King Power Alpha was supposed to occupy 8,000 square feet of SkyMart's 320,000 square feet, and run packaged food outlets, Reebok casual wear boutiques and Harrods private label boutiques.

'In terms of fiscal area, it is not a large area. They only constitute a small percentage. But they are 12 out of 140 stores, which sounds large. We are not hit at all financially,' Mr Chow said.

'We are making temporary provisions. We already have three new offers for the shops, and with the nine others, we are doing something quite soon.' The Hong Kong Tourist Association would be among the new concessionaires, but he did not disclose the names of other interested retailers.

The blow comes nearly a month after the Airport Authority appeased retailers by granting them 50 per cent rent reductions for the first six months. Tenants had been pressuring them to renegotiate leases due to the downturn.

Just last month, Airport Authority Chief Executive Hank Townsend said retail rents would not be reduced, but Mr Chow said yesterday the authority was committed to helping out retailers during 'these difficult financial times'.

'We want to work with our business partners. Everything that can be done by the Airport Authority will be done to help them,' he said.

Problems on the retail front are adding to the difficult climate facing the new airport - a tourism slump and over-capacity in the airline sector.

Independent consultant Jim Eckes of Indoswiss aviation said over-ambitious expansion by regional carriers had been fuelled by steep discounting and the granting of easy credit by manufacturers scrambling for market share.

The popping of the bubble has left airlines with crippling debts as well as too many aircraft under firm order.

The mainland aviation market has also taken a hammering, with passenger loads falling from 68 per cent to about 58 per cent.

Mr Eckes said the deal Boeing signed during the visit by United States President Bill Clinton last week was simply a 'rehashing of old orders and existing options'.

Analyst Viktor Shvets, a director at Deutsche Morgan Grenfell, said the airlines' troubles were partly the result of unrealistic expectations.

Airlines had taken on an unprecedented fleet expansion based on Asia's past growth performance.

The crashing blow to Asia's middle classes would also count against any recovery in air travel in the immediate future.

Asia's wealth lacked the depth needed to sustain the industry through the recession.

The problems faced by the carriers come at a time of rapid expansion in the number of international airports in the region - in addition to fewer passengers and less aircraft, there may also be a problem with terminal space over-capacity.

Airports in Shenzhen, Macau and Guangzhou will be competing for Southern China business, while the new airport in Kuala Lumpur brings another rival to the fore.

Airport Authority spokesman Chris Donnelly disputed the bearish view. While he conceded the timing of the opening was unfortunate it would be unfair to blame the Government for failing to anticipate the severity of the downturn.

'What you have to ask is what would be the cost, what would happen to the Hong Kong economy, if [it] didn't build an airport,' he said.

'Once the slump is over there's no reason why this shouldn't come back.'