A railway line linking Hong Kong and Shenzhen airports came one step closer to reality yesterday with the opening of the Lok Ma Chau spur line, which by 2010 will extend to Shenzhen Baoan International Airport.
KCRC chairman Michael Tien Puk-sun was so optimistic about the future of the HK$10 billion rail link he made a rare prediction at the extension's opening ceremony yesterday that the spur line would break even, and perhaps even slightly exceed, its operational costs in its first year.
His forecast, which an academic questioned as overly optimistic, took into account not only the shopping facilities around Futian and Shenzhen West, but also a Shenzhen Metro project that will expand its Line 1 into the Baoan district and to Shenzhen airport by 2010.
Shenzhen Metro is the only railway connection to the new spur line and a major transport option that links the Lok Ma Chau checkpoint with other mainland cities.
Jian Lian, vice-president of Shenzhen Metro Co Ltd, told Kowloon-Canton Railway Corporation board members that the Baoan station at Si Xiang would be completed by late 2009, while the extension to Shenzhen airport would be finished one year later.
A joint forum held by the Hong Kong and Shenzhen governments on Monday touched on a proposal by the Bauhinia Foundation to build a high-speed rail link between the cities' airports.
But KCRC board member Ng Leung-sing said another option was to build an extension across from West Rail to Hong Kong International Airport at Chek Lap Kok. West Rail will be connected to the Shenzhen airport after completion of this planned Northern Link, which will link West Rail to the spur line.
Mr Tien said the route was feasible but stressed that it remained a concept at this stage and it required much discussion by the two governments. He expected, however, that the KCRC would see a daily average of 60,000 commuters on the spur line during its first year of operation.
"Lo Wu is getting old, Futian will soon replace it to become the new shopping haven for Hong Kong consumers," he said.
Also the chairman of fashion chain G-2000, Mr Tien has opened a new branch of his stores in Futian.
At yesterday's opening ceremony, Mr Tien said the KCRC projected an income of HK$450 million from the spur line after its first year of operation, including fares and commercial revenue.
"[The spur line] would be a rare rail project in that during the first year of operation we are actually expecting slightly better than break-even, including depreciation; so obviously, cash flow-wise, we are very positive."
His prediction was based on the estimate that one third of the 60,000 daily commuters would be new passengers who did not come from Lo Wu and who were expected to generate a fare revenue of HK$150 million in the first year. This figure alone would be able to cover the HK$100 million projected annual expenses, while earnings of HK$300 million a year from railway-related business, including retail and rental, would help to offset the expected annual depreciation of a similar amount.
But Chinese University economist Andy Kwan Cheuk-chiu said Mr Tien might have been too optimistic. "The government has also expected more of the Western Corridor but it turns out car flow fell hugely short of its estimate," he said. "Normally, it takes a rail line at least three to five years to break even, let alone show a surplus ... if I were him, I would be more prudent."