be interested in some form of

possible that China might cooperation in respect of an overflow airport in Shenzhen. A decision to go ahead with it could well be based in part on an expectation of taking some traffic from Kai Tak, once the latter became saturated or of enticing some traffic even before that situation was reached. It might therefore be possible to divert traffic less significant to Hong Kong (e.g. between Hong Kong and secondary China cities but not Peking, Shanghai or Guangzhou) so as to provide some relief for Kai Tak.

22

23

(a)

(b)

The main advantages are

expenditure by Hong Kong would be less

less than building a replacement airport in Hong Kong;

the finite capacity of Kai Tak would be reached at a later date and the time when it would become necessary to introduce drastic demand

management measures could be deferred; and

(c) the central location of

of Kai Tak would be preserved.

On the other hand, the disadvantages associated with the retention of Kai Tak, as set out in paragraph 4, would remain to various degrees.

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In addition, disadvantages including

there are also other possible

(a) the travel time between Hong Kong and the

airport;

(b)

(c)

possible problems related to customs, immigration and other documentation controls at the border. In addition, travellers to and from China would need to go through not only customs and immigration procedures respect of the China/Hong Kong border but also in respect of the Shenzhen SEZ/rest of China border; and

in

the eventual possibility that the airport would be developed to such a point that it became not just a supplementary airport but, in effect, a separate airport in its own right, capable of atttracting a substantial proportion of valuable

valuable traffic which might have otherwise accrued to Hong Kong.

CONFIDENTIAL

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