Hong Kong's Airport Authority has earmarked HK$12 billion for an expansion plan aimed at ensuring it can cope with expected air traffic growth by 2020 after posting a record annual net profit and paying the government a handsome dividend.

The Hong Kong government, the airport's sole shareholder, will pocket HK$4.5 billion in dividends, including an unprecedented special dividend totalling HK$2.2 billion, outstripping the airport's HK$2.84 billion net profit in the year to March. The special dividend comprises retained profit at the airport.

Starting from the fiscal year 2003/2004, the government has received HK$13 billion in dividends and HK$6.0 billion in capital repayments from the airport, recouping half of its investment.

The airport's earnings rose nearly 10 per cent due to expanded retail spaces in terminal one, offsetting the negative effect of reduced air traffic and a relief programme for airlines in which fees were cut 10 per cent. Sales at the airport increased 1.5 per cent to HK$ 9.0 billion despite a 1.7 per cent fall in passenger number and a 5.4 per cent fall in aircraft movements.

Stanley Hui Hon-chung, chief executive of Airport Authority, said yesterday that he had seen robust growth in both passenger and cargo traffic in the first five months and believed that the growth would continue into the second half. He predicted that passenger volume would exceed the pre-recession level to reach 50 million passengers for the year, up from 46.9 million last year.

The airport, which ranks 13 in the world in terms of total passenger numbers, has been studying a plan to construct a passenger concourse and aircraft stands in the midfield, the only large-scale undeveloped area on the airport island.

This would enable it to handle the 70 million passengers and 6 million tonnes of cargo expected to flow through the airport annually by 2020.

Some 20 parking stands will be built by 2015 when the maximum capacity of the two runways will be lifted up to 68 aircraft per hour from 59 at present, followed by 10 additional stands by 2020. Cost for the expansion in mid-field amounts to about HK$ 9 billion, including a railway to connect it to the main terminal.

The capital expenditure would be funded by bond issuance, Hui said, adding that any plans to list the airport were a government matter.

The third runway in Chek Lap Kok was still under review. The result would be released by the year end, followed by a public consultation.

Hong Kong flag carrier Cathay Pacific Airways (SEHK: 0293) has been urging the construction of a third runway at the airport. Hong Kong had lost 7 per cent of total passenger numbers to direct flights across the strait, Hui said. The shortfall, however, had been offset by the rise in passenger traffic on other routes.

Sourc: SCMP, 1 July 2010