"Hong Kong airport tie-up talks with Chinese hubs hit rough patch"

Tuesday, November 16, 2004

Hong Kong airport tie-up talks with Chinese hubs hit rough patch 
Agence France Presse


HONG KONG - Talks between Hong Kong's airport and rival Chinese hubs have
run into serious difficulties, making it unlikely that Hong Kong will clinch
alliances with Shenzhen and Zhuhai airports before its planned privatisation
in 2006, a press report said. 
 
The talks, which faltered earlier this year on disagreements over pricing,
are understood to have slowed further amid resistance from authorities in
Shenzhen and Zhuhai, two cities neighbouring Hong Kong in the booming Pearl
River Delta region, the Financial Times reported, citing unnamed sources
close to the deal. 

The newspaper said bankers involved in the talks have been told to take a
back seat as discussions continue without them. 

It said that Shenzhen has been concerned that an agreement with Hong Kong
would give its rival control of landing rights and fees and management of
the airport's retail assets. 

Failure to secure a tie-up with two of its strongest rivals on lucrative
China routes would deepen investor fears over rising competition ahead of
the planned six billion dollar listing of the territory's airport, it said. 

Officials at Shenzhen and Hong Kong airports told the newspaper that the
talks were continuing although they acknowledged there were difficulties. 

"As our chief executive has said, these are not easy discussions but we will
continue to drive to some sort of cooperation," a Hong Kong airport official
was quoted as saying. 

Hong Kong's investment in Shenzhen and Zhuhai was intended to reduce
competition for passengers and cargo in the Pearl River Delta, home to five
major airports. 

Rivalry between Hong Kong and nearby hubs intensified this year with the
August opening of the 2.4 billion dollar Baiyun International Airport in
Guangzhou.


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