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SCMP Reporter

Hong Kong's international airport at Chek Lap Kok opened to great expectation on July 6 last year, the $60 billion steel-and-glass structure stirring pride in this city of 6.5 million.

 But soon after the ribbon-cutting which followed the first landing - by Polar One, a Cathay Pacific Airways non-stop flight from New York - problems began.

 The issue was one of deadlines. The new airport had been rushed into service too soon, with not enough time to prepare staff and critical systems.

 Chek Lap Kok's first day quickly became a nightmare that engulfed the airport's operations for nearly a month and set in motion a witch hunt for scapegoats in the Airport Authority (AA).

 No sooner had the passenger terminal begun operation than flight information display problems began, cascading into ramp and baggage troubles.

 That spiralled into a myriad of unrelated technical problems that were widely publicised and later described by Financial Secretary Donald Tsang Yam-kuen as having undermined Hong Kong's reputation as an international business centre.

 The passenger terminal problems were brought under control quickly with the concerted effort of all involved. By the end of the week, the terminal was running almost smoothly.

 But its recovery was overshadowed by the partial closure from July 7 of most air cargo facilities for a month.

 The Legislative Council led an inquiry into the problems which cost all but two of the authority's previous board members their jobs.

 The reshuffle saw Victor Fung Kwok-king, chairman of the Trade Development Council and insurance company Prudential Asia, appointed as head of the Airport Authority in June.

 The remaining two members of the board were censured by the inquiry.

 Coincidentally, Chek Lap Kok opened in the middle of Asia's worst post-World War II economic slump.

 International carriers began complaining that it was the world's third-most expensive airport, mainly due to the landing and terminal fees.

 Hong Kong was missing out on billions of dollars, the carriers said, since the high costs of using Chek Lap Kok as a regional hub meant that fewer flights were arriving there.

 Given that regional air traffic was down and Hong Kong was in recession, the airlines argued for a 25 per cent reduction in all fees.

 This reduction would allow the airlines to provide an extra 5,000 flights per year at Chek Lap Kok, they argued.

 The response from the AA was that a 25 per cent reduction in fees would cost the operator $625 million in revenue a year, a sum too high for the authority to afford under commercial loans taken to develop the airport.

 Authority treasurer Alex Kam Kwong-fai said in August: 'At the end of the day, if we're losing money and we're going to lose further, that money will have to come from somewhere'.

 Yet the authority has already signalled capitulation to the reality of the Asian crisis.

 At the beginning of this year, the airport cut rents for retail concessions by 30 per cent. From January, the airport will slash landing and parking fees by 15 per cent, moves which will cost the authority $280 million a year in lost revenues at present traffic rates.

 In exchange, the carriers will be expected to make good on their claims that lower fees will induce them to carry more flights to Hong Kong.

 In terms of damage to the local economy and to Hong Kong's reputation as one of the world's busiest air cargo hubs, the cargo operation troubles had a far worse impact than any of the problems in the passenger terminal.

 But since taking on the role of chairman of the AA, Mr Fung has outlined a development programme to expand the airport into a full-scale recreational area, creating an airport facility unlike any other in the world.

 Using land adjacent to the airport, he hopes to create additional services that would attract tourists and transit passengers. That will go a long way to helping Hong Kong's reputation.



Chek Lap Kok on track after troubled start