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Old November 22nd, 2004, 04:06 AM   #541
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Baoan's future tied to Chek Lap Kok;
Report finds natural fit between Hong Kong and Shenzhen airports and calls for closer ties and further investment

Russell Barling
22 November 2004
South China Morning Post

Shenzhen Baoan International Airport must strengthen ties with Hong Kong International Airport (HKIA) and invest 20 billion yuan over the next 20 years if it is to keep pace with demand for passenger and freight services, according to a consultants report commissioned by Shenzhen aviation authorities and obtained by the South China Morning Post.

The report suggests that Shenzhen airport officials are at least aware of their facility's natural fit with Chek Lap Kok, given Baoan's extensive domestic network and Chek Lap Kok's international linkages.

They were also advised to promote Baoan as a centre for low-cost carriers and services, and to develop it as a cargo gateway to China rather than a regional hub.

"HKIA and [Baoan] could form a strategic link to optimise their combined advantage of a strong international network and a moderate domestic network in the face of growing challenges from [Guangzhou's new international airport]," the report said.

"For Hong Kong, acquisition of [an equity stake in Baoan] is crucial if it wants to assuage investors' fears over rising competition ahead of its $6 billion privatisation."

The objective of Baoan officials, the report's authors continued, should be "to develop [Baoan as] an air cargo gateway to the [Pearl River Delta] region and [as] the low-cost domestic passenger partner for a dual ... airport hub [with Hong Kong] serving southern China and the Asia-Pacific region."

Speaking at the weekend, a senior Airport Authority executive denied media reports last week that discussion over potential fiscal or operational co-operation between the two airports had broken down.

"They're still talking," the executive said.

If its recommendations are followed, the report predicted Baoan would handle 62 million passengers and two million tonnes of cargo a year by 2025. With Hong Kong's aviation authorities slow to capitalise on the rise of low-cost carriers, part of the strategy appears to take aim at Macau's successful courtship of budget airlines such as Air Asia.

Suggested projects include two new runways, the construction of a 420,000 square metre domestic passenger terminal by 2009, and new cargo and express-freight facilities.

"The need for more domestic passenger terminal capacity is expected to occur by 2009-10 when passenger traffic will exceed 20 million per annum," the report said.

"A major portion of the [20 billion yuan] capital cost involves the reclamation of land for the expansion of the airport. This reclaimed land also is to be used for an expressway connecting Hong Kong, Shenzhen and Guangzhou.

"It is understood the regional government has agreed to fund the reclamation and would lease the land back to [the airport's listed vehicle, Shenzhen Airport Co Ltd]."

More than 10 million passengers passed through the airport in the first nine months of this year, an increase of 42 per cent over the same period last year.

It expects 14 million travellers this year and, according to the report, about 7 per cent of them will come from Hong Kong.

Baoan saw a 28.4 per cent year-on-year surge in freight business over the first nine months of this year, handling about 365,000 tonnes in the period.

According to the report, its recommended investment of 19.52 billion yuan by 2025 would reap a net economic benefit of 16.32 billion yuan, and Baoan would see its first positive cash flow - of 760 million yuan - by 2015.

The report was drafted by Australia-based consultants Sinclair Knight Merz, drawing on an earlier master plan done for Baoan by Netherlands Airports Consultants.
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Old November 22nd, 2004, 04:07 AM   #542
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Authority draws the line on smoking at airport
Raymond Ma
21 November 2004
South China Morning Post

The Airport Authority says it has no plans to permit any more restaurants or bars at Chek Lap Kok to allow smoking - at least not for the time being.

And it has defended itself against criticism that the airport - which is supposedly a smoke-free zone - is becoming increasingly friendly for smokers, with more restaurants and pubs being allowed to operate smoking sections.

Public health advocates have attacked the authority's willingness to allow more catering outlets at the airport to build smoking rooms as being contradictory to the government's war against the harmful effects of tobacco on both smokers and non-smokers.

Second-hand smoke has been linked to a variety of illnesses in non-smokers, including cancer and heart disease. Local concerns have mainly centred on its harm on workers in the catering industry.

