Key Decisions will Benefit Hong Kong

18th Apr 2005

“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 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.

“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.

“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.


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