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1.1       The new Hong Kong International Airport at Chek
Lap Kok (CLK) was open to civil aviation on 6 July 1998.
Numerous operational problems emerged on the airport
opening date (AOD).     These operational problems have
attracted widespread public concern over the preparation
work and management of the airport, particularly in its
passenger and cargo operations and services. The Office
of The Ombudsman has also received complaints on the
subject from members of the public.

1.2       The Ombudsman therefore decided to initiate a
direct investigation under section 7(1)(a)(ii) of The
Ombudsman Ordinance into the commissioning and operation
of the new airport at CLK by the Airport Authority (AA)
on 9 July 1998. The AA replied in its letter of 10 July
1998 that the AA welcomed the investigation.          The
Ombudsman made a public announcement of the investigation
on 13 July 1998. During the course of the investigation,
The   Ombudsman  found   it  necessary   to  include  the
Government Secretariat in the direct investigation.    He
informed the Government Secretariat of his intention to
conduct the investigation on 19 November 1998.


1.3       The purpose of the direct investigation is to
investigate the actions of -

    (A)   Airport Authority,

    (B)   Airport Development and Steering Committee
          (ADSCOM), New Airport Projects Co-ordination
          Office (NAPCO) and, where necessary, other
          offices within the Government Secretariat,

in the exercise of their administrative functions, in
relation to the following ambit -

    (a)   Airport Authority -

          (i)     the preparation and commissioning work
                  by the AA for the opening of the new
                  airport, as well as the degree of
                  airport operational readiness (AOR) of

                  the new airport as on the AOD on 6 July

          (ii)    the framework and mechanism established
                  by the AA to achieve its purposes and
                  to discharge its functions, both prior
                  and subsequent to the opening of the
                  new airport, and whether the framework
                  and   mechanism    are   adequate    and
                  effective for their intended purpose;

          (iii)   the nature, extent, causes and results
                  of the various major problems affecting
                  the new airport;

          (iv)    the contingency plans and remedial
                  measures taken/to be taken to tackle
                  the various problems, as well as their
                  efficacy and effectiveness;

    (b)   Government Secretariat -

          (v)     the decision by the ADSCOM on the
                  opening of the new airport on 6 July
                  1998; and

          (vi)    overseeing, steering and monitoring by
                  the ADSCOM, NAPCO and/or any other
                  offices     within     the    Government
                  Secretariat on the overall progress of
                  the new airport project and whether
                  their functions have been adequately
                  and   reasonably   discharged  for   the
                  commissioning of the new airport.


1.4       On 10 July 1998, the Administration announced
an independent team to investigate the operations of the
new airport.    The announcement said the team would be
headed by a leading member of the Hong Kong community and
would include two international experts. On 21 July 1998,
the Administration announced the appointment of a
Commission of Inquiry on the New Airport under the
Commissions of Inquiry Ordinance to inquire into the
operation of the new Hong Kong International Airport
since its opening on 6 July 1998.

1.5       On 29 July 1998, the Legislative Council formed
a Select Committee to inquire into the circumstances
leading to the problems surrounding the commencement of

the operation of the new Hong Kong International Airport
since 6 July 1998 and related issues.


1.6       The Ombudsman did not consider that parallel
investigations by The Ombudsman, the Commission of
Inquiry and the Legislative Council would be tantamount
to overlapping.     In the judicial field, it is the
integrity and independence of judges or magistrates which
keep the courts in business and so it is with The
Ombudsman in the administrative field.    The decision to
conduct this direct investigation was made in accordance
with the provisions of section 7(1)(a)(ii) of The
Ombudsman Ordinance. The Ombudsman was also of the view
that the other two inquiries, although with similar
ambits were conducted with different objectives and
perspectives. His ambit focused on the actions taken by
the organisations concerned in the commissioning of the
new airport as people endeavoured to use their new
facilities and service. This accordingly brought out his
primary function to investigate into any suspected
maladministration which might have risen during the
process.    His investigation is not made with the
intention of denting a career or damaging a reputation.
Accordingly, he considered duty-bound to continue his own
independent investigation in the public interest, despite
parallel investigations. The fact that he was the first
one to declare the investigation was immaterial.

1.7       The direct investigation was conducted at no
extra cost and with existing resources of this Office
which   are   provided  for  investigation   of   alleged
maladministration in the public sector.   Members of the
Panels of Legal Advisors and Engineering Advisors have
also provided expert advice to The Ombudsman throughout
the investigation process. Such advice was tendered on a
honorary basis and The Ombudsman is most grateful to
their contributions.



2.1       Hong Kong has for a long time earned an
enviable reputation of being a very fast developing city.
Its   externally-oriented  economy   depends  greatly   on
modern, efficient and expanding air transport for its
continued and sustained growth.     However, in the late
1980‟s, it became clear that Kai Tak would be unable to
accommodate the forecasts on the upsurges of demands for
its services. This eventually gave rise to an important
decision taken by the Government to introduce the Airport
Core Programme (ACP) to provide for a          replacement
airport at CLK to be located on Lantau Island and other
necessary supporting infrasturcture facilities.    The aim
then was to commission the first runway by early 1997.


2.2       To oversee, direct and co-ordinate such a
massive programme, the very high-powered ADSCOM was set
up by the Hong Kong Government in February 1990.    The
NAPCO, the executive arm of ADSCOM, was set up in the
following year. The Provisional Airport Authority (PAA)
was also established in April 1990 to oversee the
planning, design and construction of the replacement
airport.   Following the signing of the Memorandum of
Understanding Concerning the Construction of the New
Airport in Hong Kong and Related Questions (MOU)between
the Chinese and UK Governments in September 1991, this
body was subsequently turned into a statutory body upon
the enactment of the Airport Authority Ordinance and
renamed the AA in December 1995.


2.3       According to the MOU, the Hong Kong Government
was required to complete the ACP projects, including the
new airport itself, “ to the maximum extent possible by
30 June 1997.”       This requirement was subsequently
confirmed again in a Joint Communique signed by the two
Governments on 30 June 1995.   It was also on that date
that the Hong Kong Government       announced that they,
having considered the progress of the necessary physical
works programmes for the airport and support transport
facilities,   including   the   Airport    Railway (AR),
anticipated that the new airport to be opened in April
1998.   Such an announcement was echoed in a similar
public statement released on the very same day by the


2.4       In the case of the CLK airport project, it was
indeed never envisaged that the new airport would be 100%
completed in all aspects upon opening.      Nevertheless,
the primary objective of the Government, in a nutshell,
was to have the new airport which was safe, smooth and
efficient on its opening, commensurate with the standard
expected of a world class airport which was not only
physically ready, but also equipped with fully trained
staff and adequate supporting facilities.


2.5       Because of the lead time required for various
parties to gear up for actual airport opening, the
Government started to examine critically the state of
overall airport operational readiness from early 1997
onwards and was then advised by the AA that the physical
structure should be completed in November 1997 and that
other elements, such as the necessary fitouts, the
computer systems and retail and commercial operations
should be in place by early 1998. In October the same
year,   ADSCOM  was further advised by the AA that Hong
Kong Air Cargo Terminals Ltd. (HACTL) should be able to
achieve 50% of its designed capacity by the end of April


2.6       In spite of such assurances, ADSCOM, having
considered the actual progress of the airport project and
the problems associated with the AA Management, was far
less optimistic.     In October 1997, ADSCOM received
confirmation that the AR would only be ready by late June
1998 even if the airport itself was physically ready in
April.   It was primarily under such circumstances that
ADSCOM began to seriously look for a new AOD and to ask,
via a letter dated 15 November 1997, the AA for a more
realistic recommendation     in that regard, indicating
that the Government would, upon receiving such a
recommendation, make its final AOD decision .      It was
specifically pointed out in the letter, without any clear
and discernible rider or qualification, that“ the date,
once announced, will be irreversible.”


2.7       The AA Board subsequently met and discussed the
AOD issue extensively and re-assessed the whole situation
on several occasions in November and December 1997.
Despite some obvious reservations about the original
April AOD as expressed by certain individual Board
members-mostly Government members, the general stance
taken by the Board was that the April target date was
still achievable and ADSCOM was informed accordingly.
Upon being asked for a further assessment towards the end
of 1997, the AA Board decided that they would conduct a
site visit to the CLK on 9 January 1998 which would be
followed by a special Board meeting scheduled to be held
3 days later, i.e. 12 January 1998 to finalise their


2.8       In the meantime, ADSCOM continued to meet and
make their decision without waiting for the final
recommendation from the AA.     On 2 January 1998, they
decided, after extensive in-house discussions, that 1
July 1998 be adopted as the ceremonial opening date to be
followed by the functional opening date.    On 8 January
1998, they, having reconsidered all the issues involved,
decided to report to the Executive Council(ExCo), which
would meet on 13 January 1998, that 6 July 1998, being a
Monday when air traffic was expected to be lighter,
should be the new functional AOD for the new airport.
The date for ceremonial opening was also subsequently
changed to 2 July 1998 in order to avoid clashes with
other celebration activities that were planned for 1 July

2.9       Subsequent to the above two ADSCOM meetings, a
non-Government official of the AA Board was informed in
private by a Government official of the July AOD decision
but was asked to promise not to reveal it to other Board
members   as   the  Government   would   soon  made   the


2.10      On 12 January 1998, the AA Board met as
scheduled although by then the July opening date for the
new airport was already very much a fait accompli.
Needless to say, some participants in this meeting were
already by then aware of the Government‟s decision on
AOD.    After extensive discussions and exchange of
opinions,    the majority view still favoured, despite
obvious   concerns  about  the   HACTL  position,  which
incidentally was referred to by some as a “ peripheral

matter ”, the original April target date. A motion was
carried, albeit with all Government members abstaining,
to inform the Government that “ the new airport would be
ready to open for safe, smooth and efficient operation in
the last week of April 1998.”


2.11      Airport opening was discussed in ExCo as
scheduled on 13 January 1998. As soon as the meeting was
concluded, the Government‟s decision concerning the AOD
was announced   as planned in that emphasis was made to
link the need to defer the opening of the airport, which
should otherwise be ready for operation in late April, to
the AR project, which would only be completed, as
originally scheduled, by late June.        No reference,
however, was made in the official press release to other
related issues such as the financial implications
incurred, the actual progress of the physical works then
achieved, let alone problems already encountered or
anticipated at the CLK site and the possibility for a
further AOD postponement.

2.12      In accordance with the planned PR strategy,
arrangements were made by the Government for various
interested organisations and groups, including the then
Provisional Legislative Council, the Airport Consultative
Committee (ACC) to be separately notified.        Various
Bureau Secretaries and Heads of Departments involved in
the airport project were each likewise informed with a
letter emphasising, inter alia, that the Government was
firmly committed to the 6 July date.


2.13      In reply to a formal notification from the
Government of its decision, which incidentally also
contained no reference to any possibility for a further
deferment of the AOD, the AA, while pledging its support
for it, nevertheless reiterated that its commitment to
getting the airport functionally ready by April as
originally scheduled.    There was concern, particularly
from individual officials of the AA Management that the
deferment might bring about a loss of works momentum
built up over the years. In any event, the AA took the
necessary action to officially pass on the latest
decision taken by the Government to its franchisees and
other business partners.


2.14      AA‟s   Flight    Information   Display   System
(FIDS)and HACTL‟s Super Terminal One (ST 1) had remained
the two most focused areas of concern in terms of project
slippage and problems encountered. In this regard, HACTL
indicated in mid-June 1998 that ST 1 would be able to
provide 75% of its designed capacity on AOD and FIDS was
reported by the AA as sufficiently stable as at 22 June
1998.   On the FIDS aspect, however, NAPCO had indicated
in its weekly situation report submitted to ADSCOM for
the week ending 27 June 1998 that there were still
continued systems delays and operation problems which “
represented real risk to smooth airport operation.”    In
the end, such concern did not lead to a further deferment
of the opening and, to the painful disappointment to all,
serious operational problems did begin to quickly emerge
and took a very heavy toll of the reputation of the new
airport, alongside with that of Hong Kong as a whole, on


2.15      The AOD incidents had led to increased public
attention to whether the decision had indeed been
irreversible as some individuals and/or organisations
involved in preparing for the opening of the new airport
were led to believe, had the situation been so warranted.

2.16      The Government has, since the AOD, sought to
maintain vigorously, in differently-worded statements but
largely to the same effect that, had they been approached
direct by HACTL or the AA with a specific request,
supported with evidence, for a further deferment of the
July AOD because their facilities would not be ready for
operation on 6 July 1998, the request would have been
seriously considered leading to the re-visiting of the
whole AOD issue.    Nevertheless, such a contingency had
not been expressly mentioned or explained to the AA or
HACTL and neither of these two organisations had ever
forwarded or even contemplated forwarding any such



3.1       The AA stated that, from the outset, it was
recognised that it was unrealistic to expect all
facilities at the new airport to be 100% operational and
efficient on AOD.    To monitor all aspects of the new
airport that were considered essential for the AOD, the
AA and NAPCO therefore established the AOR programme. The
objective of this programme was to ensure that all
essential aspects of the new airport were in working
order for opening so as to achieve a seamless transition
from   construction,   testing   and    commissioning  of
facilities and systems to full airport operation.


