Mrs J C Cotton Room S7/13
Department of Transport
2 Marsham Street
London SW1
Den Love,
Telephone: 01-233 8713
Room WH 222
Foreign and Commonwealth Office
London SW1A 2AH
7 October 1986
Наяван
RECEIVED IP
3 1 OCT 1986
INDEX
PA
MEGKTRY
Action Taken
AIRPORT USER CHARGES : HONG KONG
1. Thank you for your letter of 26 September, which arrived when I was abroad and from whence I have only recently returned. Unfortunately I did not receive a copy of Heady's letter of 3 September, and this has further delayed my consideration of your draft reply.
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2. The only comment I have though "only" might be an understatement concerns Hong Kong's idea of a "community dividend". Not only would I agree that it would be difficult to justify taking all the existing cash surplus as a accumulated community dividend, but I would question also whether we could justify a community dividend in future years.
3*
You say this would be consistent with our privatisation policy. I think one has to draw a distinction between the dividends which a privatised BAA will pay its shareholders and what Hong Kong are proposing. Although the Hong Kong airport is now apparently making a profit, its status is, as I understand it, quite different to that of a privatised BAA. Hong Kong Airport is run directly by the Hong Kong Government in the same way as airports used to be run by the British Government. We can justify the privatisation of the BAA, and payment of dividends to its shareholders, on the basis that BAA plc will be more efficient, and therefore payment of dividends to shareholders will not result in airlines paying more in charges.
In contrast, the community dividend proposed by Hong Kong would seem to amount to a straight milking by the Hong Kong
4.
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