Flights Of Fancy


I have some bad news for our beleaguered Transport Minister Anthony Cheung and the few remaining Chinese White Dolphins swimming near our shores: we don’t need one more runway to add to the existing two, we need at least two more for a total of four.

Maybe we need a whole new second airport.

But let us start by admitting there might in theory be an ideal way to cope with increasing demand for air transport in southern China which does not involve extra runways in Hong Kong at all: we reach agreement with Beijing and all the other airports in the region that we will each specialise in what we do best.

Hong Kong gets long haul international, Shenzhen gets all flights to and from mainland cities, Guangzhou gets all the cargo, Macao does the no frills market, possibly sharing with Zhuhai. Our government gets together with Shenzhen to provide a free high speed rail shuttle between the two places. Problem solved?

Unfortunately not. The only problem with this ‘solution’ – and it is quite an important one -- is that it doesn’t work. The first reason it is impractical is that none of the airports in the region will be willing to give up the services they at present provide outside their core area of expertise. Why can’t I fly from Hong Kong direct to Shanghai, why do I have to take a train to Shenzhen first? Why can’t I fly from Shenzhen direct to Paris instead of via Hong Kong? And so on. If you were Beijing, would you get involved in a fight like that?

The second problem arises from the way air services are licensed which in turn is governed by air services agreements between different jurisdictions. Disentangling the spaghetti junction of interwoven approvals would take even longer than building a new airport. So back to consideration of the third runway project we go.

To help minds focus and concentrate on the issue, it is useful at this point to bring the concept of “user pays” to bear. That way we will not be misled by special pleading or propaganda.

If Chek Lap Kok is approaching capacity in terms of take-off and landing slots, then we have two options: we can either accept the constraints and auction off what slots we do have and see which services are prepared to support the higher costs (and recover higher charges from users); or in the broader interests of economic development we can refuse to accept those constraints and expand the capacity of the airport.

If we go this second route, then in principle it doesn’t matter whether the third runway costs $130 billion, or $200 billion or some other number. The amount, whatever it is, is only worth paying if those flying in and out are prepared to pay. Airlines are the direct users of course, but they are acting on behalf of their customers –travellers. That means higher ticket prices.

My colleague Jake Van Der Kamp has done some provisional calculations in this area but I am not clever enough to either confirm or refute them. Suffice to say that we should be thinking of funding any airport expansion primarily by way of Airport Authority bonds, paying a reasonable rate of interest repayable in full over the life of the expanded facility. That will mean higher landing and parking charges, and probably a special “airport development” levy on individual passengers. There may be a case for a modest amount of support from general revenue to cover the spin off economic benefits to those not actually flying, but it is a difficult argument to put across.

The green groups are still fighting a gallant battle on behalf of the dolphins and long may they continue to do so. But at the end of the day I think they are on a lost cause. After all, once the existing airport was finished, some dolphins did come back. Otherwise how could they have been around to be disturbed by the Macao – Zhuhai – HK Bridge project? They will surely come back again as soon as that is finished so we can annoy them again with our third runway.

But the real battle will come when special interests try to make taxpayers pick up all or part of the tab. Good luck with that idea in Finance Committee, Anthony.

 
Mike Rowse
email: mike@rowse.com.hk