3.2       In the AA 1996/1997 annual report, the AA
reported   that,    the   AOR   programme   covered   the
identification and monitoring of the progress of those
activities critical to the new airport opening.     These
included the recruitment and training of key operational
and maintenance staff, the development of operational
policies and procedures, and arrangements for the
contracting out of services where appropriate.    The AOR
programme also encompassed the conduct of integrated
airport trials and the mobilisation and relocation of
plant, equipment and personnel to the new airport,
enabling an evening closure of Kai Tak and the opening of
the new airport the following morning.

3.3       From the relevant information provided by the
AA to this Office, there were a number of salient aspects
which were absolutely essential to the operation of the
new airport
on the AOD, including the completion of Passenger
Terminal Building (PTB) and Ground Transportation Centre
(GTC); completion of franchisee works; readiness of
commercial tenants; readiness of Day 1 functionalities
for all AOR PTB and airfield systems; installation and
commission of FIDS; development and completion of
training programmes; acquisition of Aerodrome Licence;
implementation of security measures; development and
implementation   of   airport   trials   programme;   and
completion of airport relocation.


      3.4       In   respect  of   the  involvement  of  major
      organisations in the AOR programme, including AA details
      are mentioned in the various ensuing chapters.


      3.5       The ADSCOM did raise concerns on the AOR and
      AOD. Towards the end of 1997, the ADSCOM wrote to the AA
      Board to express the main areas of concern including
      works   progress   against  the   Integrated  Accelerated
      Programme was behind schedule; the airport would operate
      on partially integrated/standalone systems on AOD because
      of delays in systems integration; the training and trials
      programme had been so compressed by the delays in works
      progress and systems integration that it had to be and
      was then being re-developed; and airport operations
      depended also on the readiness of the key business
      partners and franchisees but progress of the HACTL and
      AAT air cargo terminals and that of the main caterers
      were not reassuring.

      3.6       The ADSCOM said the aim must be to have an
      airport which was safe, smooth, and efficient on its
      opening, and emphasised that the AOD, once announced,
      would be irreversible.

      3.7       The AA Board replied and concluded that the
      airport could be ready to open for safe, smooth and
      efficient operation on an appropriate date in the last
      week of April 1998.


3.8        In the final Consolidated Project Monthly report
      prepared by the AA in December 1997, it summarised that
      the risks and problems associated with the remaining
      works could be handled satisfactorily.        The overall
      assessment was that the project would achieve substantial
      completion in time for an airport opening in late April
      1998. In the final AOR Progress Report prepared in late
      June 1998 by the AA, the AA Board members were updated of
      the status of AOR as at 22 June 1998, which was less than
      2 weeks from the AOD.    It summarised that, in general,
      those salient aspects which were absolutely essential to
      the operation of the new airport would be/had been
      completed and would be ready for operation on the AOD.

      3.9      On   the   other   hand,   NAPCO,   in   its   weekly

situation report for the week ending 27 June 1998 issued
on 29 June 1998 to the ADSCOM, reported concerns on
various critical issues.     The report highlighted that
outstanding number of FIDS software problem reports were
increasing;   testing,  commissioning    and   handover   of
Government systems entrusted to the AA such as Airport
Operation Data Base (AODB) and Flight Data Display System
(FDDS) were in delay; only 60-65% designed cargo handling
capacity on HACTL cargo terminal was expected to be ready
by end June 1998; and unavailability of relevant systems
had hampered training of the Government departments and
would affect their smooth operations on airport opening.
On airport railway, it had been observed that train
headways had been erratic on some days.      NAPCO assessed
that the continued systems delays and operational
problems   represented  real   risk   to   smooth    airport

3.10      This Office notes that, in particular, the
occupation permit for PTB and temporary occupation permit
for GTC were issued only in late June 1998 and a number
of parts of the airport complex looked like construction
sites immediately prior to AOD.      Also, whilst the AA
claimed in various meetings with this Office that
training and familiarisation aspects were sufficient, it
acknowledged that the FIDS training programme had been
squeezed from 6 weeks to 2 weeks.        It claimed that,
having put forth special arrangements, this would still
be considered as adequate.        Further, high profile
publicity activities including Miss Hong Kong Pageant and
a number of familiarisation tours organised on site prior
to AOD by the AA and the Administration, might stimulate
the high perceived expectation from members of the public
that the new airport would be in full operational
readiness on AOD.     Yet, some of these activities had
brought construction works to a temporary halt or might
even have distracted workers from their normal duties.


3.11      According to the Civil Aviation Department
(CAD), the relocation exercise from Kai Tak to CLK took
place in five phases over a three-month period -

Phase   1 : Pre-Advance Move 6 May to 4 June 1998
Phase   2 : Advance Move     5 June to 21 June 1998
Phase   3 : Main Body Move   22 June to 1730 hrs 5 July
Phase   4 : Night Move       1730 hrs 5 July to 0630 hrs 6

Phase 5 : Follow-on Move   0630 hrs 6 July to 5 August

3.12      The AA, being the Central Coordinator of the
relocation    exercise,   had    developed   a    detailed
Mobilisation and Move Plan. The relocation exercise was
planned on the basis of three inter-linked operations,
namely the departure from Kai Tak; the journey from Kai
Tak to CLK; and reception and distribution at CLK.



4.1       The AA is a body corporate incorporated by
statute and is wholly owned by the Hong Kong Special
Administrative Region (SAR) Government. It was formally
established on 1 December 1995 as the permanent successor
to the PAA through the reconstitution of that body which
had itself been set up in 1990. It is tasked to ensure
Hong   Kong‟s   continuous   status  as   a   centre   of
international and regional aviation.


4.2       The AA‟s activities are governed by the Airport
Authority Ordinance (Cap. 483) (AA Ordinance).     It is
responsible for providing, operating, developing and
maintaining Hong Kong‟s new airport situated at CLK, and
is engaged in the planning, construction and development
of the new airport. Pursuant to these responsibilities,
the AA also engages in airport-related activities in
trade, commerce or industry at CLK.   The AA is required
under the AA Ordinance to conduct its business according
to prudent commercial principles.      The AA Ordinance
provides that the AA shall consist of a Chairman, the
Chief Executive Officer (CEO) who shall be a member ex-
officio and such number of other members, being neither
less than 8 nor more than 15, as shall be determined by
the Chief Executive of the Hong Kong SAR Government. It
stipulates that the number of members of the AA who are
public officers shall not at any time exceed the number
of such members who are not public officers. The
functions of the Chairman shall generally perform and
carry out in relation to the AA such duties and
responsibilities as pertain or as are appropriate to the
office of a chairman. Based on the curriculum vitae of
the AA Board members provided, this Office notes that,
with the exception of one Board member, most of the Board
members had no or little apparent experience in airport

4.3       Under the AA Ordinance, the AA may appoint a
person to be its CEO.         His duties shall include
responsibility   for    the   general    management   and
administration   of   the   AA‟s   affairs.      On   the
recommendation of a consultant, a Deputy CEO position was
created in January 1998 to strengthen the AA senior
management team.


4.4        The AA currently comprises seven divisions
including Airport Management Division (AMD) and the PD.
The   AMD    took  ownership  of  all  completed  airport
facilities and infrastructure of the AA.    The PD had a
peak staff of 1 600 out of a total of about 2 000 AA
staff.    However,  staff numbers by end March 1999 would
be smaller than the current number as there was a release
programme in place.


4.5       In respect of construction activities, the AA
had direct responsibility in its own construction
activities.  Also, it was responsible for acquiring an
Aerodrome Licence before operations could begin at the
new airport.

4.6       The AA developed various operational rules,
procedures and policies for operation and use in the AA‟s
facilities in the new airport. It also developed various
emergency procedures and plans which were part of
contingency measures for AOD. Further, it developed and
managed   plans   and  programmes,   including  its   AOR
Programme, to monitor and trace progress of critical
works and activities.

4.7       On airport relocation, the role of the AA was
to co-ordinate the move from Kai Tak to CLK.     Also, it
co-ordinated   the  familiarisation   programmes  of  air
carriers and passenger handling services providers.

4.8       The AA carried out a number of trials before
the airport opening to test the functionality of the
airport facilities and the effectiveness of staff
training, communication and co-ordination amongst various
working   parties.     These  trials  could   be  broadly
classified into two categories : operations trials which
focused on the handling of passengers, baggage and cargo
in a simulated environment, and facilities trials which
aimed at testing the functionality of the various
operational facilities and systems against the design
specification.     The AA developed its detailed AOR
training   plans   and   adopted   a  „train-the-trainer‟
programme for its business partners.

4.9       The AA reported to the Government, primarily
through NAPCO, of the works progress and the AOR
programmes of the AA and its business partners. It
assisted various business operators who had operational
interfaces which required co-operation and co-ordination
among themselves.

4.10      There were relationships between the AA and
vital airport services provided by independent service
operators   who   were   either   franchisees,    licensees,
contractors, or air carriers. In respect of franchised
operations, the AA‟s role on the HACTL, being one of the
cargo terminal operators (CTOs), was to monitor the
HACTL‟s   construction   progress   and   its    operational
readiness programmes.     In its early response to this
Office, the AA provided its initial views that, after
commissioning the operation, the AA’s role with the HACTL
would be one of landlord and tenant relationship.       This
Office   notes  that,   having   regard   to   the   20-year
successful operation of the HACTL, the AA placed more
focus on passenger-related activities than air cargo-
related ones.   Other franchised operations included the
ramp handling operation; the line maintenance operation;
aircraft catering operation; and aviation fuel.

4.11      In respect of relation with vital services
contractors, the role of the AA with such operators is
primarily governed by contracts, and vital services
provided include Airfield Passenger Bus Services and
Baggage Handling Operation Services.       In respect of
relation with air carriers, they carried on their own
independent operations and business in the airport using
their own as well as the AA‟s facilities. In respect of
relation with permit holders for services, they are
engaged in passenger handling services in relation to the
operations of the air carriers.       They either provide
such services for themselves or only for other air
carriers.   In respect of business operators in the PTB,
they were independent business operators         and were
commercial tenants of the AA and the AA was the landlord.

4.12      The AA was responsible through its subsidiary,
the Aviation Security Company (AVSECO), to provide
airport-wide aviation security services.


4.13      There   were   internal   monitoring   and   reporting

frameworks/mechanisms within the AA.       In respect of
mechanism at the AA Board and top level, the affairs of
the AA are under the care and management of the AA Board.
The AA Board members were informed of the airport project
progress through regular monthly AOR Progress Reports and
Project Status Reports. Six committees were established
by the AA Board to consider matters related to key policy
decisions and commitments, and to advise or make
recommendations to the Board on such matters.

4.14      In addition, there are two further regular
senior management meetings.     The Executive Committee,
consisting of senior executive directors of the AA,
reviews and advises on specific important issues to
leading Board members and relevant Board steering
committees.     The Chairman’s Meetings, being weekly
meetings among leading Board members and senior executive
directors of the AA, were to keep leading Board members
apprised of major issues including construction works and
systems progress, and other critical AOR issues including
the AMD training progress.       This Office notes that
“Schedule of Critical Activities, Weekly Status Report”
was tabled at the meeting which was to be signed by three
members of the AA Management. However, some were not
signed by a member.   During the various meetings the AA
had with this Office, the AA Management provided
explanations to this irregularity that this might be due
to insufficient time to get access to the report or
disagreement on some wordings on the report on the part
of that member.

4.15      In respect of mechanisms at inter-departmental
level, there were Weekly AOR Review Meetings for senior
management for the purpose of strengthening inter-
divisional    co-ordination    to    achieve    operational
readiness.     However,   this   Office   noted  that   one
divisional director did not attend any meeting in May and
June 1998. This Office also noted from the minutes of an
ADSCOM meeting in November 1997 that the project was
driven by a divisional director. Given that a divisional
director was totally absent from these meetings in the
two months prior to AOD, it cast doubt on whether the
inter-divisional co-ordination on AOR issues could be
achieved. A senior officer of the AA chaired all the AOR
meetings from early 1998 to end of June 1998, except for
a few meetings in March and April 1998.

4.16      During May and June 1998, a number of special
ad hoc meetings among relevant AA senior staff were held
and these meetings focused on system hand-over, Aerodrome
Licence, and airport relocation.

4.17      In respect of mechanisms at intra-departmental
level, there were, in particular, AMD Weekly Meetings and
PD Weekly Meetings.

