The Airport Authority recorded profits of $1.4 billion for the 2004-05 financial year - up 265% on the previous year.

Its fifth consecutive profitable year saw a record turnover of $6.5 billion, up 29% year-on-year. Operating costs before depreciation rose 4%, to $2.8 billion. Return on net assets reached 4%, up from last year's 1%, a level in line with similar local infrastructure companies.

The authority's board has declared it will pay a $1 billion dividend to the Government. The financial results, detailed in the authority's 2004-05 annual report, were tabled at the Legislative Council today.

Outstanding performance

"The authority's outstanding financial performance was mainly driven by the records made in all categories of air traffic," its Chief Executive Officer Dr David Pang said.

He added the substantial increase in net profit was also attributable to a large proportion of expenses being fixed costs, with the majority of the incremental additional revenue contributing to the bottom line.

The airport attained all-time high records in passenger and cargo throughput, and in aircraft movements in the year. About 38.3 million passengers and 3.1 million tonnes of cargo passed through the airport, increases of 38% and 15% over the same period a year earlier.

Aircraft takeoffs and landings climbed 27%, to a record 242,000 movements.

Growth triggers surge in demand

"In the past year, Hong Kong International Airport faced immense competition in the aviation business in the region," Dr Pang said.

"However, the strong economic growth in the Pearl River Delta and the Mainland has created huge demand for air traffic and was the major driving force in the surge in traffic."

He said the Government's progressive policy in liberalising air services, allowing airlines to offer competitive airfares, also contributed to the increase.