THIS WEEK CHINA cut landing fees and air navigation charges at Beijing airport by 20 per cent in recognition of the crippling losses facing airlines due to Sars. The cuts on the mainland were preceded by similar measures taken by Macau, Singapore and Kuala Lumpur. Yet the Airport Authority (AA) has held back from making concessions. Hong Kong is widely acknowledged as one of the most expensive airports in terms of charges it levies on airlines - not just in Asia, but in the world. And at a time when unemployment is high and airline workers are worried about job cuts, help from the AA could be just what airlines need to be able to retain their staff. But a temporary reduction in charges is not going to amount to enough to save an airline that is going under. Critics argue that Cathay Pacific Airways, which recently paid shareholders a dividend, albeit halved, should look to its own resources before asking the AA - answerable to its own shareholders - for reductions. The Informer spoke to the key players to get their views. Gilbert Chow, vice-chairman of the Board of Airline Representatives (BAR). 'We are looking to the AA to come to the assistance of the airlines by reducing the fees at the airport so they can survive this very difficult period before we can talk about a recovery. We've been having meetings with them over the last few days. We are appealing to them given the dire situation - 57 per cent of flights have been cancelled. Even with a much reduced frequency, airlines have been operating at a 30 to 50 per cent load factor. The figures available to the AA confirm our plight. On a normal day, there would be 80,000 to 85,000 passengers passing through Hong Kong International Airport. In May, it's been 10,000 to 15,000. Macau Airport has cut fees by 30 per cent, Singapore by 30 per cent, the mainland by 20 per cent. That's the magnitude we are looking for. I believe the situation here is the worst in the region. We aren't asking for too much. We are asking for the kind of assistance to enable us to survive.' Airport Authority spokeswoman. 'The AA believes that it is time to introduce measures to help the industry stimulate traffic and bring back business. While the $363 million relief package offered by the AA in April has provided business partners, including airlines, with some timely relief, AA also believes that when the Sars peak is over, we could do something to help quicken the pace of recovery. AA is financially responsible to its shareholders and is limited in how much it can do to help the entire aviation industry deal with their losses. Our business is also badly affected by Sars. It's no secret that we are currently operating at a loss. AA is in consultation with the airlines on some incentive proposals which are designed to serve as catalysts to help airlines speed up their programmes to re-build traffic and to resume flights cancelled as a result of the Sars outbreak. The incentives being discussed are part and parcel of a recovery plan co-ordinated by AA and supported by business partners at the airport. Timothy Ross, head of regional transport research, UBS Warburg. 'If you look at the success of an airport like Kuala Lumpur's KIA, they have offered free landing and parking for five years for any new services and they've been unable to generate any significant throughput. Pre-Sars, Narita, Beijing and Hong Kong, who charge the most in the world, had no problems filling the air space and the tarmac. Airlines come because the market is there, not because of landing fees. I think in the context of the current profitability for the airline sector, any relief would be welcome. Costs depend on where the carrier is located across the world, but landing fees range from 5 to 8 per cent of operating costs. If those were reduced by 10 per cent, that would mean less than a 1 per cent change in operating costs. At no stage is this going to rescue the industry from the current lack of profitability, but in the current environment, any form of reduction in costs has got to be welcomed.' Dragon Air spokeswoman. 'Given the impact on the reduction in travel on the industry, we would welcome a move by the AA to reduce charges such as landing and parking fees. Such a move would only be in line with what has been done at a number of major airports in this region.' Raymond Woo, director, Standard & Poor's. 'Even if they reduce the charges, if it doesn't result in any increase in traffic, it won't help the airlines. They are saying the charges are a smaller part of the airlines expenses, but for the AA, the landing charges are more important as a percentage of revenue. I think they are saying it's up to the government to decide whether the AA suffers this discount. They don't feel it's a commercial decision.' Cathay Pacific spokeswoman. 'We welcome any relief measures that offer material help to the airline industry and we are working with BAR, which represents all airlines, to discuss this issue with the AA.'