The authority's general manager for retail and advertising, Eva Tsang, said smoking was allowed in only 2 per cent of the total floor space that was reserved for catering outlets.

"We are just trying to serve those who have a need. We totally accept and respect the concerns of those in the public health sector," she said.

"Based on the passenger numbers, I believe that this will be the percentage of floor space we will keep [smoking establishments] at. In the near future we don't see the need to open any more."

But the authority could reconsider its position if passenger throughput surged, she said.

The authority has received no complaints from non-smoking passengers, but those who do smoke have expressed their concern at the lack of facilities to cater for their needs.

When the airport opened in 1998 there was just one bar - Katie O'Connor's in the passenger arrival hall - where smokers could light up.

Two other catering outlets in the passenger terminal's East Hall extension - Champions Bar and Wildfire - opened last year and allow patrons to smoke.

Cathay Pacific has also made additions to its two lounges to cater for smokers since the airport's opening.

The executive director of the Hong Kong Council on Smoking and Health, Raymond Ho Lei-ming, said he was not satisfied and urged the Airport Authority to rescind the approval that it had already granted to the two new eateries and to the Cathay Pacific lounges.

The council has also been told by health officials that a proposed ban in all restaurants and pubs in Hong Kong would in theory apply at Chek Lap Kok.
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Old November 22nd, 2004, 05:00 AM   #543
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Old November 22nd, 2004, 05:20 PM   #544
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Old November 22nd, 2004, 06:17 PM   #545
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November 22, 2004
Government Press Release
Views sought on Airport Authority privatisation

The Economic Development & Labour Bureau has released a consultation document on the partial privatisation of the Airport Authority, outlining 21 preliminary proposals for public comment.

It deals with regulatory issues in five main areas, namely, the relationship between the Government and a partially privatised authority, the authority's business case and valuation, economic regulation, land use, competition and scope of business, and impact on companies and workers at the airport.

Following the recent capital restructuring, the paper said the Government's equity capital in the authority stands at about $30.7 billion. Its return on equity is low especially in the context of a commercial enterprise.

In order for the market to ascribe a value to the authority comparable to the Government's equity investment, the authority needs to demonstrate to potential investors that it will be able to achieve a commercial return within a reasonable timeframe.

The paper said this is a choice between trying to preserve taxpayers' investment by increasing airport charges in the next few years, or keeping airport charges more competitive at the risk of diminishing taxpayers' investment in the authority.

49 hectares
The body has 49 hectares of earmarked land on Chek Lap Kok that is available for airport-related uses. In addition, the authority is currently is limited in the scope of business that it can undertake outside the island and can only conduct activities that are in keeping with the objective of promoting and maintaining Hong Kong's status as a centre of international aviation.

Concerns have been expressed by some stakeholders that the authority would be privileged over other developers or other private enterprises given the land it holds and its status as the operator of Hong Kong International Airport, which may give rise to unfair competition or anticompetitive practices.

Accordingly, the following proposals are being put forward:
* to allow the new company to continue to hold and make use of the land on the airport island while maintaining existing controls over land uses; and,
* as regards activities outside the airport island, it is proposed the existing restrictions on the range of airport-related activities that the authority can conduct should be retained.

The proposals are not final and Government will formulate the legislative and regulatory framework for the privatisation taking into account feedback received.

Comments should reach the Economic Development & Labour Bureau, 2/F Main Wing, Central Government Offices, Lower Albert Road, Hong Kong by February 28. Fax 28684679 or email [email protected].
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Old November 22nd, 2004, 10:50 PM   #546
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18 November 2004 Corporate News Release
OCTOBER SEES NEW RECORDS SET

(HONG KONG) New records were set for both passengers and cargo in October. The airline also saw a new daily record set, when 19,242 passengers travelled on October 24.

A total of 451,644 people flew throughout the Dragonair network in the month, up 8.7% on September.

"The month started off slowly due to less inbound traffic to Mainland cities during the National Day holidays, but picked up quickly thereafter, bolstered by strong business and leisure traffic," explained Dragonair CEO Stanley Hui.

