Sky shuttle hits bump over disruption, tax

Sky Shuttle, whose services have been disrupted by the grounding of some of its helicopters, is facing an acute increase in operating costs next year that may force the operator out of business.

The firm is owned by Chan Un-chan, the third wife of casino magnate Stanley Ho Hung-sun.

The company has five Agusta-Westland139 helicopters operating services between Hong Kong and Macau and they have to undergo thorough checks to replace tail rotor blades that have exceeded 600 flight hours or 1,500 flight cycles.

This is in compliance with the emergency airworthiness directives ordered by several aviation regulators including the European Aviation Safety Agency on August 25.

The directives came after an AW139 plunged into Victoria Harbour in July last year, followed by five other accidents which killed at least nine people this year in China, Brazil and South Korea.

According to the Hong Kong Civil Aviation Department (CAD), four of the five aircraft operated by Sky Shuttle have reached their service life limit set under the airworthiness directives and are required to replace the tail rotor blades.

Owing to a global shortage of spare parts in the wake of the emergency airworthiness directives, the four helicopters have been grounded. With only one helicopter available, Sky Shuttle has to cut its flights to Macau to one hourly instead of two. At least three helicopters are required to operate half-hourly services - two departing Hong Kong and Macau at the same time with the third placed on standby in case of mechanical problems.

Sky Shuttle has also suspended its services between Macau and Shenzhen. The firm did not respond to inquiries as to whether the disruption in service is temporary or long term.

An official with the CAD said the overhaul of one helicopter was expected to finish at the weekend, which could help the operator resume some services.

Meanwhile, Sky Shuttle will have to pay the government a rental tax of HK$800 for every passenger departing and arriving at the heliport at Shun Tak Centre in Sheung Wan from July next year.

This is expected to increase the company's operating costs by about HK$36 million a year.

Apart from the new tax, Sky Shuttle is also facing declining passenger numbers, which dropped to 45,449 last year from 68,687 in 2007.

In the first seven months of this year, there were 29,404 passengers, according to the CAD.

The figure is far short of the projected number of people using the cross-border helicopter service by the government. It had expected the number of passengers to reach 133,000 by last year and 204,500 by 2015.

One reason for the decline could be the fares. The 15-minute ride costs HK$2,900 on Monday to Thursday and HK$3,100 from Friday to Sunday. This is as much as the cost of a round-trip fare offered by airlines to many Asian cities.

Sky Shuttle's fares have nearly doubled over the five years. With the impending rental tax, the fares are expected to increase further. Cherry Chun, the company's reservations and sales manager, said they had yet to decide on the fares for next year.

'In the event Sky Shuttle defaults on the lease, the government will put it out to tender again,' an industry veteran said.

In September 2006, the government put the heliport at Shun Tak Centre out for tender. Sky Shuttle outbid South China Aviation, a subsidiary of Wynn, and a consortium led by Albert Cheng, by offering to pay HK$800 rental per passenger. The minimum amount set by the government was HK$50.