Cathay Pacific Airways and DHL Worldwide Express plan jointly to invest as much as US$300 million in the next year to develop Air Hong Kong (AHK) into a premier cargo carrier serving major intra-Asian routes. At a press briefing yesterday to unveil their new joint venture, the companies said most of the investment would be used to purchase a new fleet of aircraft for AHK, Cathay's all-cargo subsidiary, and help strengthen its operations. DHL confirmed it had taken a 30 per cent stake in AHK, although financial details of the transaction were not revealed. The firms said they had committed to invest a further US$100 million by 2010 to continue expanding AHK's capacity and market reach. Cathay chief operating officer Philip Chen Nan-lok, and his counterpart at DHL, John Mullen, said AHK would buy five freighter aircraft by 2004, and the fleet would increase to eight by 2010. This fleet will operate from the new express cargo terminal to be built by DHL at Chek Lap Kok and serve, at least initially, 11 regional destinations. The launch of both projects is expected in the first half of 2004. The Airport Authority last week awarded terminal rights to DHL, after a controversial tendering process with one bidder. Under the deal, DHL will purchase block-space on AHK's network to operate its Asian express services, presumably at a predetermined market rate. The space DHL uses will be reviewed every 30 days and depend on market demand. Cathay Pacific Cargo will market AHK's excess capacity as general air cargo product. The two companies said annual throughput for the venture would be about 160,000 tonnes - or equivalent to about one-sixth of all intra-Asian cargo that now passes through Chek Lap Kok. Growth in the express sector in the next five years is expected to reach 15 to 20 per cent per year, the firms said. DHL now serves its growing intra-Asian market by sending express cargo on overnight flights to Osaka, Seoul, Taipei and Singapore using Cathay's Starlight Express passenger services. Ross Allen, DHL operations director for Asia-Pacific, said AHK, along with the new express terminal, would help DHL better serve its Pearl River Delta customers. The delta, including Hong Kong and Macau, is DHL's second-biggest market in Asia after Japan, with a 20 to 25 per cent share of its Asian business. In China, DHL and Cathay are in talks with China Eastern Airlines to help tap the Shanghai market. Mr Allen said Beijing was also a consideration, although talks with Air China have yet to begin. Business in southern China would continue to be accessed by road, he said. Mr Allen said AHL would also serve markets in Japan, South Korea, Taiwan, Singapore, Malaysia, Thailand and Indonesia. AHK underwent a restructuring this year in preparation for this deal. In February, Cathay paid HK$194 million for the remaining 25 per cent of AHK it did not already own.