"Significantly, we also saw greater demand from individual travellers in the Mainland, which has positive implications for future growth. It is over a year since the Individual Travel Scheme was launched, and the benefits are now gradually coming through."

Cargo also set a new record, this for the fourth month in a row.

"Our cargo operation is performing exceptionally well, and we continue to build on that," Mr. Hui said. "We will be adding three new all-cargo flights to the busy cargo hub of Shanghai to capitalise on the demand to and from there. The timing is good given that we are in the busy pre-Christmas peak, so we are expecting this month’s record to be broken sooner rather than later."

He added: "As anticipated, oil prices remained at high levels during the month. Fuel costs accounted for 22% of our total costs in October, up from 8% two to three years ago. This is consistently putting heavy pressure on our bottom line despite the good operational numbers."
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Old November 23rd, 2004, 06:26 AM   #547
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Old November 23rd, 2004, 06:32 AM   #548
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Higher landing fees seen as threat to hub status
Joseph Lo
23 November 2004
South China Morning Post

The Airport Authority will have to keep landing and parking charges at Chek Lap Kok in line with regional rivals after it is listed on the stock exchange or Hong Kong will lose its status as a premier hub, the government was warned yesterday.

Legislators yesterday met with a panel of government officials, led by Secretary for Economic Development and Labour Stephen Ip Shu-kwan, to discuss the launch of a public consultation paper on the airport's privatisation.

It includes a proposal to raise airline charges at Chek Lap Kok to boost profitability and ensure a better return for investors.

"Airlines are now opposed to the privatisation plan," said Howard Young, a legislator for the tourism sector who also serves as Cathay Pacific Airways' general manager for government affairs.

"They haven't said much on the topic until now, but I think you will find increasing opposition."

Other legislators said discussion would need to focus on how the airport would be regulated as a monopoly supplier.

Officials said the privatisation of the airport operator would lead to greater transparency and regulatory oversight, as well as help to ensure that Hong Kong remained a competitive aviation hub.

"We're not saying we have to raise charges ... we're consulting the public over that," Mr Ip said.
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Old November 23rd, 2004, 06:43 AM   #549
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A new approach to handling charges
Willy Lin, Chairman

The Better Hong Kong Foundation released a study report last month on the competitiveness of the Hong Kong port. The report, prepared by Mckinsey & Co, correctly points out that the high boundary-crossing trucking costs, together with the high Terminal Handling Charge (THC) in Hong Kong, are the two most critical factors affecting the competitiveness of the port. I understand that the Port Master Plan 2020 which the Government is going to release later this year, would draw similar conclusions. I am glad that the industry has at last reached a consensus on the crucial factors that are eroding the competitiveness of the Hong Kong port.

I certainly support the proposed reforms mentioned in the McKinsey report. In essence, it mentions separate controls for boundary-crossing tractor, chassis, container and driver, and deleting/reducing the boundary crossing truck license fee. The traditional "four up- four down" requirement is obsolete and causes a lot of inefficiencies. Of course, it requires a lot of changes in the practices and systems of Mainland Customs, as well as additional resources in implementing the changes. The reforms, together with all other initiatives of the Government and the industries, such as boundary crossing infrastructure improvements, freight villages and bonded pipelines, relaxation of container truck driver licensing requirements, electronic document exchange, etc, would definitely enhance productivity and lower cost for carriage of cargo to Hong Kong.

However, unless a solution is found for the problem of high THC, the cost differential would continue to lead shippers to seek alternative routing for cargo. Despite container terminal operators in Hong Kong having repeatedly said that they had substantially lowered their charges in the past few years, carriers refuse to adjust the THC levels they charge shippers. The Council has been calling for transparency of THC because carriers insist that THC is a cost recovery exercise. Regrettably, progress on transparency has been very minimal. Only the Transpacific Stabilisation Agreement has provided the Council with a simple component list-other shipping conferences have not taken any positive moves. The TSA component list, however, lacks the essential costing figures to justify the current high levels of THC and a mechanism for level adjustment is also lacking.

