3

(c) HMG's commitments on user charges embodied in air

services agreements and, in particular, in the UK/USA

Air Services Agreement.

3.3

Clearly it would be embarrassing to HMG if HKG took action

on user charges which resulted in pressure by airlines on

their Governments who then felt obliged to approach HMG

directly or through ICAO. Concern over this possibility is

no doubt the reason for a HMG's request that it be advised

of HKG's proposed course of action as regards future

charging policies.

3.4

Examination of the documents at Appendix 1 led the WG to the

following main conclusions:

(a) the surplus generated at HKIA should be limited to a

"reasonable" one;

(b)

it is permissible to extract a "community dividend"

since the community in relation to HKIA is in the same

position as the equity shareholders in a public

company;

(c)

the amount of dividend to be extracted will be limited

by the level of "reasonable" surplus which may be

generated ((a) above) and by the need to retain funds

in the accounts to finance capital expenditure on HKIA.

Consideration of Alternative Medium

Term Charging Policy

4.

Options

4.1 Determination of a Reasonable Future Rate of Return

4.1.

1 The principal consideration in developing charging

policy options is the determination of what is a

"reasonable" rate of return. The level or rate of

"community dividend" available for extraction will

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