4.18      In respect of internal independent monitoring
and    reporting    framework/mechanism,    an    internal
independent monitoring position directly reporting to the
AA Board was created in late 1996. Before the AOD, apart
from other responsibilities, he assisted in overseeing
the progress of the alteration and enhancement works
implemented as a result of the airport trials.       Since
March 1998 the involvement on the assessments of contract
claims had increased significantly.    After the AOD, he
assisted in overseeing the progress of the outstanding
contract works.     Since his appointment, Consolidated
Project Monthly Reports which were monitoring reports of
the progress of construction works were prepared. These
reports were no longer prepared after December 1997 when
construction works entered the final phase. The overall
assessment in the last report was that the project would
achieve substantial completion by end of April 1998.

4.19       There   were   also   monitoring   and   reporting
frameworks/mechanisms with contractors and key business
partners.    The AA held quarterly review meetings with
contractors.     It also required the HACTL, being a key
franchisee, to submit monthly Project Progress Reports
which were related to the construction progress of its
ST1. In addition, the AA established airport relocation
frameworks/mechanisms with business partners to ensure
that the AA‟s business partners were kept informed of
progress with regard to the relocation.          Further, to
ensure that ramp operations would begin and proceed
smoothly from AOD, the CLK Ramp Handling Operators
Working Group (CROW) was formed in November 1996 to
discuss ramp operational issues in a forum setting
provided by the AA. This Office noted that the CROW was
basically formed by the industry and the AA did not
assume a leadership role in it.         Also, the AA stated
that, the AA/BAR Consultation Group, consisting of the
Board   of   Airline    Representatives   and   the   Airline
Operations Committee, was the forum to discuss airport
facilitation issues.

4.20      The following external monitoring and reporting
frameworks/mechanisms on the AA were available -

     (a)   By ADSCOM to which the AA issued monthly AOR
           status reports and conducted regular briefings
           on the progress of the airport project;

     (b)   By NAPCO which monitored the project on behalf
           of ADSCOM and requested senior AA Management to

          attend monthly NAPCO meetings.     NAPCO also
          prepared independent weekly situation reports
          to the ADSCOM;

    (c)   By the Administration with which the AA had
          established interface at various levels, i.e.
          from AA Board level to inter-organisation
          committees, meetings and routine working level

    (d)   By others - The Kai Tak/CLK Transition Working
          Committee,   through   its   regular   meetings,
          addressed many key issues critical to the
          transfer of operations from Kai Tak to CLK. In
          addition, briefings were conducted by the AA
          Management to the LegCo and the Airport
          Consultative Committee on matters related to
          airport activities on a regular basis.

4.21      Regarding frameworks established by the AA
subsequent to the opening of the new airport, upon
request from the Administration, a task force was set up
by the AA on 7 July 1998 to address major problems
affecting the airport. Its task was two-fold: to resolve
the immediate difficulties and to oversee the smooth
implementation of a variety of matters envisaged on and
after the AOD.    Also, Operations Review Meetings were
held among representatives from the AA, the AOC, and
various airport service operators starting from 6 July
1998 to deal with any issues which might arise. At these
meetings, the extent of the problems being encountered
became evident and solutions to mitigate them were
discussed. The AA also stated that, it was asked by the
Administration, through cargo crisis management meetings,
to assist HACTL with its recovery plans on cargo handling
by ensuring smooth operation at the apron and proper co-
ordination between all parties involved.


5.1       The ADSCOM was established in February 1990
with the overall responsibility for establishing policy,
guiding the implementation of the ACP projects and co-
ordinating action taken by the Hong Kong Government with
regard to the MOU. It plays a pivotal role in respect of
the 10 ACP Projects, which are focused on construction of
the new airport at CLK to replace Kai Tak Airport. The
management structure for implementing the ACP projects
was adopted by the Government in 1990/1991. It is noted
that the frame-work and the mechanisms, including the
bodies such as the AA, ADSCOM, NAPCO, and the ACC were
established by the Government in connection with carrying
out the airport project.


5.2    The ADSCOM is composed of eight very senior
Government officials who were mostly Bureau Secretaries.
For significant policy issues, final and collective
decisions are taken by ADSCOM. The terms of reference of
ADSCOM are to review the general progress of the new
airport and associated works of other ACP projects and to
resolve problems referred to it by Bureau Secretaries.


5.3       ADSCOM‟ view was that on opening the new
airport must be safe, secure and efficient. In order to
achieve such an objective, ADSCOM had to carefully review
the AOR issues, prior to opening of the airport. In this
connection, ADSCOM received progress reports from the AA
and NAPCO, as its executive arm, and made its decisions
accordingly.   It is noted that some senior Government
officials who sit on the ADSCOM are also members of the
AA Board of Directors. The decision to open the airport
on 6 July 1998 was taken by ADSCOM in January 1998, after
which it has continued , through the progress reports of
AA/ NAPCO etc., to monitor the overall preparation for
the opening of the new airport.


5.4       ADSCOM was established to provide the necessary
oversight and perform essentially a trouble shooting role
to ensure all parties involved worked towards the goal of
delivering the ACP projects within budget and on

    CHAPTER 6         -   NEW   AIRPORT     PROJECTS     CO-


    6.1       NAPCO is administratively part of the Works
    Bureau. Following the Government‟s decision to proceed
    with the implementation of the ACP projects, the staffing
    structure of NAPCO was strengthened to enable it to
    achieve its roles.


    6.2       The organisation structure of NAPCO consists of
    the Project Management Office, the Media Relations and
    the   Community   Relations   Division,   the   Committee
    Secretariat and Administration and Support Division, and
    the Legal Advisory Division.


    6.3       The NAPCO‟s main role is to co-ordinate the 10
    core ACP projects, which include the Airport (first
    runway and associated facilities), the Tung Chung
    Development (Phase 1), the North Lantau Expressway, the
    Lantau Fixed Crossing, the Route 3 (Tsing Yi and Kwai
    Chung sections), the West Kowloon Reclamation, the West
    Kowloon Expressway, the Western Harbour Crossing, the
    Airport Railway, and the Central and Wanchai Reclamation
    (the part relating to the Airport Railway).

    6.4       Overall, the NAPCO has two general areas of
    responsibilities related to the implementation of the ACP
    projects   which  include   the  management   of   project
    implementation and co-ordination and the Government‟s
    public information and community involvement programmes.

    6.5       A NAPCO representative sits in the AA Board.
    In that capacity, he also attends monthly meetings of the
    AA Board and also its other relevant Committees.

    6.6       With the opening of the new airport on 6 July
    1998, the ACP projects had been completed.    The NAPCO‟s
    role had correspondingly changed to take into account the
    fact that the construction phase of the airport had been

completed and that it has now entered into an operational


6.7       The NAPCO is an executive arm of ADSCOM.    The
NAPCO can draw on expertise advice/assistance from the
consultancy firm to monitor, inter alia, the technical
aspects of the airport project such as FIDS.     Prior to
the airport opening, NAPCO was required to submit weekly
situation reports to ADSCOM, which were primarily written
on the basis of the result of observations/assessments
made by NAPCO‟s own consultant. It is noted that in the
last two reports submitted in June 1998 NAPCO had drawn
ADSCOM members‟ attention to the “risk” to a smooth
airport   opening   because    of   unsatisfactory   FIDS


6.8       The view of the Administration expressed at the
meeting held on 2 December 1998 with The Ombudsman was
that the NAPCO played the role of a critical observer in
connection with the ACP projects. The assessment on the
overall readiness of the airport opening made by NAPCO
could not be regarded as “hard evidence” and be used as
the only basis to decide on whether AOD should be



7.1       The CAD is responsible for civil aviation and
airport matters in Hong Kong.   The CAD reports to the
Economic Services Bureau (ESB) as the policy bureau in
the Government Secretariat.  Prior to the commissioning
of the new airport, the CAD was responsible for the
following functions -

    (a)   the provision of air traffic control, flight
          information, air alerting service and air/sea
          search and rescue for all aircrafts operating
          within    the   airspace  assigned   by   the
          International Civil Aviation Organisation to
          the Hong Kong SAR;

    (b)   the   provision  of   sophisticated electronic
          equipment to enable the efficient and safe
          operation of air traffic;

    (c)   the safety oversight of aircraft and aircrew

    (d)   the management and operation of the Hong Kong
          International Airport at Kai Tak in accordance
          with international standards;

    (e)   the   approval   of   scheduling    of   aircraft
          movements,    compilation    of    air    traffic
          statistics and conduct air traffic forecasts,
          formulation   of  aircraft   noise   policy   and
          measurement of noise levels in the respective
          flight paths;

    (f)   the   approval   of   scheduled    services   in
          accordance with the Hong Kong Air Services
          Agreements as well as approval of non-scheduled
          services to supplement the normal demand; and

    (g)   the drawing up and monitoring of compliance to
          operational safety and security standards at
          the new airport and recommendation for the
          issue of Aerodrome Licence to the licensee,
          i.e. the AA.

7.2       However with the opening of the replacement
airport at CLK, the AA has assumed responsibility for the
management and operation of the ground operations of the
new airport. The CAD continues to be responsible for the

air traffic control side of the new airport operations.
The CAD has thereby evolved into more of a regulator
responsible for overseeing airport operations in terms of
operational safety and security.

7.3       In order to perform this regulatory role and
ensure compliance with safety and operating standards, a
CAD Airport Standards Division was established in August
1995. As construction of the new airport progressed, the
Division worked in consultation with the AA towards a
recommendation for the CAD to issue an Aerodrome Licence
to the AA on 29 June 1998.    The basis for the issue of
the licence is the AA's compliance with the requirements
of the Air Navigation (Hong Kong) Order (AN(HK)O) 1995.
This relates specifically to the safety and security
aspects of airport operations and details of the
statutory requirements.


7.4       The CAD‟s involvement in the planning and
operation of the new airport was in respect of the
following capacities, namely as a regulator, as a member
of the Kai Tak/CLK Transition Working Committee, as an
ex-officio member of the AA Board, and subsequently from
November 1997 as an advisor to the ADSCOM.

7.5       The CAD, in addition to its on-going duties in
relation to Kai Tak Airport, was particularly concerned
in the successful procurement and timely implementation
of the air traffic control (ATC) system and associated
facilities for the new airport at CLK for which the CAD
would continue to be responsible after the transfer to
the new airport.      The air traffic control equipment
consisted of over twenty major procurement items at a
total cost, including the control tower and radar centre,
of almost HK$l billion.     Contracts were let commencing
August   1994  and   the   system   was   commissioned and
operational on 22 October 1997.      According to the CAD,
this was the first occasion that an ATC system of such
scope and complexity had been completed on time and
within budget.   The successful introduction of the CLK
ATC   system  also   required   the   recruitment   of 150
additional controllers who needed to undergo transition
training and familiarisation with the new CLK procedures.

7.6       According  to   the   CAD,  relinquishing  the
management of Kai Tak imposed on the department the
responsibility to make arrangements for the transfer of
129 CAD airport management staff from Kai Tak to the AA.

The CAD claimed that these staff with their Kai Tak
experience must form the core of the airport management
expertise at the new airport.       The CAD was deeply
involved in the transition arrangements for these staff
including the terms and conditions of their transfer.
Virtually all staff decided to join the AA with effect
from February 1997. This provided the AA with a core of
experienced operational staff and sufficient time for the
AA to recruit additional staff to fill outstanding
establishment needs.    It also provided continuity of
employment and enabled this important group to rotate and
progressively integrate with the AA while managing Kai
Tak until its closure. The CAD also claimed that it was
largely due to the efforts and dedication of these
individuals that the new airport was able to make such a
rapid recovery from the operational problems immediately
subsequent to its opening.

7.7       Planning for the transfer of airport operations
from Kai Tak to CLK had already started in 1996.        A
Relocation Steering Group was established in June 1996
with representatives from the NAPCO, CAD, AA, Transport
Department, Highways Department, Marine Department, Hong
Kong Police Force, and other Government organisations.
The Steering Group was attended by senior officials of
the CAD throughout the planning in 1997 and final
preparations for the move in mid-1998 respectively. The
CAD claimed that as at May 1998 the arrangements for the
transfer had been largely finalised and were successfully
implemented in accordance with the programme.


7.8       In March 1995, the ESB initiated a working
committee on Kai Tak/CLK transition, with among others,
senior officials from the CAD being members.         This
working group, chaired by the ESB, held regular monthly
meetings in which it addressed many issues concerning the
operational preparation of the new airport, including the
machine automated detection system for the security
screening of hold stowed baggage, the provision of fire
fighting and sea rescue vehicles, the licensing of the
airport and, during the period from 1996 until 1998, the
progress achieved in respect of the new FIDS to be
introduced at CLK.


