It was a landmark year for Hong Kong's civil aviation industry. The Hong Kong International Airport (HKIA) at Kai Tak was formally closed when the runway lights were switched off at 1.16 a.m. on July 6, 73 years after the first recorded flight in 1925. Commercial air services at the new HKIA at Chek Lap Kok began a few hours later, with the first landing at 6.27 a.m.

          Hong Kong is a major international and regional aviation centre as well as a gateway to the Mainland of China. Air transport is an important link between Hong Kong and the rest of the world. The HKIA is one of the world's busiest. In 1998, a total of 27.4 million passengers (excluding 1.4 million in transit) passed through the old and new airports at Kai Tak and Chek Lap Kok. This was 3 per cent less than the 28.3 million in 1997 as a result of the decline in demand for air travel. A total of 1.64 million tonnes of cargo, valued at $597 billion, were handled, representing a decrease of 8.4 per cent and 8.8 per cent, respectively, when compared with 1.79 million tonnes and $654.9 billion in 1997. Goods carried by air accounted for about 24 per cent, 31 per cent and 17 per cent, in value terms, of Hong Kong's total imports, exports and re-exports respectively. The USA remained the major market for exports and re-exports by air, accounting for 34 per cent and 25 per cent respectively.

          Compared with 1997, a decrease of 1.1 per cent in aircraft movements was recorded in 1998, bringing the annual total to 163 297, of which wide-bodied aircraft formed 81 per cent.

The new HKIA at Chek Lap Kok is on a 1 248 hectare site on the northern side of Lantau Island and 28 kilometres west of Kai Tak. As part of the Airport Core Programme (ACP), a transport network comprising the Lantau Link and the Airport Express Railway provides convenient links between the new airport and the urban areas.

          The estimated cost for the first phase of the new airport was $70.3 billion. This comprised $49.8 billion for works of the Airport Authority, $5.1 billion for government facilities and $15.4 billion for facilities of franchisees from the private sector.

          The new airport has much better facilities than Kai Tak. Initially with one runway, the first phase of the new airport development is expected to be able to handle 35 million passengers and 3 million tonnes of air cargo a year. A second runway costing $4.3 billion for Airport Authority works and $600 million for government facilities is due to come into operation in around mid-August 1999. The New Airport Master Plan forecasts that with incremental addition of other facilities such as passenger terminals and aircraft gates in response to demand, the new airport will be able to handle 87 million passengers and 9 million tonnes of air cargo each year upon full development. The new airport will contribute significantly to Hong Kong's economic growth well into the next century.

          The new airport is managed by the Airport Authority. It is a statutory body established to provide, operate, maintain and develop the new HKIA. Certain key services continue to be provided by government, including air traffic control and aviation meteorological services. The Fire Services Department also helps to staff the aircraft rescue and fire-fighting units in the airfield. The Civil Aviation Department retains regulatory functions relating to aerodrome and aircraft safety.

          The relocation of the HKIA to Chek Lap Kok was conducted in five phases between May 6 and August 5, involving more than 3 000 vehicles and 30 barge movements. These included trucks, container lorries and special transport vehicles, as well as re-positioning of general purpose and specialised vehicles. In addition, 29 aircraft flew from Kai Tak to the new airport during the overnight changeover period on July 5, 1998.

          President Jiang Zemin officiated at the opening ceremony on July 2. Commercial air services at the new airport started on July 6. Despite problems encountered during initial operation, the new airport's service standards improved considerably in the following few weeks. It was quickly comparable with, and in some aspects even better than, Kai Tak. By December 1998, over 76 per cent of the departure flights were leaving on time or within 15 minutes of schedule, and virtually all the rest could leave within 60 minutes. On average, a flight's first bag reached the baggage reclaim hall in 13 minutes.

          In response to the problems in the operations of the new HKIA including air cargo handling shortly after the July opening, the government worked with parties concerned to put in place contingency arrangements to enable airlines and the cargo industry to handle as much air cargo as possible. For example, special arrangements were made to enable the old facilities at Kai Tak to be used and to facilitate airlines to operate temporary air cargo services at the Shenzhen Huangtian Airport and Macau International Airport.