We believe a new approach is needed to resolve this long-standing issue. Perhaps Hong Kong shippers and container terminal operators should consider a mechanism that allows shippers to pay directly to container terminal operators. There may be a separate charge for shipping lines which, of course, have to justify the charge. After all, shipping lines should, in principle, make their main revenue from ocean freight, and not from surcharges.

Moreover, there actually exists a similar threat of cargo losses for Hong Kong on the air side. One should never underestimate the potential competition from the new Baiyun Airport. According to a recent survey by GHK, commissioned by the Hong Kong Airport Authority, Hong Kong airport suffers from the disadvantages of substantially higher land transportation cost from cargo sources in South China, and terminal and handling fees. Although these disadvantages are at present offset by lower air freight charges from Hong Kong, this situation could easily change. Of course, to a certain extent, air freight charges are factored by successful cargo consolidation of which Hong Kong doubtlessly reigns supreme. Yet it also depends on how keen the operators are to develop a new market. Carriers and freight forwarders might offer very competitive rates to quickly build up critical mass. There is always the danger for air cargo to follow the same pattern in cargo diversion as sea cargo.

In order to ensure a sustainable growth for Hong Kong's air freight industry, the high terminal and handling costs, among others, must be reviewed. GHK's report indicates that terminal costs at Baiyun Airport is as low as RMB 0.50 per kg, which compares sharply with Hong Kong's current level of HK$1.72 per kg. One must remember that terminal and handling costs were more than 30% lower when we were using Kai Tak Airport. The franchise period for cargo terminal operators, the competition among them, etc, are factors that must be closely examined in exploring possibilities for lowering the charge. Indeed, the option of shippers paying directly to terminal operators should be considered if it would lead to lower charge levels for shippers.

There certainly has to be some urgency in quickly and substantially lowering operating costs in Hong Kong should we wish to sustain the competitiveness of Hong Kong's sea and air freight industries. Whilst the industry has still been enjoying very good results these past two years, there are a lot of obvious potential threats. The abolition of the quota system for textiles and garments in 2005 is going to cause a lot of cargo to be shipped directly from the Mainland. More container terminal capacity continues to come on-stream at Shenzhen ports. There is the least doubt that Baiyun Airport and Shenzhen Airport's share of South China cargo would increase sharply in the next few years. It is imperative for Hong Kong to lower operating costs here. Paying handling charges directly to terminal operators is an option that the industry should explore seriously.
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Old November 23rd, 2004, 06:45 AM   #550
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Kenya Airways Cargo: The Africa freight connection

Nairobi's national flag carrier, Kenya Airways, started to operate cargo services under the name of Kenya Airways Cargo in May. The new division is fully integrated into the airline's commercial department and was formed by a buyout of the stakes held by its previous shareholders Martinair and KLM which still remain as strategic and commercial partners of Kenya Airways Cargo.

Kenya Airways Cargo was launched in Hong Kong last month, when the fleet and the company's service cooperation with various airlines were introduced. Kenya Airways' cargo revenue has grown steadily by 47% over the past three years. In May, the airline took delivery of the first state-of-the-art Boeing 777. Closer cooperation between Kenya Airways' commercial department and the new cargo division had proved fruitful and led to aircraft upgrades from Boeing 737 to Boeing 767 on major intra-Africa routes. "Our cargo results are in line with our expectations," said Hugh Fraser, commercial director of Kenya Airways.

He added that the increased cargo capacity for the Boeing 777 would enhance the airline's capability to operate freighter services for feeding and de-feeding through Nairobi and strengthen Nairobi as the preferred cargo hub in Africa.

The head of Kenya Airways Cargo, Guy Mertens, said that apart from the current weekly flights between Nairobi and Mwanza, the management of the new cargo division would seek ways of increasing capacity utilisation of the Boeing 737-200 QC freighter by exploring the viability to regional destinations such as Kigali, Bujumbura and Zanzibar.