7.9       The FIDS is a highly sophisticated integrated
automated computerised system which is central to the

management and operation of the new airport.      The CAD
highlighted that none of the systems installed at Kai Tak
Airport   (e.g.  the   semi-automated  baggage   sortation
system, an early version of FIDS, and the bay allocation
system) were of the complexity proposed for the new
airport, and they all clearly demonstrated the need for a
substantial period of operational testing.     As regards
the systems developed by the CAD, the CAD considered that
a period of six months should be allowed after
integration had been completed to operationally prove the
system to the point that it was sufficiently stable to be
brought into service. The CAD‟s further experience with
the procurement of the sophisticated ATC system at CLK
further illustrated that, even during the early stages of
the project, such tests and a stabilisation period prior
to operational use were absolutely essential.      The CAD
also pointed out that integrating the software of one
system with another or one part of the system with
another usually increased the risk of software problems.
From its experience, the CAD was therefore concerned at
the extent of both the sophistication and integration of
the AA‟s systems proposed to be installed in the PTB,
particularly FIDS, and the inadequate time provided by
the AA for the operational testing of these systems.

7.10      According to the CAD, the progress of FIDS was
a matter of constant concern to the department on which
its senior official made frequent comments to express
these concerns at meetings of the Working Committee, the
AA Board, and the ADSCOM. It was partly as a result of
the concerns expressed by the CAD that the AA‟s Board and
Management decided to develop the stand-by FIDS system.


7.11      During this investigation, this Office noticed
that in late 1996, HACTL had proposed, though not
formally, for Kai Tak Airport to be allowed to continue
to serve cargo flights for a short period after the
opening of the new airport. Nevertheless, the CAD and the
Administration commented that there was no evidence or
record that HACTL had made such a proposal to the CAD or
Government either formally or informally.        The CAD
considered that such an operation would have required the
involvement of the airlines, support services including
aircraft maintenance and fueling together with Government
departments. To CAD‟s knowledge, HACTL took no steps to
consult with any of these parties on the simultaneous
operation of both airports. Upon enquiry, CAD officials
explained that the development of flight paths for the
new airport was a complex issue as it involved extensive

discussion and coordination with neighbouring airports,
and this process required several years of planning and
negotiation. Given that the established flight paths for
the new airport were in conflict with those of Kai Tak,
it would not be possible to operate both airports
simultaneously unless the flight paths of the new airport
were changed.   Such a revision could not be implemented
on an ad hoc basis.



8.1       The ACC was an advisory body set up in late
1991 in accordance with the MOU, in which Clause F(iii)
stipulates that “The Hong Kong Government will set up a
Consultative Committee on the new airport and related
projects. The Committee may discuss any relevant matter
but will have no decision-making power.   It should not
delay the progress of the projects.”

8.2       The ACC was a consultative body to the
Government with no executive function. Its establishment
was announced on 1 November 1991 with 50 non-official
members appointed, in the first instance, for a period of
two years.


8.3       Since its establishment in 1991, the ACC, with
membership drawn from a wide cross section of the
community, had given much valuable advice to the
Government on matters related to the ACP.    The ACC was
served by the NAPCO.

8.4       The ACC conducted open-door plenary sessions to
enable members of the public to keep track of the
deliberations of the ACC.     The ACC had discussed ACP
issues as frequently as two to three times a month. The
terms of reference of the ACC were to provide within
which community views on the development of the new
airport and related projects could be discussed and
brought to the attention of the Government.

8.5       The ACC had set up the following sub-committees
dealing with matters related to: (a) airport and related
land development matters, (b) works progress, cost
monitoring and financial matters, and (c) transport,
land, environment and people‟s livelihood.

8.6       The ACC played an advisory role with regard to
the ACP projects. The ACC had been disbanded with effect
from 1 January 1999.


8.7       There was no direct working relationship or
regular communication between ACC and the AA.     It is,
however, noted that high level representatives of works
agents including the AA had been invited to brief ACC
members on matters relating to the new airport and other
ACP projects. The ACC also received quarterly reports on
matters related to the overall development of the new
airport from NAPCO.

            COMMISSIONING    OF    THE    NEW
9.1       Some government bureaux and departments have
been involved in the planning and implementation of the
airport project at the policy level and operational
front, particularly in the areas of passenger and air
cargo flow.     They are the ESB, Works Bureau (WB),
Buildings Department (BD), Fire Services Department
(FSD), Customs & Excise Department (C & ED) and
Immigration Department (Imm D).


9.2       The ESB is responsible for formulating and
implementing policies on all aspects of civil aviation,
shipping and port development.    The CAD reports to the
ESB on civil aviation matters. The ESB is represented on
the AA Board and several standing committees established
by the Board to consider matters relating to key policy
decisions and commitments and to advise the Board on such
matters. The ESB representative also chaired the Working
Committee on Kai Tak/CLK Transition to address issues
concerning the operational preparation of the new
airport. The ESB is also represented on the ADSCOM.


9.3      WB is the policy bureau responsible for the
formulation and co-ordination of works policies and
monitoring   the    implementation   of    public  sector
development and works programmes.        The overall co-
ordination of the ACP is carried out through NAPCO which
is administratively part of the WB.            The WB is
represented on the AA Board and the Project Committee
which is a standing committee of the AA responsible for
all works in connection with the design, construction and
operation of the new airport.          The ESB is also
represented by a senior official on the AOR Steering
Committee of the AA and ADSCOM.


9.4      It   is   a   statutory   requirement   under   the
Buildings Ordinance that no new building shall be
occupied in any way unless the Building Authority has
issued an occupation permit (OP) in respect of such
building or a temporary occupation permit (TOP) in
respect of the whole or any part of a new building and
the TOP has not expired and has not been revoked by the
Building Authority.    The receipt of Fire Certificate
F.S.172 which is a documentary proof of the Director of
Fire Services being satisfied with the installation and
proper functioning of the fire services installations and
equipment for the new building concerned is one of the
crucial considerations for the Building Authority in
deciding for the issue or otherwise of a TOP/OP.

Issue of TOP/OP    for   the        Airport   Passenger   Terminal
Building (PTB)

9.5       According to the information available to this
Office, both the PTB and the GTC were not ready for
occupation until the last moment before airport opening.
While the OP was issued on 29 June 1998 for the PTB, a
TOP was issued on 30 June 1998 for the GTC excluding
South Carpark Link connection bridge, part of driveway
and canopies at South Carpark Link connection bridge and
taxi stands.

Issue of TOP for Super Terminal 1 (ST1)

9.6       As far as ST1 of HACTL was concerned, the
original target OP date of 25 April 1998 was subsequently
revised to 29 May 1998. On 11 June 1998, the Architect‟s
Team submitted a statutory form to the BD in application
for a TOP. When the BD carried out an inspection on 17
June 1998, the building works were found to be
incomplete. The TOP application was withdrawn and re-
submitted on 19 June 1998. Following another inspection
by the BD on 29 June 1998, the TOP application was again
withdrawn and replaced by a fresh application on 3 July
1998. The TOP for ST1 was finally issued by the BD on 3
July 1998 upon the production by HACTL of the requisite
Fire Certificate (F.S.172)which was only issued by the
FSD on 2 July 1998. There was a difference of some ten
weeks between the original target date of OP (25 April
1998) and the actual date of issue of the TOP (3 July
1998) which was only three days before the airport
opening on 6 July 1998.

Inspection and Testing of Fire Service Installations at

9.7      As far as HACTL premises were concerned, FSD

carried out two visual inspections of the sprinkler
system on 13 January and 24 February 1998 before
receiving F.S. 501, Application for Inspection and
Testing of Fire Service Installations and Equipment from
the Authorized Person (AP).     Defects were noted during
the inspections and acknowledged by the AP. On 20 and 27
March 1998, FSD carried out re-inspection on the
outstanding defects of the previous visual inspections
but defects were still noted. On 5 May 1998, functional
test on the drencher system was conducted by the fire
service installations contractor and witnessed by FSD.
The result was generally satisfactory. The first F.S.501
was submitted by the AP on 19 May 1998 which was two
months behind the originally intended date of 18 March
1998.   Upon receipt of the F.S.501, FSD carried out a
number of inspections to all fire service installations,
smoke   control,    pressurization    of   staircase   and
ventilation and air-conditioning control and tests on all
installations from 27 May to mid-June 1998 but items of
defects were still noted.     Re-inspections were carried
out from 16 to 25 June 1998 but some defects had not been
rectified. Following the review and thorough discussions
held among FSD, the AP and HACTL on 26 June 98 and 2 July
1998 and upon receipt of letters from HACTL and the AP on
29 June 1998 and 2 July 1998 respectively undertaking to
rectify the defects identified, the Fire Certificate
F.S.172 was finally issued on 2 July 1998.         Another
meeting was subsequently held on 10 August 1998 between
FSD and HACTL to discuss and work out solutions on the
technical aspects of some undertaking items.

9.8       According to FSD, all inspections of fire
service installations and tests to the ST1 were arranged
and carried out by the AP and the FSI contractor in the
presence of FSD officers. In the case of HACTL premises,
FSD had not noticed or received any report of damage
resulted from such tests from the AP or FSI contractors.

TOP/OP Status of ST1

9.9       According to the BD, no application has yet
been made by the AP of ST1 for a full OP and the AP had
intimated that full OP would not be applied for until
probably January/February 1999 when permanent repairs to
the electrical power supply would be completed.

C & ED at ST1

9.10      The C & ED provides air passenger and cargo
clearance service at the new airport to prevent and
detect the smuggling of contraband, including narcotics,

firearms, strategic goods, dutiable commodities, articles
which infringe copyrights or trade descriptions and any
other articles the importation or exportation of which is
prohibited or regulated by law. The C & ED is empowered
under the Customs and Excise Service Ordinance (Cap. 342)
to conduct primary checks on passengers, crew, cargoes,
postal parcels, aircraft and vehicles, and secondary
examination of those considered high risk.     Before the
new airport operates at CLK, the C & ED had 532
disciplined staff and 13 civilian staff deployed at Kai
Tak.   The corresponding figures has increased to 1 025
and 36 at CLK.

Streamlining of cargo clearance procedures at CLK

9.11      Customs clearance procedures at the new airport
for inbound and outbound air cargo are similar to those
used at Kai Tak.     A minor procedural change has been
introduced at CLK whereby cargo consignments which fall
under the control of the Department of Health or
Agriculture and Fisheries Department will be directly
cleared and released by the concerned department if the
consignments are not selected by the C & ED for
inspection or verification so as to streamline the
operational arrangements with a view to expediting the
process of cargo clearance.

Air Cargo Clearance System

9.12      The C & ED has developed a new computer system
- Air Cargo Clearance System (ACCS) at the new airport to
enhance the operational efficiency of cargo clearance at
CLK. It provides electronic links between C & ED and the
individual air cargo operators to facilitate the transfer
of cargo information and customs clearance instructions,
and the tracking of movement of consignments between air
cargo operators; facilitates the retrieval, correlation,
analysis and updating of information and provides
automated matching of the particulars of cargo with the
intelligence in the department‟s central Customs Control
System and the lists of prohibited and restricted items.
Since October 1996, a Working Group on Interfacing with
ACCS has been formed and attended by representatives from
the cargo operators, airlines, Information Technology
Services Department (ITSD) and C & ED. Regular meetings
had since been held and intensive testing programmes
conducted prior to airport opening.    In August 1997, a
Sub-working Group for ACCS Fallback and Recovery,
comprising of representatives from cargo operators,
airlines, Information Technology Services Department
(ITSD) and C & ED was formed to study and develop the
contingency procedures.   As a result, a Task Force on
Fallback and Recovery for ACCS was established and
fallback procedures were formulated. The key players of
ACCS unanimously indicated their satisfaction of the
performance of the interface functions provided by ACCS
and their readiness to interface with the system and
related procedures for airport opening. According to the
C & ED, some minor problems were identified at a
rehearsal conducted during 15 to 17 June 1998. Most of
these minor problems had either been solved or partly
solved prior to airport opening. The result of the final
rehearsal conducted during the period from 30 June 1998
to 2 July 1998 indicated that ACCS was ready for
operation.   Since AOD, the system has been running very

Imm D

9.13      Imm   D   is  responsible   for,   inter   alia,
controlling the movement of people into and out of Hong
Kong.   It is also the aim of the department to prevent
the entry of undesirable persons and the departure of
persons wanted for criminal offences.         Considerable
effort also goes into detecting and prosecuting those who
breach immigration laws, and removing those who have
entered Hong Kong illegally.    The Imm D is responsible
for enforcing the Immigration Ordinance (Cap. 115).
Operations at the Airport enforce immigration control
over passengers and aircrew entering and leaving Hong
Kong by air. There is also designated detention quarter
at the Airport for detaining and removing passengers and
undesirable persons who have been refused entry. Before
relocation of the airport to CLK, the Imm D had a total
establishment of 663 posts comprising 642 uniform and 21
clerical staff working at Kai Tak.      The corresponding
figures have subsequently increased to 786 and 40 at CLK.

Operation at the New Airport

9.14      According to the Imm D, the working mechanism
basically remains unchanged after relocation to the new
airport, except that there is an increase in size of the
immigration premises and more rooms for dedicated
function, which require adjustments to the functions and
responsibilities of certain offices and posts.

