DAVE KNIBB SEATTLE A deal between Hong Kong's airport authority and government has cleared the way for a 15% cut in landing and parking fees at Chek Lap Kok from 1 January.

Hong Kong's Government has agreed to take over fire and rescue operations at the airport to save the airport authority HK$200 million ($26 million) a year. This is to soften the effects of a 15% fee cut across the board forced on the authority by the airlines. For the balance of this year, the airport will receive a HK$30 million credit for continuing to provide these services until the government assumes them.

This will not cover the airport's HK$280 million estimated revenue loss from the fee cut, but Victor Fung, chairman of the airport authority, predicts a 15% rise in airport use will reduce its shortfall to HK$20 million a year. The authority may save more than that from a review of depreciation costs, which is under way. Fung says none of these changes will affect the airport's long term forecast of a 5% return on equity - a commitment made during negotiation of the airport's financing.

Some critics in Hong Kong are already grumbling that this accord shifts Chek Lap Kok operating costs from airlines to taxpayers. But more air traffic may benefit everyone. During the campaign to lower fees, airlines told the legislative council that each Boeing 747 service to Hong Kong adds HK$91 million in annual revenue.

Airline representatives had asked Hong Kong for a 25% cut in landing fees and total exemption from terminal fees. These would have cost HK$600 million annually, the airport authority said.

Source: Airline Business