TNAG-1175-FCO40-1477-Proposed-replacement-airport-for-Hong-Kong-at-Deep-Bay-or-Ch-1982 — Page 150

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When I was in Hong Kong last week, Mr March arranged a programme of visits for me which enabled me to discuss the prospects for a new airport to replace the present one at Kai Tak with Mr Alan Scott, the new Secretary for Transport, Mr Brain Keep, Director of Civil Aviation, and Mr Ron Hodges, senior local partner of Mott, Hay and Anderson. Mr March has also noted the significant points that arose from our meeting with Mr Jeaffreson the Economic Secretary and Lord Limerick's meeting with the Governor. In this minute I will try to draw together the various themes that emerged.

There are as many opinions in Hong Kong on the new airport as people with whom one discusses it and there are an unusually wide range of options still open for a project that has advanced as far as it has down a single path. The situation is still very fluid. My own view is that a new airport is more likely than not to be built in something like the timescale envisaged, and that if it is, it is more likely than not to be at Chep Lap Kok off Lantau Island than elsewhere, but both decisions are far from certain. They will await the new Governor, and they appear to require at least the tacit consent of the Chinese. This latter point affects both the siting of the airport (the alternative site at Deep Bay necessitates flying over Chinese airspace) and whether it is built at all (it is conceivable but unlikely that the Chinese will wish to build their own airport to service the special economic zone at Shum Chun).

As Mr March's attached note indicates, Schroders have been chosen (but not yet appointed) financial advisers and one part of their remit will be to see whether and how the new airport can be financed with the 1997 date in mind. This may mean no more than a consideration of how the private sector can be persuaded to invest to produce a return in this timescale. 7 He hinted that an attractive financial offer from HMG could

lead to the prospect of a negotiated contract, but this would depend on the alternatives produced by the consultants. He claimed that IMG had made an interest free loan to the HKG in the 1950's to finance the construction of Kai Tak (but this may have been for defence reasons which no longer apply) and said that wider considerations such as the diminished value of air traffic rights once Kai Tak was saturated (sometime between 1987 and 1995) should also not be overlooked.

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