CURRENT PERFORMANCE INDICATORS

Hong Kong is the fourth busiest international airport in the world and is home to three international airlines (Cathay Pacific, Dragonair and Air Hong Kong).

• In 1994, the aviation industry generated 1.5% of Hong Kong's Gross Domestic Product and employed some 21 000 people.

• An increase of 4.8% in aircraft movements was recorded in 1995, bringing the annual total to 150 118, of which 79% involved wide-bodied aircraft.

• Over 1.45 million tonnes of cargo, valued at $563.8 billion, were handled in 1995, an increase of 12.4% compared to 1.29 million tonnes, valued at $447.6 billion, in 1994.

• A total of 27.4 million passengers passed through the terminal in 1995, an increase of 8.7% over the 25.2 million in the previous year.

• A total of 60 scheduled airlines served Hong Kong in 1995. Together, they operated 1 370 direct round trip services weekly between Hong Kong and over 100 cities. In addition, an average of 230 non-scheduled flights were operated by the airlines each week.

THE GOVERNMENT'S COMMITMENT

The government is committed to :

• ensuring that Hong Kong's airport and aviation services continue to match the growth in demand; and

• maintaining Hong Kong's position as a major international and regional aviation centre.

The Hong Kong International Airport at Kai Tak is operating over its design capacity. To satisfy the estimated growth in demand, a new and expanded airport is urgently needed. Rapid progress has been made on the new airport project at Chek Lap Kok. Site formation has been completed and the construction of the superstructure is underway. The franchise award process for three out of five major airport support services has been completed and the remaining two are at an advanced stage. We are confident that the new airport will be ready on schedule in April 1998 and within budget.

POLICY DIRECTIONS

We propose to :

• continue making further improvements to service standards and facilities at the Hong Kong International Airport, such as increasing the runway capacity and enlarging the Arrivals Greeting Hall, so as to maximise the existing capacity before the completion of the new airport;

• ensure that the new airport at Chek Lap Kok is built and operated to international standards and managed on the basis of prudent commercial principles, and that all major airport support services such as cargo handling, aircraft maintenance and catering are provided efficiently and at competitive prices; and

• complete negotiations on air services agreements (ASAs) with all major aviation partners in 1996 so that Hong Kong's ASAs are fully separated from those of the UK. This will provide a stable legal framework for the development of the aviation services sector up to and beyond 1997.

The private sector's enterprise, adaptability and readiness to respond to market demands provide the basic ingredients for the remarkable success of Hong Kong's aviation services industry.

The private sector makes its vital contribution by :

• developing, through recruitment and training, a pool of local airline and aviation services expertise; and

• continuing to invest in research and development so that Hong Kong's aviation services can keep pace with technological advancements in the industry and meet the highest standards of service and technical excellence.

It is essential to Hong Kong's continued prosperity that it maintains its position as a leading international and regional aviation centre. To achieve this, we must ensure that aviation services are delivered at competitive prices and meet international standards. Local service providers must meet the challenge from established competitors in the region. Only by pursuing excellence can the air transport services sector continue to meet the ever-increasing demands of international visitors and the local travelling public.

While the Government will avoid direct intervention in the provision of aviation services, it recognises the importance of providing a sound, transparent and stable legal framework within which the industry can continue to flourish. It also accepts the responsibility of promoting key infrastructural projects to keep pace with the growing needs of the industry.

Secretary for Economic Services

March 1996