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Press Release No.: 11

Date: 15 April 2005

Right Decisions on Air Transport Will Benefit Hong Kong's Economy

(Hong Kong) "Global losses of over US$36 billion between 2001 and 2004 make industry change critical," said Giovanni Bisignani, Director General and CEO of the International Air Transport Association (IATA) at the Aerospace Forum Asia. "The extraordinarily high price of fuel will keep the industry in the red again in 2005 with another US$5.5 billion in losses."

"Airlines have done a great job of cutting costs and driving efficiencies throughout their operations. We see non-fuel unit costs dropping 2 to 3% each year. Simplifying the Business—driving down costs and enhancing passenger service—will add an industry-wide dimension to these efforts," said Bisignani. '

IATA's Simplifying the Business initiative focuses on using technology to make air travel less costly, more efficient and a better experience for the traveller. "100% e-ticketing globally by the end of 2007 is at the forefront of this revolution in travel and will save the industry at least US$3 billion annually. Bar coded boarding passes, common use of self-service kiosks for check-in, radio frequency identification (RFID) for baggage management and paperless cargo are all part of the airline vision for a low cost industry," said Bisignani.

While Asia is leading the industry in profitability, the high and volatile cost of fuel is a reminder that efficiency gains across the industry are essential. Bisignani called on Hong Kong to do its part to support industry efforts to return to profitability in two critical key areas: correct privatisation of the Hong Kong International Airport Authority and eliminating inefficient use of airspace in the Pearl River Delta.

Airport Privatisation

"Quite frankly, I do not care who owns the airport. It is the cost and the service levels that matter. Hong Kong's airport is a catalyst for overall economic development. It is important that the privatisation benefits all stakeholders: the people of Hong Kong, the government and the airport customers—travellers, shippers and airlines," said Bisignani.

"I am disturbed by the arguments that charges at the airport will need to rise. Already Hong Kong has the highest charges to airlines in this region next to Japan and the mainland of China. Any increase in charges will disadvantage Hong Kong compared to its neighbouring airports which are hungry for your business. A successful privatisation should generate efficiencies to allow for reduced costs," said  Bisignani.

Let's also remember that the airport is already profitable. It made a HK$520 million profit in FY 2002-2003. This is impressive for a new facility during a period that featured an economic downturn and  SARS," said Bisignani.

In 2004-2005 it is expected that the airport will turn a profit of HK$1 billion or a 4% return. "With expected growth of 5 - 6%, the potential contribution to Hong Kong's economy is enormous. Don't jeopardise this with short-sighted profiteering for an IPO. Transparency, efficiency, and benefits to all stakeholders are the guiding principles. And a strong independent regulator is needed to ensure that the airport monopoly does not have a licence to print money at the expense of the community that built it," said Bisignani.

Pearl River Delta

"At a time when airlines are struggling to keep costs under control, inefficient airspace management in the Pear River Delta region is costing the industry over US$400 million each year. This unnecessary cost to airlines and the environment is not acceptable. IATA is working closely with all parties in the region to rationalize the situation. And I call on all authorities concerned to come to a quick solution," said Bisignani.

"Hong Kong is well-known for its efficiency. It has invested in great airport infrastructure. Now it is time to capitalise on this investment by leading the industry in Simplifying the Business, effective airport privatisation and airspace management. The result will be a competitive air transport sector that contributes significantly to the economy," said Bisignani.

Notes for Editors:

Corporate Communications
Tel:  +41 22 770 29 67
Fax: +41 22 770 26 41
E-Mail: corpcomms@iata.org

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