Liberalisation of air services would stimulate direct trade of US$308 billion, US$62 billion of manufacturing and almost one million new jobs in Hong Kong in 2003, according to a report. These are the findings of a study by United States-based Campbell-Hill Aviation Group, commissioned by FedEx Corp and presented in Hong Kong in May, just weeks after aviation talks with the US ended in stalemate. US carriers and local interests led by Cathay Pacific Airways have been keen ahead of the next round of negotiations in Washington to display that the interests of the local economy and airport were closest to their own. The US-side is seeking more freedoms to operate from Hong Kong to destinations in Asia and Europe, without giving much in return. Protecting its turf, Cathay has been lobbying the Government aggressively to prevent it from granting any extra freedoms to the US without reciprocal concessions. The author of the US-funded study, Brian Campbell, argued that complete liberalisation would be a major stimulus to the economy by encouraging direct trade, manufacturing enterprise and attracting new foreign investment. He said liberalisation was also necessary for Chek Lap Kok airport to maintain its dominant position in the region and to become a logistics hub. 'Market liberalisation of air express services will expand the local market by stimulating and attracting new cargo-dependent investment to Hong Kong and nearby South China regions,' Mr Campbell said. 'And it will maintain Chek Lap Kok's status as the primary gateway for carriers, shippers and freight forwarders.' With complete liberalisation, the airport would capture 3.8 million tonnes, or 61 per cent of cargo traffic from South China, in 2003. But under the status quo conditions, the airport's share of South China air trade would drop to 28 per cent, the Campbell-Hill study concluded. David Dodwell, a consultant working for Cathay Pacific Airways, described some of the estimates in the Campbell-Hill report as 'flagrantly nonsense'. 'They are not even in the realm of the sensible,' Mr Dodwell said, referring to the projected economic benefits from air service liberalisation made by Mr Campbell. 'Wherever they concocted this model from, it really is very bizarre. In any case, all the job creation would be in manufacturing in the Pearl River Delta, not Hong Kong.' He said Mr Campbell had displayed no understanding of the Hong Kong economy and assumed it to be the same as Singapore. In a report Mr Dodwell co-authored with Zhang Anming of the City University - commissioned by Cathay - he also described Mr Campbell's categorisation of the Asian aviation regimes as 'wholly inaccurate and misleading'. Mr Campbell categorised Hong Kong's regime as 'partially liberal'. Mr Campbell responded in the latest edition of Orient Aviation by saying that the criticisms in Mr Dodwell's report were 'dead wrong'. 'There's no analysis in there,' Mr Campbell was quoted as saying. 'It's all pure opinion and a lot of their logic is very flawed.' The spirit of the debate has reflected the potentially high stakes of liberalisation for both the US carriers and Cathay Pacific. Last month, the issue culminated in a heated verbal exchange between the senior executives of the US carriers and Cathay Pacific at a General Chamber of Commerce luncheon, where Mr Campbell and consultants representing Cathay presented their reports on air-service policy. A source who attended the luncheon described the atmosphere of the discussions as 'very emotional'. 'It was really terrible,' he said.