Charges for most will be lower than the HK$180 predicted when they are introduced next year as airport turns to bonds and loans to cover more of the bill
ERNEST KAOernest.kao@scmp.com
PUBLISHED : Tuesday, 29 September, 2015, 5:03pm
UPDATED : Tuesday, 29 September, 2015, 9:38pm
A concept drawing of how the airport will look with its new runway.
Every passenger who flies out of Hong Kong International Airport will be hit with an extra charge to help fund its third runway, the Airport Authority confirmed today.
But the “airport construction fee” for most passengers will be lower than the HK$180 per head the authority originally proposed in March, after airport bosses agreed to take out bank loans and issue bonds, including Islamic bonds, for half the cost. The fees are expected to kick in from the middle of next year.
"Because the authority is reducing the airport construction fee, we need to increase borrowings from other sources," said authority chief executive Fred Lam Tin-fuk. "The current proposed borrowing level has been increased from HK$53 billion to HK$69 billion, which accounts for about half of the overall construction expenses."
The third runway project – proposed as the airport approaches its capacity on a two-runway system – will cost an estimated HK$141.5 billion.
READ MORE: Airport fee 'may be lowered' amid concern
Under the new proposal, only passengers flying in business or first class on long-haul flights will pay HK$180. Long-haul passengers in economy or those in higher classes on regional flights will pay HK$160, while short-haul economy passengers will pay just HK$90. Transit passengers on short-haul flights will be charged HK$70.
Lam believed the amount was acceptable and competitive with what other airports around the world were charging. Instead of 30 per cent of the pie under the original funding plan approved by the Executive Council in March, user charges will now make up just 18 per cent – about HK$26 billion – of the overall funding.
Airport Authority chief Fred Lam Tin-fuk reveals charges for passengers to help fund its third runway. Photo: Sam Tsang
“About 70 per cent of passengers will be paying the HK$90 rate or lower and we believe this to be quite competitive,” he said. “By increasing our borrowing … we will further lower the burden on passengers.”
The charges are likely to be introduced after construction of the runway commences in the middle of the next year and will continue until to “2028 to 2030”, Lam said.
READ MORE: Airport make HK$7b profit, but leaves government empty-handed
With half of the funding now coming in the form of borrowing, Lam acknowledged the risk would be higher, but was confident the authority would maintain its AAA credit rating.
“Based on prudent commercial principles, we should strive to maintain the [authority's] good credit rating in order to obtain cost-effective finances. The current borrowing ratio in the revised financial arrangement is close to the maximum level that will allow us to maintain a good credit rating."
Executive director for finance William Lo Chi-chung said Islamic bonds, or Sukuk, had proven successful by the government and would help the authority expand into a new base of investors.
http://m.scmp.com/news/hong-kong/economy/article/1862408/how-much-will-you-pay-hong-kong-international-airport-reveals
