and an adjunct professor at the Chinese University of Hong Kong. mike@rowse.com.hk

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