Airport Chiefs Head for Zhuhai Takeover

March 2, 2004

Airport Chiefs Head for Zhuhai Takeover 
The Standard, Hong Kong

The Airport Authority is in talks with Zhuhai airport
to take over the management and operation of the
loss-making facility located about 50 kilometres east
of Chek Lap Kok airport.

The authority yesterday did not deny a report that it
will conclude a 40-year deal with the Zhuhai municipal
authorities within months. 

Apple Daily said the deal will let the authority take
over the airport for free without the need to repay or
service its mounting debt. 

The airport owes at least 13 billion yuan (HK$12.23
billion) to mainly mainland creditors, including the
Tianjin Airport Construction Company which built the
facility that opened in 1997. Zhuhai airport is
currently losing about 20 million yuan a month.
Authority spokeswoman Connie Hon said talks have been
going on between the authority and four Pearl River
Delta airports. 

This followed the creation of the 5D Airports Forum,
comprising Hong Kong, Macau, Zhuhai, Shenzhen and
Guangdong airports, in 2001.

Hon said discussions have included ``the exchange of
airport management experience, the development in
commercial operations and assistance the Airport
Authority could render to mainland airports. These
talks have been ongoing. Formal announcements will be
made when substantive agreements are reached.''

News of the Zhuhai talks comes after Shenzhen Airport
Company said the authority had held discussions on
taking a stake in the facility. 

National People's Congress deputy Victor Sit told The
Standard authority chairman Victor Fung has been
heading talks with nearby airports, including Zhuhai
and Shenzhen, for three years. 

``Formal proposals were made many months ago,'' he
said. But Sit criticised the way details of the Zhuhai
talks have been publicised. ``I think it is not
sensible to make it known because it's under study and
there is not yet any decision.'' 

Sit said that although he had never been officially
involved with either the Hong Kong or Zhuhai airport
authorities, he is in contact with those who are
involved.

He added that news of the talks could be ``politically
very damaging'' especially suggestions that the
authority would get the concession for nothing. ``The
important issue is that there are lots of interests
attached. It is very sensitive economically and
politically,'' he said.

Sit believes that while a final decision must be made
on the basis of a ``win-win'' for Hong Kong and
Zhuhai, consideration must also be given to the effect
on Macau airport.

Overall, he said: ``I think at this point it is very
premature to say that there would be a decision.''

The authority said bilateral and multilateral
discussions will result in closer co-operation and
co-ordination with airports in the Pearl River Delta.
Zhuhai airport has a capacity to handle 100,000
aircraft and 11 million passengers a year, but it
barely handles 25 flights a day and its annual
passenger throughput totals fewer than one million. 

One analyst at a European brokerage said: ``I don't
see any real benefits for Hong Kong airport because
the Zhuhai airport hasn't reached a utilisation level.
It's hard to see any synergy between Hong Kong and
Zhuhai airports.''

But aviation insiders said Zhuhai may be developed to
serve low-cost airlines operating within the mainland
and to regional destinations. 


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