The Airport Authority has finalised a 1.99 billion yuan deal to jointly run Hangzhou Xiaoshan International Airport, marking the agency's first big investment outside Chek Lap Kok. The authority, which hopes to sell shares on the stock market this year in a partial privatisation, yesterday said that it would buy a 35 per cent interest in Xiaoshan Airport. The joint venture will operate the only airport in Hangzhou, an increasingly wealthy city of about 6.5 million people in Zhejiang province about 180km southwest of Shanghai. The investment, first announced in January, was finalised following talks on how the two sides would jointly manage and operate the airport, which has been transformed from a state-owned limited company into a Sino-foreign joint venture. The Airport Authority said the aim of its investment was to 'enhance operation efficiency, improve service quality and management standards at Hangzhou airport to bring it to par with top, world-class standards'. 'The project is a milestone for both airports,' authority chairman Victor Fung Kwok-king said. 'Hangzhou and Hong Kong are the major economic engines for their respective regions. 'This strategic alliance will allow the two airports to further develop and enhance business co-operation of the two regions.' Xiaoshan Airport handled 6.4 million passengers last year, making it the mainland's 10th-busiest, while posting a net profit of 67 million yuan on turnover of 370 million yuan. By contrast, Chek Lap Kok airport handled almost 28 million passengers last year. Xiaoshan Airport chairman Chen Haimei said: 'After rapidly growing at 29 per cent per year for several years, the airport is facing the challenge to quickly improve its operating efficiency to support sustainable growth. 'It will grow faster and better with the joint venture, which is a strategic co-operation encompassing areas such as capital, management skills and human resources.' The Airport Authority has been looking for mainland partners to tap into the country's growth potential before its proposed privatisation, which is expected to take place later this year. A second three-month public consultation on the proposed privatisation will end next month.