Any move to double fees at Chek Lap Kok airport could have a heavy impact on profits and margins at Cathay Pacific Airways - potentially wiping hundreds of millions of dollars from the company's bottom line, industry observers say.
Sources with close knowledge of the airline believe that Cathay's 9 per cent level of return on investment could fall by as much as half if a doubling of airport fees takes place.
However, some industry analysts believe that while a doubling would have a substantial impact, margins would fall by less than half.
The Airport Authority has acknowledged the possibility of a doubling of fees, while emphasising that such a rise in costs for air operators was not 'set in stone'.
The impact of a significant rise in charges at the new airport would be magnified by Cathay's fleet expansion timed to coincide with the expanded capacity on offer at Chek Lap Kok after it opens in April 1998.
The airline has committed itself to the purchase of seven new Boeing 777-300 aircraft and three new Airbus A340-300 models to be delivered in quick succession from soon after the airport's opening.
Since reports of plans by the authority to dramatically raise airport charges came out, Cathay has publicly remained tight-lipped on the impact of such a move on its earnings and on how it would respond.
