Airport Privatization
We agree that the IPO may be the simplest and easiest way to divest AAHK, however, we do have concerns on the plan with respects to several aspects such as loss of control, social vs private interest, expensive cost of capital, and the most key question on whether the near future is a right timing for achieving an optimal valuation of this precious asset? Airport regulation is another main concern of this paper. Different types of framework (Rate of Return (ROR), price-cap, and other common ways) to regulate the charges are being discussed in the paper, |
along with two common approaches, single-till and dual-till, that airport regulator has to decide whether the commercial activities of the airport should be included in the consideration of setting the charges. We propose the incorporation of another three performance measures, i.e. service quality, productivity and cost into the regulatory framework.
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In February 2004, the Government commenced the plan to partially privatize the Hong Kong International Airport (HKIA) through an initial public offering (IPO) of its operator, the Airport Authority Hong Kong (AAHK) in the near future. Given HKIA is the most important public utility to the local aviation and related sectors, and to the local economy, it does deserve for our in-depth study.
In our view, an ultimate “high quality of service, high productivity and low cost” framework would benefit not only to the airport itself by raising its competitiveness in facing the challenges posted by the neighboring rivals, but also to its users and the general public by continuing its world-class quality of operations and attaining its well-managed reputation in the world.
