The opening of China and the growth of intra-regional trade in the Asia-Pacific region has transformed Hong Kong into an international entreport. The physical transportation infrastructure is being stretched to capacity limits by the growth in the ...
volume of merchandise shipped through Hong Kong. The problem is most acute in air shipping services.
This study shows that capacity limits is not the only factor hampering the ability of Hong Kong entrepreneurs to respond to new economic opportunities. It argues that the award of a monopoly franchise in air cargo terminal services and regulatory restrictions imposed by air service agreements severely limits competition. This results in higher prices on air cargo services and less choice for the customers. The study recommends sweeping changes to pave the way for Hong Kong to develop into an Asian air cargo hub before her competitors in the region succeeds.
It cites the successful examples of Singapore's Changi Airport and urges the Provisional Airport Authority to: (1) award licenses to two or more independent terminal operators in the new airport, (2) select at least one company to operate a terminal that offers a separate dedicated area for express cargo, (3) allow terminal operators complete freedom in pricing and encourage competition to eliminate the need for regulation of prices or profits, and (4) charge each operator an annual franchise fee proportional to its use of airport land and choose operators on the strength of their proposals.
The study recommends that to demonstrate Hong Kong's commitment to becoming a viable hub candidate in the region at a time when Hong Kong would be plagued by capacity constraints it should remove all-cargo flights from the unwieldy bilateral air service negotiations. Hong Kong should:
(1) unilaterally offer fifth freedom rights for a limited number of all-cargo flights between Hong Kong and other major Asian destinations, (2) provide unrestricted access for all-cargo flights serving Chek Lap Kok, and (3) authorize a second local carrier to provide all-cargo services to important destinations where permitted by bilateral treaties.
Number of pages: 91
Date of publication: 01/01/1993
Edition First edition
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