CONFCENTIAL
XCC(92)57
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Revenues from Real Estate Development - subject to the agreement of the Land Commission, the whole of the 1248 hectare airport island will be granted at "nominal premium" to the AA. Approximately 100 hectares of the site will be developed for airport-related uses, primarily for cargo village (commercial developments for air freight forwarders and related business), hotels and offices. The AA will dispose of some of these sites before the completion of the airport in return for up-front premium payments. The approximately $1.3 billion of revenues (in March 1991 prices) expected from this source before completion assists significantly in reducing the level of Government equity required to fund the project. In the longer term, revenues from real estate play only a minor role in the financial plan. If these pre-completion revenues were not available, e.g. if the Land Commission were not to approve the nominal premium arrangement, a higher paid-up equity provision would be required from Government.
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Having analysed cashflows on the basis of anticipated costs and revenues, it became clear that, in order to achieve an optimal financing stragety, the following two measures would be needed to improve the viability of the projects -
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a)
b)
introduction of a passenger terminal charge (PTC);
deferral of charges due to Government for the provision of air traffic control and meteorological services.
Passenger Terminal Charge - in the "expected" case it will be necessary for the AA to levy a PTC of at least $50 per passenger. Depending on the circumstances, the AA may need to increase this charge up to $100 on the opening of the airport.
Payments for Air Traffic Control and Meteorological Facilities
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The AA will be required to reimburse to the Government the full cost of air traffic control and meteorological services which the Government will continue to provide. However, it will be necessary to allow the AA to defer payment of these charges.