ENG-2002 — Page 324

TRANSPORT

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The Government and the AA will continue to work closely with the airlines and the airport community to further strengthen Hong Kong's position as an international and regional aviation centre.

Air Services

In 2002, the Air Transport Licensing Authority granted five licences: two to Hong Kong Dragon Airlines (HDA), one to AHK Air Hong Kong (AHK) and two to Helicopters Hong Kong Limited (HHK). At year-end, Cathay Pacific Airways (CPA) held 10 licences to operate scheduled services to 130 destinations, HDA held 12 licences to operate scheduled services to 106 destinations, AHK held seven licences to operate scheduled services to 52 destinations, and HHK held two licences to operate scheduled services to two destinations.

There was a temporary decrease in air services demand for both passengers and cargo after the terrorist attacks in the United States on September 11, 2001. The market, however, quickly recovered towards the middle of 2002. In order to cope with the increasing demand, CPA progressively increased the frequency of its scheduled passenger services, starting in June, to a number of destinations including Manila, Jakarta, Bangkok, Kuala Lumpur, Los Angeles and Vancouver. In August, CPA launched its new scheduled all-cargo services to Milan. These increases have brought the frequency of services provided by the airline back to pre-September 11 incident levels. To cope with the increases in services, all five passenger aircraft and one freighter which were temporarily parked due to service reduction after the September 11 incident resumed service in August. In November, CPA took delivery of the first of three long-range Airbus 340-600 aircraft.

In addition to the above, CPA took over AHK's operation of freighter services to Dubai, Brussels and Manchester in July as part of the restructuring of the operations of the two airlines. At the same time, two of the three Boeing B747-200 freighters that were previously leased by CPA to AHK were returned to the former. At year-end, CPA operated scheduled services to 47 destinations world-wide.

HDA's services continued to develop during the year. The airline took delivery of two new aircraft in March, which enabled the airline to increase the frequency of its services to 14 cities in the Mainland, in particular those to Shanghai (from 48 to 56 times a week) and Beijing (from 37 to 42 times a week). In June, Dragonair took delivery of a third new aircraft and commenced scheduled passenger and all-cargo services to Taipei in July. At year-end, HDA operated scheduled services to a total of 31 destinations, including 18 cities in the Mainland.

AHK continued to operate scheduled all-cargo services to Dubai, Brussels, Manchester, Osaka and Seoul until July when, as part of the restructuring of its operations together with those of CPA, the airline stopped serving Dubai, Brussels and Manchester and focused on developing its network in Asia. In the same month, the airline commenced scheduled all-cargo services to Tokyo using a wet-leased Airbus A300 freighter.

AHK was previously a wholly-owned subsidiary of CPA. In October CPA and DHL Worldwide Express (DHL) concluded an agreement under which DHL acquired a 30 per cent stake in AHK from CPA.