While the authority would explore how to maximise capacity of the two existing runways, authority chairman Victor Fung Kwok-king said Hong Kong needed to start thinking of a third runway at Chek Lap Kok.

'In five to 10 years' time, the third runway will be a real issue. We need to talk about it now because there are a lot of factors which need careful consideration. For example, there are a lot of environmental concerns at possible sites where the runway can be built. We have to balance the cost-effectiveness and how much environmental cost are we prepared to pay.'

The authority had not made any decisions, Mr Fung said.

According to the report, by 2025 the airport will serve 80 million passengers, handle 8 million tonnes of cargo and 490,000 aircraft movements each year.

The airport's original design was based on a 1992 plan when it was estimated that by 2040 it would handle 87 million passengers, 9 million tonnes of cargo and 380,000 aircraft movements.

The report says: 'Over the past decade, demand has increased dramatically and the mix of aircraft has changed. As a hub airport, [the airport] now serves a significant volume of transfer/transit traffic and a growing number of small aircraft. These changes, coupled with supply constraints, mean [the airport] must optimise runway capacity to meet growing demand.'

Mr Fung said the authority would explore ways to maximise the capacity of its two runways, and to work more closely with airports in the region to share resources, which he sees as the long-term solution to cope with growing demand.

Last year the airport handled a record 40.7 million passengers and 3.4 million tonnes of cargo, figures that made it the world's fifth busiest for international passenger traffic, following London, Paris, Frankfurt and Amsterdam. Hong Kong was the world's busiest airport for international cargo throughput in 2005.

Legislator Sin Chung-kai, a Democratic Party spokesman on economic affairs, yesterday said there was a need for a third runway. 'It is about our competitiveness as a regional aviation hub, a status which we cannot afford to lose. Shenzhen and Guangzhou may serve as a domestic hub.'

But a green group last night warned of worsening air pollution in Tung Chung if a new runway was built. 'This would add frost to the snow,' said Hahn Chu Hon-keung of Friends of the Earth, citing records that the air pollution index in Tung Chung once reached 201 in September 2004.