CONFIDENTIAL
Meeting C.E. Jones of Civil Aviation Department, H.K.G.
and
Representatives of U.K. Department of Transport,
11.00 a.. 14th August, 1984
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Purpose of Meeting
The purpose of the meeting was to discuss the matter of constraints upon B.K.C. aviation charging policies imposed by international treaties/ICAO statements etc. HMG Department of Transport was represented by Mr. F. Boonham of Civil Aviation Policy Directorate and two assistants both of whom appeared to be economists.
Summary of Discussion
Previous Advice
2.
I opened by a point-by-point confirmation of the substance of their initial advice which was as followз:-
1 a
a
(b)
It is necessary to show that the revenue and thus the charges are consistent with HG policy and .. defensible in terms of the ICAO Council Statement on Airport Charges and Bermuda 2.:
If the Hong Kong Government have reason to believe the surplus is unreasonable, a reassessment of the full economic costs should be made to determine the level of charges necessary to meet either the marginal costs of the present airport or the long run marginal costs of the new airport,
(c) Assuming that the charge levels are justifiable in
teras of the long run marginal costs of a replacement airport and Hong Kong is committed to a policy of providing facilities to meet long tem demand i.e. provision of/replacement airport, G favour 23 a tensorary arrangement freezing charges in real terms* --i,e.increasing changes in line with inflation. This
Jan however only be a temporary policy pending a decision in the medium term one way or the other on a replacement port. A negative decision would require reduction in charges to levels necessary to cover the marginal costs of the existing airport. A positive decision would enable real increases in charges to be pursued to levels necessary to meet
a replicarent imort,
(1)
(=)
Would
The 200umulated wmplus duni a specific say Airport Development Reserve.
20
There is no question of declaring that charges breach ICAO Statements. Charges must be brought into line with either the marginal costs of the existing Airport or the replacement airport assuming that a commitment to proceed with the project is made in the medium term.
EMG does not actually say "real terms" but the addition of these rds would make more sense in the context of their other add
atharadriae. However, see para 7 below.
CONFIDENTIAL