The changeover of air traffic control (ATC) operations from Kai Tak to the new HKIA on the night of July 5, 1998, was carried out smoothly. Since then, all ATC equipment has been functioning normally and the new ATC Complex has maintained its high standards.

          The Civil Aviation Department has continued to maintain close liaison with the civil aviation authorities of the Mainland and Macau, particularly in the development of flight procedures and air traffic control co-ordination arrangements for airports in the Pearl River Delta area. After a series of meetings, two agreements on the detailed ATC operational procedures were concluded and five existing ones were revised. They formed a solid basis for the safe and efficient ATC services for the airports in the Pearl River Delta area, including the new HKIA.

The three international airlines based in the HKSAR faced difficulties in 1998, largely because of the economic downturn in Asia which affected the demand for air services in the region.

          Cathay Pacific Airways (CPA) improved the efficiency of its fleet by retiring three of its B747-200 'Classic' aircraft and replacing them with 10 new Airbus A330-300, A330-200, A340-300 and Boeing B777-300 aircraft. Facing a decline in yields and load factors on regional routes to the Southeast Asia and Japan, CPA concentrated its expansion of services on its key long-haul routes to London, Los Angeles and Sydney. The airline commenced twice-weekly flights to Istanbul in August and resumed serving San Francisco with a daily non-stop service in December. During the year, CPA became the first airline in the world to operate the B777-300, the world's longest commercial airliner.

          Hong Kong Dragon Airlines' (Dragonair) services to the Mainland were less affected by the Asian economic downturn. Dragonair began scheduled passenger services to Fuzhou in February 1998. With this addition, the airline now operates scheduled services to 12 cities in the Mainland and eight other destinations in Asia, together with non-scheduled passenger services to other cities in the region, mostly in the Mainland. In addition, Dragonair continued to participate in the joint services between Bandar Seri Begawan and the HKSAR operated by Royal Brunei Airlines.

          Air Hong Kong (AHK) continued to operate scheduled all-cargo services to Manchester, Brussels, Dubai and Osaka.

          Owing to the decline in demand for air travel, Grand International Airways, Air Niugini and Varig Brazilian Airlines suspended their scheduled services to the HKSAR in February, May and September 1998, respectively. As a result, the number of scheduled airlines serving the HKSAR decreased to 62. At the end of 1998, these airlines together operated about 1 500 direct round-trip services weekly between the HKSAR and some 100 other cities. An average of 200 non-scheduled flights operated each week.

        At the end of 1998, the fleets of the three Hong Kong-based airlines were as follows:

          In 1998, the Air Transport Licensing Authority granted seven licenses to HKSAR airlines: two to CPA and five to Dragonair. At the end of the year, CPA held licenses to operate scheduled services to 77 cities, Dragonair to 79 cities and AHK to 35 cities.

In connection with the relocation of HKIA, the Hong Kong Aircraft Engineering Company Limited (HAECO) transferred all its aircraft-maintenance facilities to the new airport at Chek Lap Kok, and all its component maintenance to Tseung Kwan O. Approval was granted to two new aircraft line maintenance organisations, the China Aircraft Services Limited (CASL) and Pan Asia Pacific Aviation Services Limited (PAPAS). However, HAECO remained the only base maintenance organisation approved in Hong Kong. The Hong Kong Aero Engine Services Limited (HAESL) combined all engine overhaul facilities under one roof in Tseung Kwan O.

The Aviation Security Ordinance provides comprehensive local legislation to implement aviation security-related conventions and agreements promulgated by the International Civil Aviation Organisation. In June 1998, the Aviation Security Regulation was brought into effect to enable the enforcement of access control into the Restricted Area of the new HKIA at Chek Lap Kok. Meanwhile, the Aviation Security Programme developed by the government, in consultation with the airport operators, airlines and other concerned parties, has laid down the aviation security requirements for different operators at the airport. These form the basis for implementing effective aviation security measures in Hong Kong. They establish a clear framework for maintaining Hong Kong's aviation security practices at the highest international standards.