Problems Encountered by Immigration Staff or Passengers

9.15      According   to    the    Imm  D,    since   the
implementation of Immigration Control Automation System
at the new airport on 6 July 1998, the system has been
running smoothly and is able to provide an efficient and
effective computerized immigration service.    During the
first week of airport opening, the Imm D‟s entrusted
systems were wholly or partially available.    Besides, a
few counter top signages at the arrival level did not
function as originally planned in the first week. The AA
posted up paper signages as a temporary measure, but then
the department was left with little flexibility in
assigning   different   counters    to  clear   different
categories of passengers according to the changing
passenger mix.    By end October 1998, the counter top
signages had been much improved except that some magnetic
static signs for the „Permanent HK Identity Card‟
counters are still under-provided.

Chapter     10   -   FLIGHT      INFORMATION      DISPLAY

10.1      FIDS is an integral part of the Passenger
Handling Systems of the new airport.      In its broadest
sense FIDS integrates a flight information display system
with a stand, gate and check-in desk allocation system.


10.2      Information displayed by FIDS mainly includes
information such as check-in desk, gate number, departure
and arrival time of flights and baggage reclaim carousel
for the public; External Reclaim Summaries, External
Baggage Reclaim Displays and Baggage Lateral Displays
which guide baggage handling operators to the correct
pick-up and set down points for baggage laterals and
reclaims for airport staff and airline staff; and
information for airline staff including display of
airline logos and information on flights relevant to each
check-in desk, transfer desk and gate desk.


10.3      The Particular Technical Specification (PTS) of
the FIDS which describes the required system in non-
technical language were prepared by the AA‟s information
technology design consultants The Mott Consortium with
British Airport Authority as part of the Consortium.

10.4      General Electric Company Hong Kong Limited
(GEC) is the contractor responsible for the detailed
design, installation, testing and commissioning and
integration of the FIDS including stand/gate and desk
allocation   systems   and   overall   project   management.
Electronic Data Systems Limited (EDS) is a sub-contractor
of   GEC   responsible   for   the    development,   supply,
installation and commissioning of system software, the
network sub-system, server computers and workstations.
EEV Limited is another sub-contractor responsible for the
supply of LCD monitors. The Preston Group is a sub-sub-
contractor   responsible   for    providing   the   Terminal
Management System (TMS)software which is a component of
FIDS dealing with the optimum allocation of incoming
aircraft to vacant stands and passing stand allocation
information to FIDS.    EDS used to communicate direct to

GEC their views and suggestions on the development of
FIDS which would then convey the message to the AA as
deemed necessary.

10.5      The Project Division of the AA is the main
point of contact for GEC and EDS in terms of the
development of the FIDS before airport opening.        A
project staff of the AA was resident in EDS‟s UK office
supervising and monitoring the progress of the software
development on a weekly basis. Staff of the AMD Division
who were the end user of FIDS and Information Technology
(IT) Department only began their direct involvement in
the project in late 1997.

10.6      The Centre of Software Engineering Ltd. (CSE)
are a specialist consultant working directly for the AA
and are responsible for monitoring the quality control of
software developed by EDS.


10.7      At the 75th Board Meeting held on 15 June 1995,
the PAA approved the award of a contract to GEC for the
development of FIDS.   This Office has noted that while
the PAA found the tender submitted by GEC to be a fully
technical and compliant tender, the tender was described
as “non-conforming” and it might require substantial
percentage of customization to meet the requirements of
the AA.

10.8      In developing the software of the FIDS system,
EDS had to break down the PTS into uniquely referenceable
statements of functional requirements or the System
Segment Specifications (SSS).    The SSS was used as a
baseline against which to conduct tests to ensure that
the software meets the requirements of the AA and is an
important and useful tool for both the AA and the GEC/EDS
to understand the requirements of the system and it is on
the basis of this mutual understanding that the system is
designed and developed.

10.9      The original Key Days for the development,
testing and commissioning of FIDS were as follows -

    Key Day 1   Preliminary        Design   30 Sept 95
                Review Completed

    Key Day 2   Final    Design    Review   31 Jan 96

    Key Day 3   Plant       Commissioning   31 Mar 97
                Phase     Testing     and
                Commissioning Completed

    Key Day 4   Works Completed             30 June 97

10.10     During the period from September 1995 to July
1996, the SSS submitted by EDS and GEC to the AA had been
continuously revised as a result of the comments from the
AA and discussions held among the parties concerned to
clarify and redefine the PTS. In November 1996, a senior
staff of the AA Management wrote to GEC expressing
concern over the lack of progress made by EDS in
completing the design of the system.    This was followed
by a trip to the UK in early December 1996 by two senior
representatives from the AA Management, the senior
management of GEC and CSE, the software consultant to
meet with the senior management of EDS to review major
problem   issues    and   identify   steps   to    improve
communication and progress of works.       While the CSE
report gave a positive evaluation of the EDS practices,
it also pointed out that the time scale for delivery on
time was very tight. Upon the recommendations of the CSE
and following discussions amongst the parties concerned,
it was agreed among others that a full time project
management staff would be posted resident on site from 6
January 1997 and EDS Management would pay monthly visit
to Hong Kong.   EDS was also committed to completing the
works by November 1997. Communication between UK and HK
would be improved by installing a telephone link with
modem for speedy transfer of data and the AA assured that
CSE visits to EDS would not disrupt works progress of the
latter.     EDS   eventually   started  the   design   and
development of the FIDS in December 1996.

10.11     During the period from 9 to 11 April 1997,
representatives from the AA and GEC, EDS and CSE met in
the UK to review and modify the integration plan for FIDS
with parallel development of the five major functional
units of the system to be achieved between April and end
October 1997. System integration was targeted to be
completed by December 1997.     The rationale behind the
approach was that if there was any major slippage in the
development programme, a decision could be taken not to
integrate all the major components but to develop as
standalone components in order to provide the necessary
functionality for airport opening in April 1998, the then
target date of airport opening.

10.12     During the two joint presentations to the AA
Board held at CLK on 17 June and 16 September 1997, GEC
and EDS briefed the Board of the development progress of
FIDS and explained the then position in the project
management. They drew the attention of the Board to the
tight time scale, overlapping of testing, deferral of
functionality and the option to deliver the major
functions of the system as standalone components. The AA
Board was told that decision should be taken by mid-

September 1997 as to produce either a fully-integrated
system or unintegrated standalone components because if
the latter was chosen, some additional interfaces would
need to be designed and developed. While there were some
six weeks slippage in the delivery of the early Builds to
site, both companies advised the Board that they would be
able to recover slippage and deliver the software to meet
the dates on the baseline plan. The Board was also told
that the remaining Builds 1.3, 1.5 and 2.0 would be
delivered on 7 October, 3 November and 4 December 1997
respectively, meaning that the baseline programme of 1
September, 30 September and 31 October 1997 for the three
Builds again slipped.    Full integration test would be
carried out on site commencing end of December 1997 which
remained on schedule.    (It eventually turned out that
Builds 1.3, 1.5 and 2.0 were delivered on 8 October, 7
November and 5 December 1997.)

10.13     By November 1997, EDS and GEC had proposed to
the AA Management to carry out end to end testing on
Voice and Data Outlets in the installation of Display
Monitors and Liquid Crystal Display (LCD) boards which
was necessary to prove the complete data circuit across a
number of different contracts networks.     The proposal
was, however, rejected. It subsequently turned out that
a considerable number of LCD boards were not functioning
either due to data cable over-length or having defective
or missing cables and FIDS/Common User Terminal Equipment
(CUTE) interface was reported as having problems during
the early terminal operations trials.

10.14     In early December 1997 when EDS was preparing
for Factory Acceptance Test (FAT) to be carried out in
the UK, they received an instruction from GEC requesting
a demonstration of Build 2.0 to be arranged at CLK on 12
December 1997.   EDS raised their grave concern with GEC
in writing about this request which would, in the view of
EDS, be disruptive to the planned programme of FAT on
FIDS in the UK. EDS also emphasized that if this request
was to be acceded to, it would have a time and cost
impact on the project and the Key Dates 3 and 4 would
have to be extended. EDS counter proposed to GEC for a
demonstration of Build 2.0 to take place in early
December 1997 in the UK which would have permitted FAT to
proceed on 19 December 1997 as scheduled.      Later on 4
December 1997, EDS received an instruction from GEC for a
combined FAT/Site Acceptance Test (SAT) to take place at
CLK commencing on 19 January 1998.          EDS was also
requested to provide support for the airport trials in
January 1998.   It subsequently transpired that GEC and
the AA had signed an agreement on 5 December 1997 to the
effect that FAT and SAT were to be combined.

10.15     Although EDS had eventually carried out the
instructions of GEC to have the FAT/SAT combined on-site,
this Office has noticed that EDS was far from agreeable
to the changed plan. This can be reflected in a letter
sent by the EDS management to GEC on 4 December 1997 in
which a senior staff of EDS described himself as
“extremely dismayed at the instruction at such a late
stage in the project”.    EDS also forewarned GEC of the
impact that the late changes made to the project plan
including the combined FAT/SAT would have on the
development and quality of FIDS.

10.16     Since 24 February 1998, GEC/EDS and the senior
staff of the AA Management met regularly to monitor
progress on the completion of software development and
testing, and installation and commissioning of networks,
computer equipment and display devices at CLK and the key
focus was on fixing the Problem Reports (PRs).    The Key
Day 3 for FIDS was eventually achieved in March 1998
which was some 12 months after the original Key Day 3 of
March 1997.   The FIDS was progressively handed over by
the Projects Division to the AMD, the end user, in May
1998. However, GEC/EDS and the AA held divergent views as
to whether Key Day 4 had been achieved.     While GEC/EDS
claimed that Key Day 4 was achieved on 6 July 1998, the
AA said that Key Day 4 would only be achieved upon the
issue of the certificate of completion.


10.17     During the first Terminal Operations trial of
18 January 1998, both FIDS and the FIDS/CUTE interface
were inoperable.    At the second trial of 15 February
1998, FIDS again crashed during the initial check-in
process.   From the third trial of 28 March 1998 onward,
FIDS performance was reported to be improving and getting
stable. It was recorded in the AOR Status Report of 22
June 1998 that the reliability of the system as a whole
was 98.7% available. While the AA Management had assured
the AA Board and ADSCOM that FIDS was stable and ready
for use on AOD and workarounds or temporary solutions
could be depended upon should some displays or functions
fail, a different assessment was given by NAPCO to the
ADSCOM for the meeting of 4 July 1998 where FIDS was
reported to have been down for 9% of the time during the
continuos test run between 14 to 27 June 1998 and the
system was described as not satisfactory.


10.18     The train the trainers approach was adopted for
FIDS with GEC, EDS and relevant sub-contractors providing
training to the training instructors proposed by the AA
during Level 1 training.    The training instructors then
trained the end users to operate or maintain FIDS and
Level 3 training involved the airlines which would train
their own staff.       Training included TMS training,
FIDS/CUTE Interface training for the AA staff and for the
airline/handling agent staff.


Rewriting of the Design of the FIDS System

10.19     Some   14 months were taken in 1996 and 1997 for
the SSS to be     finalized and agreed upon between the AA
and EDS. The     resultant SSS had over 900 changes to the
PTS which the    AA and EDS held different views as to the
classification   as follows -

                                  AA         EDS
     No Change of Scope           84%        36%
     Increased Requirement         3%        56%
     Reduced Requirement          13%         8%

10.20     According to GEC and EDS, the changes were due
to the instruction of the AA to use Windows NT instead of
Windows   3.1  as   originally  proposed  and   the   many
modifications   made   by   the  AA   to  the    specified
requirement, rendering the original PTS could no longer
be employed with minor modifications and new software had
to be written from scratch.

10.21     On 10 December 1997, the AA and GEC/EDS reached
a commercial agreement to settle the latter‟s claims for
variations,   disruption  and   delay   which  had   been
outstanding since May 1996.     The AA Project Committee
Paper 10/98 recorded that the instructions issued by the
AA Management up to end 1997 had largely stemmed from the
then Operations Division and their own consultants. The
AA Management concluded that the majority of the claims
made by the contractor were legitimate variations due to
the ambiguity of the PTS and such variations had
seriously delayed and disrupted the progress of the
development of FIDS because the system software had to be
substantially rewritten. During the 37th meeting held on
22 January 1998, the AA Board had approved the claim
which had the effect of raising the contract value by
some 50% in the amount of around HK$89 million. This can
perhaps be taken as the tacit consent of the AA that the
long time taken for the rewriting of the system design of
FIDS was not, at least up to the moment when the
settlement agreement was reached, due to the fault of

Stability of FIDS/Fixing of PRs

10.22     During a meeting held with The Ombudsman, GEC
had confirmed that if the PRs could not be permanently
resolved, workarounds or temporary solutions to prevent
the problems from becoming significant to the operation
of FIDS would be employed. Both the AA and/or GEC were

fully aware of the level of outstanding PRs and the
prioritization that EDS was according to each PR. In the
Airport Works Schedule of Critical Activities Weekly
Status Reports prepared by the AA senior management, the
number of High Priority PRs remained to be fixed was over
100 as reported in the report for the week ending 3 May
1998.    The number of High Priority PRs had been
progressively reduced to about 11 for the week ending 14
June 1998.    On 17 June 1998, AMD and IT staff held
discussion with EDS and raised a list of some 38 items of
which 15 were AOR important affecting the operation of
FIDS. The parties concerned had agreed to progressively
fix the PRs but the AMD and IT people of the AA were
still concerned about Item 37 of the list on “Workstation
and printers not fully installed” which was described as
an operational problem and remained very important from a
“Gate Allocation” perspective.

