CONFCENTA
XCC(92)57
* Finance Committee was shown a figure of $43.6 billion which represented the net funding requirement for the project derived by subtracting $1.2 billion of real estate revenues expected prior to airport opening from the capital cost of $44.8 billion.
The cost increase reflects the outcome of the considerable refinements in design and cost estimates possible now that the airport Master Plan is complete. In July 1991, fundamental planning and engineering decisions had yet to be taken. These costs also reflect the PAA's business strategy of privatising all major support facilities at the airport (e.g. the air cargo, aircraft maintenance, aircraft fuelling and aircraft catering facilities) but of developing and owning all other facilities itself. They also reflect Government's decision to retain responsibility for a range of functions at the airport (e.g. air traffic control, air mail centre, police and general fire service facilities). Of the currently estimated $46.3 billion total capital cost of the airport, therefore, only $33.7 billion will need to be funded by the AA itself.
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All of these costs are subject to ongoing refinement. The AA's costs include a 17.5% project contingency element. The estimate for tenant support facilities is very approximate; the costs will ultimately depend on the commercial judgement of investors in these facilities. A review of the estimated costs for Government facilities is expected to be completed by the end of March. There are indications that the figure of $3.1 billion may need to be revised upwards.
Traffic Forecasts and Revenues
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Traffic Forecasts - The majority of AA revenues are related directly to the level of air traffic forecasts. These have been generated by the PAA's Master Plan consultants on a relatively conservative basis. Between 1980 and 1990, the number of passengers using Kai Tak increased at an annual growth rate of about 12% from around 8 million to nearly 20 million. The Master Plan consultants have forecast an average growth rate of 4.4% between 1997 and 2010, dropping to 2.3% between 2010 and 2040.
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Aeronautical Charges - these are charges made on airlines for using the airport; the main charges are for landing and parking. It has been assumed that, on the target opening date of the new airport, the level of these charges will have been set at three times the level, in real terms,
Executive Council