Date
19 January 2017
Airport Authority chief Fred Lam has stressed that the new runway project is financially feasible. Photo: HKEJ
Airport Authority chief Fred Lam has stressed that the new runway project is financially feasible. Photo: HKEJ

Airport runway project now seen with 8% internal rate of return

The planned third runway at Hong Kong’s airport is expected to yield an 8-percent internal rate of return (IRR), Airport Authority chief said, stressing that the project would be feasible.

Fred Lam Tin-fuk gave the new estimate as he unveiled a special study that was conducted with the assistance of The Hongkong and Shanghai Banking Corp.

The figure is far above the 3 percent IRR that had initially been projected in 2011, the Hong Kong Economic Journal reported.

The revised estimate has taken into account the proposed airport construction levy and improved financial performance of the airport operator over the last few years.

Lam was also quoted as saying that the construction cost will be HK$141.5 billion in total.

Some observers, meanwhile, are arguing that the Airport Authority should not gauge the project’s feasibility by the internal rate of return.

The feasibility should be determined more by the extent of the economic benefits, they say.

Albert Lai Kwong-tak, chairman of independent think-tank Professional Commons, says the high return rate is partly due to the airport operator’s decision to skip dividend to the government while imposing a new levy on passengers.

[Chinese version中文版]

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