The Airport Authority has posted its first operating profit from Chek Lap Kok airport after making a significant adjustment to its depreciation policy. It reported an operating profit of HK$291 million for the year to March 31, after a change in depreciation policy saved it HK$538 million in depreciation charges. The authority booked an operating loss of HK$36 million in the previous accounting period, from the airport's opening in July 1998 to March last year. Spokesman Chris Donnolley defended the move, saying the previous policy of depreciating its land and other fixed assets over 50 years would have meant a tremendous burden on profitability in the years ahead. 'We have close to HK$50 billion in fixed assets,' Mr Donnolley said. 'Depreciation at 40 per cent of revenues is a pretty big charge.' Under the new policy, the authority will write off its land over 100 years instead, or 1 per cent per annum, and write off its runways, the airfield, passenger terminal and other buildings over 75 years. This reduced the depreciation charge for the last financial year to 36 per cent of revenues from 40 per cent. It will mean a reduction of HK$538 million per annum for future years. Turnover for the year to March 31 was HK$5.05 billion, compared to HK$3.77 billion for the nine months to March last year. The depreciation charge for the year was HK$1.7 billion, compared to HK$1.6 billion in the previous accounting period. An extra HK$4 billion was added to the authority's total fixed assets this year after the completion of the airport's North Runway and North Concourse. The authority booked a net loss of HK$168 billion after finance charges and expenses, compared to HK$388 million in the previous accounting period. Passenger throughput increased 6.4 per cent and aircraft movements rose 2.8 per cent as the regional economy improved in the latter half of last year. The associated rise in revenue was, however, mostly offset by a 15 per cent reduction in landing and parking charges, conceded after protests by Cathay Pacific Airways and other airlines. 'We are encouraged by this year's results,' chief executive Billy Lam Chung-lun said. 'If the current trends since the beginning of this financial year continue, we are confident that next year's results will be even better.' For the 12 months to May, the airport registered record passenger throughput of 31.6 million and cargo throughput of 2.11 million. This represented a 7.6 per cent increase over the same period last year in passenger throughput and a 26 per cent increase for cargo. Aircraft movements in the year to the end of May were up 3.5 per cent at 171,235. Mr Lam indicated that commercial revenues registered double-digit growth from the previous accounting period and now accounted for more than 50 per cent of turnover. The airport's commercial revenues are derived from its duty-free concessions, real-estate and franchises. Given the economic recovery, the airport is reducing the rental discount it gave to retail tenants last year from 30 per cent to 20 per cent. The authority placed its first advertisements last Saturday inviting tenders from consultants to conduct a master plan for realising the airport's expansion during the next decade. The consultation will also include plans for building an airport city - with a second convention centre, office blocks and other commercial developments - in the 35-hectare plot of land north of the airport.