"Apart from increasing cargo capacity for our customers, we have invested in full cargo automation by linking our Rapid Cargo accounting system with a new cargo operations system known as e-Champ, which will be operational in September," said Mertens.

Far East/Asia route
"We are currently developing the Africa to Far East/Asia route," said Larissa Manson Hart, manager, regional cargo sales East & North Africa. "Kenya (and Africa) has a wide variety of products to offerĐfrom handicrafts to the best quality fruit, vegetables and flowers, live tropical fish, seafood, etc. Kenya Airways Cargo will be happy to put in touch the importers in Hong Kong and China and exporters/shippers/producers in Kenya and other African countries. This can be importers themselves or their agents."

Hart said that at present, they carry mainly seafood products from Kenya/Tanzania to Hong Kong. And products include live crabs and lobsters, dry sea cucumber, other types of seafood. "We use HKG hub for transportation of live tropical fish, flowers, seafood and general cargo beyond Hong Kong using our partner airlines for destinations via Hong Kong."

"Our route from Hong Kong to Africa via Nairobi is very popular and is already well developed despite our operating on the route for less than a year. Our premier hub, Nairobi, is used to transport cargo to Lagos, Kinshasa, Lusaka, Lilongwe, Harare to name just a few major destinations for cargo originating in Hong Kong. Mainly these include textiles, electronics, mobile phones."

Kenya Airways has direct flights to Bangkok and Hong Kong, a combined flight with the routing: Nairobi-Bangkok-Hong Kong-Bangkok-Nairobi, operating three times per week. Flights leave Nairobi on Wednesday, Friday and Sunday night.

Through cooperation with various airlines, cargo is connected via Hong Kong to Tokyo, Kuala Lumpur, Taipei, Singapore and 11 destinations in Mainland China. These destinations are: Beijing, Chongqing, Chengdu, Dalian, Fuzhou, Hangzhou, Kunming, Ningbo, Xian, Qingdao, Xiamen. "However, some restrictions for carriage of perishable cargo apply for such connections as per destination basis," said Hart. "We do not have direct Kenya Airways service to China apart from/to Hong Kong."
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Old November 23rd, 2004, 06:57 AM   #551
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Old November 23rd, 2004, 07:41 AM   #552
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By AN888 @ HKADB :

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Old November 23rd, 2004, 07:23 PM   #553
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The Standard
November 23, 2004
IP TRIES TO EASE AIRPORT FEARS
Wong Ka-chun

The government has sought to reassure legislators about the future of Hong Kong International Airport, saying it will not jeopardise its competitiveness by raising fees to make it a more attractive candidate for privatisation.

Legislators questioned the administration's intentions after it issued a consultation paper last week suggesting the profitability of the Airport Authority was too low and it might be necessary to raise fees to airlines to make it appealing to investors.

We will absolutely not sacrifice the airport's competitiveness, as it is so important to the Hong Kong economy,'' Secretary for Economic Development and Labour Bureau Stephen Ip told the Legislative Council's economic services panel on Monday.

We are not saying we have to raise charges. This is only a consultation paper. We are seeking the public's views on the issue and have no final decision yet.'' Wrestling with a budget deficit, the government has said it hopes to privatise the Airport Authority via an initial public offering in 2006. But the government is in no rush'' to privatise, Ip told legislators. We will continue improving our airport's position and competitiveness in the future.'' The consultation paper said although the authority posted a record profit of HK$ 502 million for the year ended March 2003, its return on equity of less than 2 per cent would be considered inadequate in the private sector.

However, lawmaker Howard Young, who represents the tourism sector, said airlines have already expressed concerns about the level of fees for landing, parking and terminal use.

We need to know how much charges will go up by and how that will affect competitiveness,'' Democratic Party lawmaker Fred Li said.

The airport's competitiveness will be on the line if airport charges are too high,'' Chan Kam-lam of the Democratic Alliance for Betterment of Hong Kong said. The government must solve the issue before floating the authority.'' The Airport Authority has argued that there is room to raise some fees without damaging Hong Kong as a travel destination.