State of Readiness of the PTB

10.23     The physical condition of the PTB was far from
being   ready   when    the   installation,    testing   and
commissioning work of the FIDS were carried out.         EDS
had, on several occasions in February and March 1998,
written   to  GEC   requesting    extension  of   time   for
completion of work due to delay and disruptions caused by
other contractors as the Communications Rooms were not
ready as some were lacking power or data supplies or
unfit   for    installation    of    sensitive    equipment.
Considerable amounts of water and dust were found in the
PTB while permanent air-conditioning or power supply were
not always available.     These had adverse impact on the
sensitive equipment installed in the PTB, resulting in
the need for replacement of some 400 monitors before
airport opening.     Furthermore, some 15 to 20 display
monitors had been damaged by leaking pipes and the fire
incident inside the PTB before airport opening.


10.24      Being concerned   with  the   development  and
stability of the FIDS before AOD and in order to
safeguard the operations of the airport, the AA, at the
Board meeting of 26 February 1998, directed the AA
management to work on a set of simple standby systems
that will be available in the event that main FIDS system
experiences reliability or outage problems. The standby
systems consist of two components; the standby displays
for flight information (Standby FIDS) and the standby
stand allocation (Stand Allocation System (SAS)). The AA
Board had eventually engaged GEC with Hong Kong Telecom
(HKT)   as   the  sub-contractor  for   the   design  and

development of the standby FIDS system.     The AA Board
also engaged the City University Consultants Ltd. which
had been involved in the design, development and
implementation of the Bay Allocation System and the
Check-in Counter Allocation System in Kai Tak since 1992
to develop SAS.    This Office was also told that the new
airport at CLK is the one and only international airport
in the world to date which has installed a Standby
FIDS/stand allocation system.

Standby FIDS

10.25     The Standby FIDS is a fallback display control
and management system that will take over the control of
all FIDS display devices when the FIDS is out of
operation.    Only basic and essential functions and
display information are provided in order to maintain the
normal operation of airport operators, airlines and their
passengers.    The Standby FIDS is to display flight
information within the time frame as specified by the AA
and information is kept up to date primarily by manual
entry. It would take a full team of 17 HKT personnel 40
minutes and a half team one hour and 10 minutes from
receipt of instructions to switch over the cables.     On
this point, a leading official of the Government had,
during a meeting held with The Ombudsman on 2 December
1998, confirmed with this Office that it would only take
30 to 45 minutes to switch from the main FIDS to the
Standby FIDS and, in the interim, there would be
workarounds which would provide the basic information
that the travelling public needed in order to catch their
flights, get to the right gates and board the planes or
for arriving passengers to know where to go to collect
their luggage.   It was also the intention of the AA to
switch over to the Standby FIDS if the main FIDS failed
and could not be recovered within three hours.

10.26     On AOD when the main FIDS was found to have
problems, the AA Management had first restarted FIDS and
subsequently   resorted  to   manual workarounds  (white
boards) for the dissemination of flight information.
Standby FIDS had not been invoked.

Stand Allocation System

10.27     The SAS has, amongst others, the functions of
displaying gate allocation using Gantt Chart, allowing
manual   input   of   required  information  for   gate
optimization and printing the Gantt Chart in a proper
format for verification. Although the SAS was developed
and intended to be used only as a standby system for

stand allocation in case of failure of the main FIDS and
the TMS, the AA Management had in fact, before AOD,
decided to use the SAS and not the TMS for stand
allocation when the airport opened.        This may have
something to do with the lack of confidence of the AA
Management in the performance of TMS approaching the AOD.
In mid-June 1998, AA staff still observed some problems
or deficiencies with the TMS during the system trial
including disappearance of some flight information and
the TMS Gantt Chart turning blank with no response.

10.28     In the Airport Works Schedule of Critical
Activities Weekly Status Reports for the weeks ending 31
May, 7 June and 14 June 1998, most of the outstanding PRs
were TMS related. In the Weekly Status Report of 21 June
1998, TMS was recorded as not usable. The AA Management
had therefore recommended to the AA Board that at airport
opening, the SAS would be used as the primary allocation
tool with parallel manual input to the main FIDS TMS.
The AA Management also confirmed with this Office during
a meeting that although GEC and EDS were aware of this
decision before AOD, neither of the companies had been
consulted on the decision not to use TMS for stand
allocation   on AOD.   It eventually turned out that SAS
was not used on AOD as it soon crashed.      TMS was only
used for stand allocation on Day 3 after airport opening.



11.1      The provision of air cargo processing terminals
and air cargo handling services is one of the crucial
airside services at the airport.         Having a single
monopoly at Kai Tak for over 20 years, there was
consideration to introduce competition in the new
operating environment at CLK.     Hence, franchises have
been awarded to two Cargo Terminal Operators (CTOs) to
provide cargo handling services at the new airport. They
are HACTL and Asia Airfreight Terminal Co. Ltd. (AAT).
The two CTOs are to provide the required, support and
optional   services   as  specified   in   the   Franchise
Agreement.    The franchisees are responsible for the
financing, construction and operation of their facilities
and generally have the freedom to set market prices for
their service. However, a price regulation mechanism has
also been developed to ensure that quality services are
offered at fair and reasonable prices by the franchisees.


11.2      HACTL  was   incorporated   in  1971   and   its
commercial operation commenced in January 1976. In 1997,
HACTL handled 1.7 million tonnes of cargo.     Until AOD,
the company operated two air cargo terminals, serving
some 70 airlines at Kai Tak.      Terminal 1 (T1) was a
conventional warehouse using a segmented storage system
that incorporated racking systems confined between the
floor levels.    A common storage system which allowed
capacity of the system to be used more effectively for
either imports or exports was used in Terminal 2 (T2).

11.3      The Franchise Agreement between AA and HACTL
was executed on 21 December 1995 for HACTL to provide an
air cargo service at the CLK airport for a term of 20
years. Pursuant to the Franchise Agreement, HACTL had to
ensure that by the key date (18 August 1998), the works
would have reached the stage of physical completion for
the issue of a TOP, and ST1 would be capable of
processing 5 000 tonnes of air cargo per day and
providing the required services at 75% of the designed
capacity.   A Certificate of Operational Readiness would
then be issued by HACTL.       In addition to air cargo
service, HACTL was also granted the right to provide ramp
handling service to freighters.


11.4      According to the Franchise Agreement, AA shall
monitor the compliance by HACTL of its obligations under
the Franchise Agreement.   AA had the right of access to
the ST1 site during the construction period and to ST1
during the services period for performing its statutory
duties, inspecting and monitoring the ST1, and checking
and enforcing the performance by HACTL of its obligations
under the Franchise Agreement.     Besides, HACTL had to
prepare and submit written monthly reports covering the
execution of the works to AA.    There were also monthly
franchise meetings which were attended by representatives
from HACTL and Commercial Division and Project Division
of AA.


11.5      NAPCO assumed an active role in monitoring the
progress of Government entrustment works in ST1.        In
addition    to   this,  NAPCO   also    co-ordinated   the
Government/HACTL co-ordination meetings and procedural
submissions    meetings between   CTOs   and   appropriate
government departments.     NAPCO‟s representative also
attended the monthly franchise meetings.


11.6      At CLK, there are three Ramp Handling Operators
(RHOs), viz., Hong Kong Airport Services (HAS), Ogden
Aviation (Hong Kong) Ltd. (Ogden), and Jardine Air
Terminal Services Ltd. (JATS). HACTL also provides ramp
handling services to freighters as well. As far as HACTL
is concerned, RHOs are responsible for moving the cargo
from HACTL to the aircraft and vice-versa.            The
relationship between CTOs and RHOs at CLK is much more
complex when compared with the operation at Kai Tak, as
there   was  only   one  franchisee   of   ramp  handling
operations, i.e. Hong Kong Air Terminal Services at Kai
Tak.    With deregulation of cargo handling and ramp
handling activities at CLK, the CTO-RHO relationship
developed from a simple one-to-one relationship to a two-
to-four relationship.


11.7     ST1 is designed to handle 2.4 million tonnes of
air cargo a year.   The degree of automation of ST1 is

much greater than that in T1 and T2, although the basic
automation technologies are similar to those in operation
in T1 and T2.      It covers the automation of physical
storage   containers,   and   automation   of  information
processing   and   information   interchange  with   third
parties.   The automation model in ST1 is a five-layered
control model.       System redundancy and operational
resilience are regarded by HACTL as key issues to the
ultimate success of a fully automated system.       Hence,
apart from being complex and sensitive, component
redundancies are incorporated in the system design for
the Cargo Handing System (CHS) at ST1.        The modular
design of the Container Storage System and Box Storage
System, i.e., separation of one zone from another,
minimises the effect on local failures on the overall
performance.    A similar arrangement is made for the
computer system.

11.8      HACTL uses the Community Systems for Air Cargo
2 at ST1 (which is at the fifth layer of control) to
interact with its customer airlines, cargo network
service providers, freight forwarders, AA and shipping
public.   The systems having the interfaces with COSAC
include FDDS and ACCS Customs.         Flight information
obtained through FDDS is critical to the efficiency of
HACTL‟s cargo handling operations.    It enables HACTL to
assign resources for the delivery and collection of cargo
to and from aircrafts.    The flight schedules define the
pattern and nature of the external demands upon HACTL
which, in turn, govern the timing and sequencing of its
internal processes and influence its application of
resources and facilities.


11.9      It was announced on 30 June 1995 that the
airport would be open in April 1998.    This Office noted
that HACTL had promised the AA to have 50% of ST1
available for operation in April 1998.    The promise was
made on a „best endeavour‟ basis and was considered to be
achievable provided there was no slippage in the
construction work.   However, throughout the construction
period, there were serious delays in the construction
works. In late 1996, HACTL was concerned that they might
not   be  able  to   cope   with  the   April  1998  AOD.
Accordingly, HACTL suggested in a press article that Kai
Tak be allowed to continue cargo flights for a few months
after opening of the new airport.     In March 1997, the
programme was 23 weeks behind schedule.     In June 1997,
HACTL suggested in a press article that a „soft‟ opening
be adopted, i.e., a testing period from midnight to 6 am
for aircraft, so that freighter operators could use the

airport and HACTL could work through the procedures for
handling aircraft at ST1.      On 13 January 1998, the
Government announced that the airport would be open on 6
July 1998.     This was a great relief to HACTL.        A
supplemental agreement was signed in April 1998 for
accelerated works to be carried out.     The TOPs for the
main building and the Express Centre were issued by the
BD on 3 July 1998 and HACTL issued the Certificate of
Operational Readiness on 18 August 1998.


11.10     Due to the delays in the construction of ST1,
there was an overlap between the construction works and
installation works in respect of the CHS. Besides, only
on-site testing of the two systems were conducted.
During the on-site testing and commissioning, a number of
software problems were identified.       There were also
mechanical problems from time to time which interfered
with the testing programme, but they were rectified by
either   the   software  engineers   or   the  mechanical
engineers.   However, given the tight time schedule for
testing and commissioning, a comprehensive system testing
was not fully carried out and only major functions of the
CHS had been tested to a satisfactory degree.


11.11     HACTL‟s officials told this Office that prior
to AOD, they believed that ST1 would be ready for
operation on AOD and they would have informed AA had
there been any indication that HACTL was not ready to do
so.   Before AOD, HACTL, on the one hand, realised the
risk involved if ST1 was to commence operation on 6 July
1998 as the delays in the construction work had adversely
affected their operational readiness and on the other
hand, believed that the AOD could not be further
postponed and they were never asked whether more time was
needed.   However, with over 20 years experience in the
Kai Tak operation, HACTL considered that they could
achieve operational functionality on AOD.    Nevertheless,
teething and maintenance problems were expected on AOD.

11.12     Initially, computer bugs were suspected to be
the main cause of the problems HACTL experienced on AOD.
However, after a more in-depth analysis had been
conducted, HACTL believed that there were some 20 factors
leading to the problems. These 20 factors had interacted
with each other in causing the problems.

