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Press Release No.: 16

Date: 19 May 2003

Airlines Welcome Reduced Airport Charges in China - Action Needed in Hong Kong

(GENEVA) The International Air Transport Association (IATA) welcomes the May 16 Civil Aviation Authority of China (CAAC) announcement of a 20% reduction in landing and air navigation service charges to foreign airlines.

As airlines operating in the Asia Pacific region reduce costs to weather the massive impact that the SARS crisis continues to weigh upon their businesses, the list of airports joining the airlines in cost cutting measures grows.

"The wisdom of the need to reduce costs has been accepted by airports throughout Asia including mainland China. It is now time for the Hong Kong Airport Authority (HKAA) and the Government of Hong Kong (GHK) to respond meaningfully to the aviation crisis in their back yard. Reducing charges at Hong Kong International Airport (HKIA) is a necessary investment to protect Hong Kong's future as a transportation hub. The HKAA and the GHK must act now in the long-term interest of the Hong Kong economy," said IATA Director General and CEO Giovanni Bisignani.

To date, airports in China, Chinese Taipei, Singapore, Malaysia, Macau SAR, Thailand, Indonesia and the Philippines have announced meaningful reductions in airport landing charges. Hong Kong is one of the very few major hubs in Asia yet to provide meaningful relief.

"Without relief in charges, the recovery of the aviation sector will be delayed compared with more progressive hubs like Singapore. The HKAA and the GHK need to get their act together quickly or risk greater than necessary long-term damage as a result of SARS. Airlines are reducing their costs by re-negotiating their contracts with their suppliers. Likewise it is time for the HKAA to re-negotiate its onerous fixed-charge HK$654 million annual contract with the Hong Kong Civil Aviation Department for air navigation services. This is not a time for finger-pointing. Decisive action is needed. The region is full of good examples of what governments and the private sector can do. Hong Kong need not look any further than the CAAC for good guidance," concluded Bisignani.

Notes for Editors

1. Summary of Major International Airport Charge Reductions
a. Mainland China, 20% reduction in landing charges
b. Singapore, 30% rebate in landing charges
c. Chinese Taipei, 15% reduction in landing charges
d. Malaysia, 50% reduction in landing charges
e. Indonesia, 20-25% reduction in landing charges
f. Philippines, 10% reduction in landing charges
g. Macau, 30% reduction in landing charges

2. In April Hong Kong announced a deferral of payment of landing charges for up to 10 months. IATA characterized this as a "placebo for a serious illness." Deferring payment does not constitute relief; it means that industry will be hit by higher costs in the recovery phase.

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