According to the consultation paper, the fees, which generate 45 per cent of its revenue, are comparable to those of Singapore and below those of Seoul, Bangkok, Taipei and the mainland. And on average, the paper said, airport fees constitute only 4 per cent of the operating costs of airlines.

Legco's economic services panel will meet again in January to discuss the privatisation, while the government consultation will end on February 28.
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Old November 24th, 2004, 07:40 AM   #554
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Cathay sets sights on Shanghai
24 November 2004
South China Morning Post

Cathay Pacific Airways hopes to end its 14-year absence from the lucrative Hong Kong-Shanghai market early next year, when it launches the all-cargo flights it was allocated this month.

Hong Kong's government awarded Cathay 12 of the 15 weekly cargo flights it won in the latest Sino-Hong Kong air-services agreement.

"We intend to launch freighter services to Shanghai in early 2005 once all the necessary processes are completed," a Cathay spokeswoman said. "We have aircraft on hand for these services once the operational requirements are in place." Russell Barling
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Old November 24th, 2004, 08:09 PM   #555
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24 November 2004
Corporate Press Release

Cathay Pacific celebrates daily Beijing service with “Visit Beijing Now” promotion

Cathay Pacific Airways today announced a special “Visit Beijing Now” promotion to celebrate the airline’s upcoming daily service between Hong Kong and Beijing from 1 December 2004. The new service will bring the two cities closer than even and also reinforces Hong Kong’s position as an international aviation hub and the primary gateway to China.

The “Visit Beijing Now” special promotion offers passengers two nights of free accommodation in three of Beijing’s top premium hotels. Passengers who’ve booked with Cathay Pacific to travel to Beijing anytime between 1 December 2004 to 28 February 2005 will enjoy the delightful rooms at Marco Polo Beijing, Novotel Peace Beijing or the Shangri-La’s Kerry Centre Hotel. Bookings are accepted from now until 14 January 2005. Asia Miles accrual is subject to the applicable fare conditions.

Cathay Pacific resumed services to Beijing with three weekly flights on 2 December 2003. The four additional weekly flights will offer passengers more options to connect with the airline’s international services through Hong Kong.

Cathay Pacific Airways General Manager Sales Hong Kong and China Clement Lam said: “We are delighted to launch this promotion to celebrate our daily service to Beijing. Passengers can now be better connected to China and the rest of the world via Hong Kong and at the same time, enjoy Cathay Pacific’s premium service.”

Cathay Pacific has been granted rights to operate a second daily service to Beijing from the start of the Summer 2005 season. If Cathay Pacific were able to operate that service at a different time of the day that would create wider opportunities for the airline to draw more connecting passengers over Hong Kong.
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Old November 25th, 2004, 03:16 PM   #556
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Thursday November 25, 12:58 PM
26 airlines permitted to extend, raise fuel surcharges in Hong Kong

(AP) Twenty-six airlines, including Air France and British Airways, have been cleared to extend and raise levies charged to passengers flying into or out of Hong Kong due to high global oil prices, the territory's Civil Aviation Department said Thursday.

The fuel levy raises and two-month extensions take effect Dec. 1, said Civil Aviation Department spokeswoman Stella Tse.

British Airways PLC will more than double its surcharge from US$10 (€8) per flight to US$27 (€21), while the Air France fuel levy will rise from US$13 (€10) to US$22 (€17), Tse said. The French carrier merged with Dutch airline KLM in May to form Air France-KLM SA.

Australian Airlines and its owner Qantas Airways Ltd. both got approval to raise its surcharges from 22 Australian dollars (US$17; €13) to US$29 (€22) _ the most expensive levy charged in Hong Kong, she said.

Hong Kong's Cathay Pacific Airways Ltd.'s fuel levy for short-haul flights will rise from US$7 (€5) to US$9.2 (€7), and for long-haul flights will increase to US$27 (€21) from US$19 (€14).

The territory's other carrier, Hong Kong Dragon Airlines Ltd., can now increase its surcharge from 54 Hong Kong dollars (US$7; €5) to 72 Hong Kong dollars (US$9; €7).