11.13     Of   the   20   factors,   HACTL   particularly
highlighted to this Office that FDDS, dust contamination,
dolly quantity, massive variations of flight schedules,
de-regulation and simulated versus live loads. On FDDS,
as flight data was critical to HACTL‟s operational
efficiency, the interface problems caused by the failure
of FIDS had an adverse impact on HACTL‟s operations.
Dust contamination caused by on-going construction works
at ST1, on the other hand, had adversely affected the
operation of the CHS. While the non-functional FDDS had
lowered   the   operational   efficiency,   the   massive
variations of flights from schedules had further effected

the work scheduling and the use of dollies, which had
brought about the unavailability of dollies. The problem
became more acute as a result of the ramp interface
confusion caused by the de-regulation of RHOs as there
was insufficient communication amongst them.         HACTL
stressed that as the cargo handling activities were time-
driven, the inaccurate flight information supplied to
HACTL by AA via FIDS/FDDS had an adverse “snowballing”
effect on other activities. HACTL however admitted that
even if FIDS had been fully operational, HACTL would
still be facing some electro-mechanical fault on AOD.


11.14     AAT was successful in its tender and entered
into a Franchise Agreement with AA on 12 January 1996.
The term of the Franchise Agreement is 20 years.      The
provisions of the franchise are similar to those of the
Franchise Agreement that the AA signed with HACTL.
According to the Franchise Agreement, AAT was to issue
the Certificate of Operational Readiness in the 13th week
in 1998, i.e. between 30 March 1998 and 5 April 1998.

11.15     AAT‟s terminal has the capacity to handle up
to 420 000 tonnes of cargo annually.         Like HACTL,
computers are extensively used in AAT‟s operations and in
the processing of documentation as part of AAT‟s cargo
management system. On the mechanical machinery level, a
fully automated Material Handling System is used to
provide storage and retrieval functions for bulk and pre-
packed cargo.   The terminal has 34 workstations for the
build-up and break-down of cargo.    AAT‟s cargo handling
also had interface with FDDS as AAT also relies on FDDS
to get flight details such as aircraft arrival and
departure times and the parking bays of incoming and out-
going flights in order to collect and deliver cargo


11.16     Building works of the second cargo terminal at
CLK commenced in April 1996.           Despite that AAT
experienced some delays in the construction works, AAT
managed to obtain the Occupation Permit for the terminal
before AOD on 9 June 1998.           The certificate of
Operational Readiness was issued by AAT in June 1998.


11.17    As   mentioned   in   para.   11.6,   there   are   three

RHOs who are permitted to handle both passenger and cargo
flights at CLK, viz. HAS, Ogden and JATS.       Under the
Aircraft Ramp Handling Service Agreement, RHOs would be
responsible for -

    (a)   the transportation of air cargo, mail, baggage
          and other properties between aircraft, and
          between   the   aircraft  and   the  passenger
          terminal, the air cargo terminals and the air
          mail centre;

    (b)   the preparation for delivery onto aircraft of
          bulk baggage and/or baggage containers; and

    (c)   aircraft loading bridge operations, including
          aircraft   marshalling and  passenger  stairs

Before AOD, HAS produced a standard ground handling
agreement with the airlines for which it was responsible,
and discussed and agreed with the RHOs and the CTOs the
interface procedures to be adopted in the provision of
its ramp handling services.        There was a further
agreement between the three RHOs to support one another
in procuring and sharing ground services equipment during
the first three days of operation of CLK.    Further, the
Chek Lap Kok Ramp Operations Working Group was an
important working group among the RHOs, especially in
identifying and dealing with the practical resolution of
ramp handling issues as and when they arose.


11.18     The following were some alleged problems and
complaints in relation to ramp handling services on AOD -

     (a) Insufficient supply of dollies;

     (b) Lack of information in relation to aircraft,
         including flight arrival and departure details
         and the respective parking bays;

     (c) Confusion of the relevant cargo terminals to
         which cargo should be delivered;

     (d) Misdelivery of baggage to cargo terminals and
         vice versa;

     (e) Inability  to   deliver   perishable  cargo   to
         relevant cargo terminals expeditiously;

     (f) Delays    in    disembarkation    of    arriving

   passengers; and

(g) Mishandling or delay of incoming, transfer and
    out-going baggage.

According to the RHOs, the main causes of the problems
were the failure of the FIDS/FDDS, the late completion of
construction works and the failure of the CTOs to adhere
to the agreed interfacing procedures.    During a meeting
between this Office and the three RHOs, this Office
noted, in particular, of the following -

    (a)   Generally, the RHOs were not familiar with the
          new operation and working environment at CLK.
          The   introduction  of   deregulation  in   the
          industry led to multiple numbers of CTOs and
          RHOs operating at CLK.     This new industrial
          environment required sophisticated co-operation
          and co-ordination among these ramp operations

    (b)   Certain RHOs complained that the limited access
          of the RHOs to CLK before AOD had led to a lack
          of familiarity with the geography and working
          environment of CLK. This was mainly due to the
          fact that various areas had been blocked as
          construction sites where works were still in
          progress; and

    (c)   The scramble for dollies on and immediately
          after AOD was caused not by the actual shortage
          of dollies, but by the inability to off-load
          cargo and empty the dollies in time.


12.1      Since the announcement of the 6 July 1998 AOD,
ADSCOM had continued to monitor the overall progress of
all preparations and works progress for the opening of
the new airport.    ADSCOM had always held its views that
on opening the new airport must be safe, secure and
efficient.    This was repeatedly said on different
occasions by a leading official of the Government as the
only yardstick used in assessing whether the announced
AOD could indeed be achieved.    Regular meetings amongst
ADSCOM members themselves or those between ADSCOM and the
AA Management had been held for the purposes of
discussing and reviewing the progress gained in regard to
such items in the run up to 6 July 1998.


12.2      On 24 June 1998 and 4 July 1998, ADSCOM held
its 185th and 186th Meetings since its being set up in
February 1990.   Obviously, the occasions were primarily
taken to conduct some sort of a last-minute review of the
overall situation pertaining to the readiness of the new
airport and of the relocation plan.

12.3      Two papers were submitted by the AA Management
in its attempt to provide ADSCOM with its latest
assessment on the status of some of the issues identified
as critical to airport operational readiness which
include airport systems, GTC, Government entrusted works
at the airport, HACTL, Statutory Permits and Licences and
airport security.   On both papers, in spite of the fact
that there were still some outstanding items, the AA did
confirm, inter alia, that -

         “these activities will be operationally
         ready in time for airport opening on 6
         July 1998.”


12.4      This was the very last ADSCOM meeting held
prior to the AOD.       Apart from the ADSCOM members
themselves, invited to this meeting were the senior
officials and Consultant of NAPCO.    In attendance were
also the senior staff of the AA Management.

12.5      The senior official from CAD, whose major
concern at that particular point in time was on the
airport relocation exercise, was also invited to attend.
He reported that the relocation itself was likely to
proceed smoothly unless there was severe disruption to
air traffic when flights temporarily diverted elsewhere
wanted to return to Hong Kong after 0001 hours on 6 July
1998. In such an event, ADSCOM was assured that the CAD
would reach a decision and it would notify ADSCOM
immediately if anything went seriously wrong in the
relocation process.

12.6      As regards the status of outstanding issues
such as FIDS, standby FIDS, communication systems,
Government   entrusted  items,   air-conditioning,   GTC,
cleanliness of the rest rooms, security, HACTL, business
partners and signage, the AA senior Management kept
assuring the ADSCOM that they were making good progress
and should be ready for AOD.     In response, the ADSCOM
indicated it understood that there would be a lot of
loose ends to tie up at the last minutes and asked the AA
to keep a close watch and to smooth out the problems
areas identified.

12.7      In spite of the above last minute preparations
to get everything ready for AOD and the level of
confidence permeated among all those involved, the
airport did eventually run into serious operational
problems on the first day of its functional opening.

12.8      Some 22 problems began to emerge to affect the
operation and the efficiency of the new airport either on
or shortly after the AOD as follows -

    (1)   Air cargo facilities

    (2)   Delay in flight departure and arrival

    (3)   Missing TARMAC Buses

    (4)   Parking of planes

    (5)   Airbridges

    (6)   Baggage Handling System

    (7)   Baggage Handling by Ramp Handlers

    (8)   Flight Information Display System

    (9)   Water supply

    (10)   Air conditioning

    (11)   Public telephones

    (12)   Mobile phone networks

    (13)   Trunked Mobile Radio

    (14)   Escalators

    (15)   Direction signs

    (16)   Slippery floor

    (17) Water,     power      and   staff   resources   at

    (18)   Aircraft parking aids

    (19)   Cleanliness and refuse collection

    (20)   Bus passenger drop off at PTB Level 3

    (21)   Automated People Mover

    (22)   Access Control System (ACS)


12.9      According to AA, all problems, with the
exception of that in regard to the ACS, have been in
essence successfully dealt with shortly after AOD. As a
result, the deployment of security guards at the doors
had to continue. The system itself was reported to have
become more stable but the necessary SAT had on that
date yet to be completed. Accordingly, it was still not
known in late November 1998 when the ACS would become



13.1      This chapter first examines the contingency
plans of the AA and other major organisations for the
commissioning and operation of the new airport, including
the standby system plans of the AA for the FIDS and other
computer systems, the contingency plans of the HACTL and
the AAT in respect of cargo handling, and the contingency
plan for airport relocation. The chapter will then cover
the remedial measures taken by the AA, the HACTL, and the
Administration to tackle the operational problems of the
new airport since the AOD.


13.2      In order to safeguard the operations of the new
airport, the AA proceeded with the development and
implementation of a set of simple standby systems that
would be available in the event that the main FIDS system
experienced reliability or outage problems.         These
standby systems were to be ready at airport opening and,
from then on, could be depended upon as a contingency

(A)     Overall Design of Current Systems

13.3      Systems are connected together and the correct
information electronically transmitted to the different
systems when needed.

(B)     Standby System Principles

13.4      The standby systems were developed according to
the following key principles -

      (a)   the standby system must make use of the 2 000
            total server driven display monitors and LCDs
            that had been installed by the FIDS contractor

      (b)   a workable operating system acceptable to the
            AA must be ready before mid-June 1998. It must
            be simple, requiring minimal training; and

      (c)   there must be minimum impact to the on-going

work of the FIDS contractor and related
training and trials.     Their system must be
ready according to their stipulated contractual

(C)    Standby Systems

13.5      The standby systems consist of a number of
standalone systems or functions supplemented by manually
based operating procedures.    The main systems are the
flight display standby system, the allocation of desks
and   gates   and  other   manual   or  smaller  systems
requirements.   The programme development on each system
is discussed in more details below.

(a)    Standby Flight Display System

        There are three layers -

         (i)     At the core is the FIDS main computers
                 located in the two main Communications
                 Rooms    adjacent   to    the    Airport
                 Operations Control Centre (AOCC);

         (ii)    From here, cabling connections fan out
                 to more than 20 smaller communications
                 rooms located in the PTB.     Each room
                 has two or more smaller FIDS computers
                 called "Display Servers" that in turn
                 each manage up to 50 Monitors and LCD
                 Boards located by zone in the PTB; and

         (iii)   From each Display Server and Switch,
                 cabling again fans out to up to 50
                 devices in each zone.

Five standby options were considered from different
companies.   The options analysed more fully by the AA
were submissions from Hong Kong Telephone International
(HKTI) and GEC. Neither option on its own was considered
by   AA  the   best.     However   their core  strengths
complemented each other. The AA considered that the HKTI
had the software development and Kai Tak knowledge while
the GEC fully understood the network design of the
current FIDS system. The accepted recommendation of the
AA was to combine these core strengths.     The AA then
worked with the HKTI and the GEC to specify the system
and begin the development process. A simple prototype of
standby FIDS was planned to be ready by mid-May 1998 and
the final system by mid-June 1998.

(b)    Allocation System

This system assisted with the efficient scheduling and
management of aircraft gates and stands and check-in
desks.   These functions were integrated into the main
FIDS system.

This standby system was a simple standalone system. The
development work was targeted at delivery of a prototype
by mid-May 1998.

(D)     Other Requirements

13.6      The overall need was to ensure that timely
information was delivered to the AOCC so that the standby
FIDS could be kept up-to-date by manual input. Briefly,
the interfaces or systems that do or will work are -

      (a)   Society for International Telecommunications
            for    Aviation/CUTE  was   known  to   work
            independently.    The links to the BHS were
            proven.     A fax facility to the AOCC was

      (b)   Information from the CAD (flight ETA etc.)
            could be printed in the AOCC for Flight Display
            update and     the Airport Control Centre for
            Gate Allocation.    This     connection     was
            available and tested;

      (c)   Download to the AODB of the seasonal and weekly
            airline   schedules    via   Cathay   Pacific's
            Scheduling Committee Computer was available in
            floppy diskette form; and

      (d)   Manual input functions to the AODB had been
            approved and were developed. This also enabled
            data to be passed to the MTRC for their systems
            and to HKT for flight data distribution to
            government   agencies   and   airport  business
            partners.   These links were tested and were
            then seen as very low risk items.

