CONFIDENTIAL
theoretical loss of potential revenue to the HKG/SARG:
(a) the land grant for the whole of the airport platform will be at nominal premium. The AA with thus be able to recuperate some of the HK$10 bln cost of froming the site by selling land for such functions as cargo village, hotels and offices:
(b) if the airport is not completed by 30 June 1997, the AA will enjoy the surplus from Kai Tak`s operations (which at present goes to HKG, which operates the airport: the AA will take over operating Kai Tak nearer to 1997 but only to gain operational experience):
(c) the passenger terminal charge (going to the AA) could be increased from HK $50, with a corresponding reduction in the departure tax (going to the SARG):
(d) if, on opening, the AA is prevented from imposing aeronautical charges at the level proposed or from imposing an increased passenger terminal charge, the Government will make good any shortfall in debt service payments which results:
(e) if the airport is not completed by 30 June 1997 and the Kai Tak surplus and passenger terminal charge are insufficient to service the AA's debt, HKG will make up the difference:
(f) the MTRC will receive a block grant of land (albeit at market value) for the railway itself and for commercial developments above stations, in joint ventures with the private sector:
(g) the MTRC will not pay HKG dividends until 2001:
(h) HKG will pay the MTRC up to a maximum of HK $ 1.5 billion to make up for lost revenue if the airport does not come into operation for a period after 30 June 1997.
Hong Kong Department
10 June 1992.
CONFIDENTIAL