Meanwhile, the Civil Aviation Department has also allowed Northwest Airlines Inc. to levy fuel surcharges on its Hong Kong flights for the first time. The U.S. carrier has been authorized to charge US$5 (€4) for short-haul flights and US$25 (€19) for long-haul.

Separately, eight other airlines were approved to extend _ but not raise _ their surcharges for two months.

Jet fuel prices have soared this year as oil costs shot up worldwide. This week, jet fuel _ which is traded separately from crude _ fetched US$56.80 a barrel, up 49 percent since January 1.
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Old November 25th, 2004, 06:47 PM   #557
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Jetstar Asia Announces First 7 Routes
Thursday November 25, 5:11 am ET
By Jake Lloyd-Smith, Associated Press Writer

SINGAPORE (AP) -- Jetstar Asia, Qantas Airways' new no-frills carrier, announced Thursday its seven inaugural destinations to be served from Singapore, including Shanghai, in a move sure to raise the stakes in the region's cutthroat budget aviation market.

The company -- which is to take to the skies next month -- will also touch down in Hong Kong, Taipei, Jakarta and Manila, plus the East Java port of Surabaya and the Thai beach town of Pattaya.

Three of those seven routes will open from December, with the rest to be added in stages from next year, the company said in a statement without saying which would be the first or the exact dates the services would start.

"This is just the beginning," said Jetstar Asia Chief Operating Officer Con Korfiatis. "But it's also indicative of the types of destinations we'll be flying to; some expected, some not expected."

Low-cost air travel has boomed over the past three years since Malaysia's AirAsia demonstrated that the business model worked just as well in Asia as it had in the United States and Europe.

But Asia's expanding crop of new cheap carriers is already starting to do things differently from predecessors elsewhere, notably by trying to expand the pool of potential customers by servicing longer routes.

Conventional aviation industry wisdom in developed markets held that the no-frills carriers were appropriate only for routes of up to three hours' flying time. But many of the new services in Asia target cities that are four or even five hours away.

Jetstar Asia is 49 percent held by Qantas, Australia's national carrier. Its other significant backers include Temasek Holdings, the Singapore government's main investment arm, which holds 19 percent.
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Old November 25th, 2004, 06:52 PM   #558
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It's our airport and the airlines' self-interest should be shot down
25 November 2004
South China Morning Post

"In the final analysis, the question is whether the costs of constructing and running the airport should be fully recovered from its users in the long run. It is a choice between securing a better value at IPO (initial public offering) by increasing airport charges in the next few years, or keeping airport charges more competitive at the risk of undermining valuation at IPO, thereby diminishing the taxpayers' investment in AA. This is a difficult choice we have to make."

Consultation paper on airport privatisation

AND IF THAT seems a long introductory paragraph to you, let me tell you that it boils down the entire consultation paper to one statement. The rest is just the usual dance of on-the-one-hand and on-the-other-hand.

Let me also tell you that the authors of this paper have effectively already made their choice.

The document is full of pledges of allegiance to the user-pay principle although I grant you that this may not mean much. Our government mostly observes the principle in the breach these days.

But the question is not only one of whether we, the taxpayers, will get a sufficiently high price on privatisation to recoup our investment in the airport.

Traffic is building up so rapidly at Chek Lap Kok that we will soon need a third runway. It will be costly and the other big question is thus whether we will be asked to dip into our pockets once again to pay for this runway or whether the airport can be put on a sufficiently sound commercial footing to finance the project on its own.

I think the choice is not difficult at all. Our airport charges are already so low that a study last year by the Transport Research Laboratory rates Chek Lap Kok as 44th in charges out of 50 major international airports it reviewed, far below the average.

The consultation paper also points out that airport charges amount to no more than 4 per cent of airline operating costs and notes: "There is no strong evidence to suggest that the level of airport charges will sway airlines' choice of destinations."

Exactly, and thus let us see those charges raised to a level that would induce investors in a privatised entity to value it at its $30 billion book cost, preferably more. This would require perhaps an 8 per cent return on equity, about what British Airports Authority gets, and far above the present level.

