Date
24 March 2017
Hong Kong's airport operator is expected to announce soon a revised proposal for a special passenger levy to finance a runway project. Photo: Xinhua
Hong Kong's airport operator is expected to announce soon a revised proposal for a special passenger levy to finance a runway project. Photo: Xinhua

Airport Authority may set special levy soon to fund new runway

Hong Kong’s Airport Authority (AA) may announce in one or two months the special fee it will impose on air passengers to finance the construction of the new airport runway, according to Ming Pao Daily.

AA had previously proposed to charge each departing passenger an infrastructure levy of HK$180 (US$23.2) for eight years through 2023 if construction of the third runway begins next year.

But the government has said that the fee should be lower.

Ming Pao cited sources as saying that financial consultants hired by AA are in the final stage of coming up with a figure on the planned levy, before submitting it to the Executive Council for approval.

The fee will definitely be less than the initial proposal of HK$180, regardless of whether it will be a flat rate or a two-tier charge based on long-haul or short-haul flights, the report said.

Although the fee will be lower, some observers are still questioning whether the levy is necessary at all.

Legislator Gary Fan Kwok-wai said AA should not impose any special fee given the agency’s rising earnings and high profitability.

AA’s annual report showed that its earnings rose 12 percent to a record HK$7.2 billion (US$928.73 million) in the year ended March, as the number of air passengers hit 64.7 million in the period, also a record.

Still, the agency feels that it doesn’t have the capability to pay for the new runway on its own. The AA said its needs extra income to maintain competitive pay for its staff and hire more personnel to cope with increasing traffic.

Apart from the passenger levy and resorting to some borrowings, the AA also said that it will skip dividend payment to the government, its sole shareholder, for the first time. That means the government will lose an income amounting to as much as HK$5.76 billion.

The airport operator’s profit growth is seen inadequate compared to the new runway project which is expected to cost about HK$141.5 billion.

Legislator Sin Chung-kai has suggested that the existing HK$120 airport tax and the planned infrastructure levy should not exceed HK$200 in total.

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TL/AC/RC

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