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Anita Lam

Dennis Eng

Cable car operator could file lawsuit after 20-year contract is cut short

The MTR Corporation remained tightlipped yesterday about how much compensation, if any, it has to pay Skyrail-ITM (Hong Kong) to take over the management of the HK$1 billion Ngong Ping 360 cable car.

The listed rail operator, of which the government is the majority shareholder, will have to  buy out the remaining 19 years of Skyrail-ITM's 20-year management contract. It may also have to pay compensation to sever ties with Skyrail.

Raymond Chien Kuo-fung, MTR Corp chairman, declined to comment on the issue of compensation.

'There is a confidentiality clause in our agreement with Skyrail. All I can say is that we're satisfied with the terms of the agreement.'

He said relevant information would be made available according stock exchange regulations that govern listed companies.

But a lawyer who is also a director of a local theme park said he did not believe the cost of terminating the contract for the rail operator would be significant.

'The report and the charges pressed by the government have all spoken so blatantly of Skyrail's responsibilities,' said the lawyer, who refused to be identified.

'It would not be politically correct for the system's owner [MTR Corp] to shoulder another cent in losses for the mistakes they made, except for the necessary cost they should pay for the assets [MTR Corp] takes over from Skyrail.'

The MTR Corp spends about HK$7 million a month to operate the Lantau attraction, which it owns. The first-year attendance target of 1.5 million was easily reached in the first nine months of opening, but it has been closed since a cabin crashed to the ground during testing on June 11 after the attraction had closed for the day.

The director warned that it was highly likely that Skyrail-ITM of Australia, a reputable operator of cable car attractions, would file lawsuits against the MTR Corp.

'It is about saving face. How would they expect to gain any more business if they accept all the faults without putting up a fight?'

Under the terms of the agreement, the MTR Corp will assume full control of the Lantau attraction by acquiring the management company, Skyrail-ITM (Hong Kong), from its parent, Skyrail-ITM. Since Skyrail-ITM retains the use of the 'Skyrail' name, the Ngong Ping Skyrail cableway will have to be rebranded.

As the new manager of the cable car attraction, the MTR Corp subsidiary will absorb about 200 Skyrail-ITM employees, who will continue to work for the cable car attraction.

But the subsidiary will have a new chief executive officer and chief operations officer. Skyrail-ITM (Hong Kong) was formerly led by managing director Bill Calderwood, previously a deputy managing director of the Australian Tourist Commission.

Dr Chien said: 'We've always had a senior manager with the responsibility for overseeing the affairs of Ngong Ping 360. In our agreement with Skyrail, we've made sure there's going to be a smooth transition and handover of operational management. We have not finalised selection of candidates for CEO and COO.'

Putting the cable car back on track

1 Ngong Ping Skyrail operator prosecuted for breaching safety regulations

2 MTR Corp forms new subsidiary with international management team to take over operations

3 About 200 Skyrail employees keep jobs, but operating and maintenance staff will be retrained

4 Adoption of ISO9000 quality management system and extra safety measures

5 Series of promotional and community events to re-establish Ngong Ping 360 as a tourist attraction



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Ngong Ping 360

MTR Corp may face compensation bill