But now we come to the big protest against this by the airlines. It is that Chek Lap Kok was built only five years ago and ought to be valued as a start-up. In the words of one commentator who could have got them directly from Cathay Pacific (and perhaps did): "When was Heathrow completed? When did BAA last spend $36 billion on a new airport?"

I do not buy it. The argument implies that older airports may recover their costs but new ones may not and even older ones had best not embark on renovations at present day costs. We will have to call a worldwide halt to any further growth in air traffic if this is the case. The only guarantee that investors in new airport facilities can be given is that they will lose money.

But if this is the way the airlines look at things, then I have a matching proposal for them. In the future they must establish their air fares on the basis of what aircraft, fuel and staff costs were 30 years ago. If this is how Chek Lap Kok's charges are to be established, then let us make it so for the airlines that use it too. What is sauce for the goose is sauce for the gander. Any takers?

Let us also remember that the airlines are already charged less than half of the airport's costs. The remainder comes from shops, restaurants and other commercial activities at the airport.

The airlines argue that it is only fair they should be given this subsidy as they bring in passengers and there would be no commercial activity at the airport without them. It is a dubious argument. There would also be no shopping in Tsim Sha Tsui if there was no way of getting there. Does this mean that the rents paid by shops in Tsim Sha Tsui ought to be expropriated for subsidies to the public transport operators that serve the district?

Let us say, however, that we indeed thought this natural justice. Very well, then. The Airport Express brings passengers to the airport too. Perhaps its costs ought also to be defrayed by shop rental income at the airport.

But you get the picture. The airlines will clutch at any straw argument to cloak their real motive of self-interest. Let us declare ours. As taxpayers who paid for the airport we want a decent return on our money if it is now to be sold to private interests. We can dispense with the objections of the airlines. It was not their investment.
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Old November 25th, 2004, 11:11 PM   #559
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Saigon Times Magazine
November 27, 2004
United Airlines Opens Ho Chi Minh Office to Celebrate San Francisco - Hong Kong- HCM Route

United Airlines, America's second biggest carrier, inaugurated its HCM City booking office at Sofitel Plaza Saigon Hotel last week. The airline's first daily San Francisco-HCM City flight via Hong Kong is scheduled to reach Tan Son Nhat Airport on December 11. Those who cut the ribbon at the opening ceremony included Nguyen Hai (L), chairman of United Viet, United Airlines'local partner; Joe Mannix (2nd, L), United Airlines' country manager in Vietnam; Le Hung Quoc (3rd, L), vice director of HCM City Service of Foreign Affairs; Mark Schwab (3rd, R), United Airlines' vice president for Asia Pacific; U.S. Consul General Seth Winnick (2nd, R); and Mark Russell (R), United Airlines' managing director for Pacific South.
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Old November 26th, 2004, 04:42 AM   #560
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Crack closes runway for two hours
Nick Gentle
26 November 2004
South China Morning Post

The northern runway at Chek Lap Kok was closed for two hours yesterday morning after a large crack was found in the tarmac.

The Airport Authority said a 4.4cm-wide, 4cm-deep crack running about 1.5 metres along the runway was discovered during a regular inspection at 9am. The runway was closed while repair work was carried out. It was reopened just after 11am.

The southern runway was used for takeoffs and landings and no flights were delayed.

The authority last night refused to answer questions about the closure, the first time in six months the runway has been closed for repairs during operating hours. The crack had apparently appeared between the inspections at 6am and 9am.

"It is not unusual to find cracks on asphalt runways," an authority spokeswoman said. "This is part of a normal wear and tear, with impact and friction caused by landing and takeoff of flights."

The authority said the 3.8km-long runway was due to be resurfaced next month. The southern runway cracked soon after its construction because reclaimed ground it was built on was settling faster than expected.

Former director of aviation Peter Lok Kung-nam said the problem was unusual. "It's reclaimed land so there must be air-filled tubes inserted to prevent heat expansion and cold contraction," he said. "One possibility is that the tubes have been blocked."
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