(E)     Standby System Overall

13.7      According to the ADSCOM paper in April 1998,
collectively, the interfaces and procedures described
above would enable the airport flight displays to provide
essential basic information.    All remaining interfaces
would not be operational. These could be handled either
through manual input or brought back up-to-date once the
main FIDS system came back on-line.

(F)     Risks

13.8      According to the same ADSCOM paper in April
1998, taking account of the remaining time to airport
opening, there were a number of risks associated with
implementing the standby system.      The most important
risks were the ability to drive the display monitors that
were installed.    The capability to drive the existing
monitors and LCDs was to be established by early April

(G)    Schedule

13.9      In April 1998, the AA was working with the
contractors to identify earlier delivery time-frames so
that there would be more time for training before airport

13.10     As in April 1998, the AA believed that the
current momentum to complete the GEC/EDS main FIDS system
must be maintained.   The then positive results from the
Site Acceptance Tests and internal trials had indicated
that the system could be ready for operations at airport
opening.   The AA also believed that diverting assigned
resources onto other initiatives would be disruptive.

13.11     According to the ADSCOM paper in April 1998,
the AA would provide a standby set of systems and
procedures permanently in the event of unforeseen
problems with the different systems.    Urgent action had
been approved by the AA Board to ensure that these
standby systems were to be available by airport opening.


13.12     According to the HACTL, it was never intended
to have the entire terminal fully operational on the AOD,
since 50% of the design capacity of the ST1 would be
sufficient to meet the requirements on the AOD.        By
achieving 75% of the capacity on the AOD, there would be
a buffer of 50% of the required capacity to meet
unexpected upsurge in demand.    On the other hand, the
planning target of having both the CSS and the BSS 100%
operational on the AOD was aimed to provide a loading
capacity in excess of the cargo handling demand on the

13.13     There are some built-in contingencies in the
systems design of the ST1. These contingencies are in a
form of system/component redundancies. The main purpose
of redundancies is to minimise the effect of systems
failures within the ST1.    The modularity in design and
operations of the ST1 ensures that any local failures
would have a minimal effect on the performance of the
total facility, as the operations of the failed module
could be transferred to an alternative module with
compatible functions.   There are also back-up machinery
and equipment such as stacker cranes. The same applies to
power supply and the information technology systems where
redundancies also exist.      The primary and secondary
computer rooms have other sources of services and
information independent from each other.

13.14     The HACTL regarded the best way to insure
against risk was to reduce problems to the minimum.
Hence, training for its staff was supposed to be part of
its contingency plans.   Besides, presentations/briefings
of those involved in the trade on matters related to
procedural changes on cargo handling related issues were
held.   Furthermore, there was a special duty-roster for
the HACTL‟s staff, including the setting up of a special
operational support team to trouble-shoot any problems
which might surface during the run-up to AOD.

13.15     The   HACTL   also  believed   that   with   its
experienced staff having worked in Kai Tak‟s T1 and T2
for a considerable period of time, they would be able to
overcome   any   operational   difficulties   that   might
encounter. Apart from this, there were also contingency
plans to cope with individual technical problems.


13.16     According to the AAT, their contingency plans
are in two folds.     Internally, there are a number of
contingency plans to deal with specific problems.   For
instance -

     (a)   contingency   plan   to   cater   for   terminal
           operations commencement without the Pallet
           Cargo   Handling   System.       This   involves
           additional equipment and operators; and

     (b)   contingency    plan   for    late  issuance  of
           occupation permit.     This involves changes to
           the   interior    decoration   of  offices  and
           adjustments to the training venue.

Item (a) was in fact devised at an earlier time when the
AOD was still in April 1998.

13.17     Externally, the AAT has partners from Singapore
which are considered to have extensive experience in the
air cargo industry. They could render assistance to the
AAT through secondment of experienced cargo staff from
Singapore to supplement local manpower. In fact, a set-
up team comprising eight secondees for two shifts from
Singapore was put in place before the AOD.


13.18      According to the CAD, the biggest risk to the

Move Schedule of the airport relocation was weather,
particularly as early July was prone to unstable weather
conditions    including    typhoons    and    rainstorms.
Postponement of the final stages of the Move might need
to be seriously considered if there was any likelihood of
winds high enough to necessitate partial closure of the
Lantau Link. This was because, should the upper deck of
the bridge have to be closed, some 'out of gauge'
vehicles, most of which were 'time-critical' and would
not be moving until the last stage of the Move, could not
pass through the lower deck.      The hoisting of No. 3
typhoon signal would also mean the automatic suspension
of the sea move as barge operators' insurance was no
longer valid under these conditions.

13.19     The AA also developed an overall contingency
strategy in consultation with the Hong Kong Observatory
(HKO), and other key departments such as the CAD, the
Hong Kong Police Force and Marine Department as follows -

    (a)   Assessment   Point   1-   7    days    before   the
          commencement of Phase 4

          This provided an opportunity to review the then
          progress of the Move so far, pin-pointed the
          need   for   any   operational   changes   and,
          crucially, to assess the likelihood of adverse
          weather conditions interfering with the final
          stages of the relocation; and

    (b)   Assessment Point 2 -      72   hours   before   the
          commencement of Phase 4

          This was the point at which the HKO would be
          able to provide a fairly accurate forecast of
          the weather conditions over the crucial 5/6
          July 1998 period to assess whether there was a
          threat of a tropical storm affecting Hong Kong.

13.20     According to the CAD, it had been agreed with
the airline community that any postponement would be for
a period of seven days.     Under no circumstances should
Hong Kong be left in a situation where neither Kai Tak
nor the new airport was adequately staffed and equipped
for operation.   If delays were incurred due to weather,
once   essential  and   time   critical  ground  handling
equipment began to move to CLK a point of no return would
be reached.    The new airport at CLK would open next
morning despite the fact that its capability might still
need to catch up during the first few hours of its new


(A)     Remedial Measures Taken by HACTL

(a)     Back to Kai Tak

13.21     As   HACTL   was  unable   to   process   cargo
effectively at ST1 on AOD, on 7.7.1998, HACTL made a
public announcement of the temporary measures to be taken
to tackle the difficulties. These included -

      (i)    to re-open T2 of Kai Tak to accept pre-pack
             cargo for export freighters and to release
             import cargo; and

      (ii)   to impose temporary embargoes on export bulk
             cargo and import cargo on passenger flights
             for 24 hours, except perishables, strong room
             shipments, livestock and urgent materials
             which continued to be handled through ST1.

13.22     On 8.7.1998, a further announcement was made on
the extension of the arrangements announced on 7.7.1998,
including the embargoes, for 2 more days.    Export cargo
processing would be resumed at ST1 on 11.7.1998 and
embargoes on import cargo (except perishables, strong
room cargo, refrigerated cargo, life-saving materials,
news material and statutory controlled items) would be
lifted on the same day, but the cargo would be handled at
T2, supported by the C&ED, instead of ST1 until further

13.23     According to HACTL, such temporary arrangements
were made after consulting the airlines and C&ED.     The
objectives were to provide the services to customers and
at the same time allowing its engineers and contractors
adequate time to rectify the hardware and software
problems   with    the   Box    Storage   System   (BSS).
Nevertheless, HACTL disputed that there were any serious
hardware and software problems with the BSS.

(b)     Moratorium

13.24     Despite that temporary arrangements were put in
place, the operational problems remained unresolved.
Hence, on 9.7.1998, HACTL imposed a nine-day moratorium
on all cargo on all aircraft, except inward perishables,
inward and outward news, life-saving materials and strong
room items, from 9.7.1998 to 18.7.1998.    The purpose of
the moratorium was to clear all cargo held at the
terminal building which could then provide HACTL with an

unhindered working environment. The cargo at ST1 were to
be moved to T2 for storage and distribution.     This was
regarded as necessary to ensure the efficient and
effective functioning of the operational aspects of the
terminal in the medium and long term.      HACTL stressed
that the decision was made after in-depth discussions
with HACTL Board members, relevant Government departments
and AA.

13.25     On   15.7.1998,  HACTL   reported  that  steady
progress was being made in the normalisation of air cargo
operations and eased restrictions to accept export cargo
on narrow bodied aircraft.       ST1 managed to process
approximately 1 400 tonnes per day out of the expected
daily load at start of operations of 4 000 tonnes per
day.   HACTL also emphasised that perishables were still
handled relatively smoothly throughout ST1 and both the
Express Centre at ST1 and T2 at Kai Tak were operating
normally.    All of the more than 2 000 containers
previously held in the CSS of ST1 had been transported
successfully to Kai Tak and the cargo would be
progressively released to consignees from Kai Tak.    The
Government had also rendered assistance to HACTL in
trucking the containers to Kai Tak.

(c)     Four Phase Recovery Plan

13.26     On 16.7.1998, HACTL announced a four-phase
recovery programme for air cargo, with the first phase to
be implemented on 18.7.1998. Under the programme, HACTL
would utilise both ST1 and T2 to increase the amount of
air cargo handled in four stages.    HACTL‟s strategy was
to move gradually all operations to ST1. Details of the
programme are as follows -

      (i)    Phase One

             From 19.7.1998, HACTL would begin to process
             imports from freighters at T2 and exports for
             freighters at ST 1. This would represent 50%
             of the projected daily tonnage. However,
             import perishables would continue to be
             processed at ST1.

      (ii)   Phase Two

             By end of July 1998, operations would be
             extended to cover export pre-packed cargo on
             both freighters and passenger aircraft and
             all import cargo on freighters and passenger
             aircraft. This would represent at least 75%
             of projected total daily tonnage.

(iii)   Phase Three

        From mid-August 1998, HACTL would process
        100% of both imports and exports, with
        operations extended to cover pre-packed and
        bulk export cargo using both ST1 and T2.

(iv)    Phase Four

        The fourth and final phase of the programme
        involving the transfer of import operations
        to ST1 was expected to be implemented by the
        end of August 1998.

(d)    Implementation of the Recovery Plan

13.27     HACTL reported on 24.7.1998 that since the
implementation of the recovery plan, HACTL was able to
process an average of 2 520 tonnes of cargo per day.
HACTL believed that the steady progress made had enabled
HACTL to introduce the phasing in of cargo on inbound and
outbound passenger aircraft slightly ahead of schedule.
Acceleration of the recovery plan was noted on 24.7.1998,
where HACTL eased restrictions further with a partial
lifting of the moratorium on passenger aircraft cargo,
originally scheduled to remain until the end of July.
From this date, one pallet of general cargo per inbound
passenger aircraft was accepted, to be processed at T2.
A further liberalization of import constraints was seen
on 28.7.1998 when HACTL began to process two pallets of
general cargo per inbound passenger aircraft.        This
eventually led to full resumption of all import cargo
handling services from 31.7.1998.

13.28     Starting from 12.8.1998, cargo on all Cathay
Pacific inbound flights, both passenger and freighter,
was handled at ST1.       This was considered to have
facilitated the handling of transshipment cargo which was
regarded by HACTL as a major operational breakthrough.
Instead of moving import cargo to Kai Tak, processing it,
and moving the transshipment component back to CLK, the
majority of it could be done under one roof at ST1.
However, import cargo of other airlines, except for
perishables, strong room shipments, livestock and urgent
materials was still processed at T2.     Such a staggered
approach was to control the build up of cargo in
container and the BSS at ST1, so as not to overload them.

13.29     All export air cargo resumed following the
lifting of the remaining partial restrictions on export
cargo for both passenger and freighter aircraft through
ST1 on 14 August 1998.      80% of demand in respect of
import cargo was handled at ST1 while the remaining
import cargo from airlines other than Cathay Pacific was
handled and processed at T2. This marked the completion
of Phase Three of HACTL‟s recovery programme.

13.30     There were improvements to the handling of
import cargo from 18.8.1998, when 90% of all HACTL cargo
was handled at ST1. The remaining import cargo handling
operations were transferred to the terminal on 24.8.1998.
This represented the completion some eight days ahead of
schedule of the Phase Four air cargo recovery programme
which began on 18.8.1998.

(B)    Remedial Measures taken by the Government

13.31     As HACTL normally handles about 80 per cent of
Hong Kong‟s air cargo, such a severe disruption in its
services is bound to hit Hong Kong‟s import and export
trades   considerably.     During  the   moratorium,  the
Government, together with AA, had worked out with the air
cargo industry a temporary arrangement to allow some
cargo to be exported.

13.32     Special arrangements to facilitate temporary
air cargo services operation at Huangtian Airport in
Shenzhen were agreed with the Central People‟s Government
on 15.7.1998 and implemented on 17.7.1998.

13.33     For export cargo, it would be collected and
processed at the Air Freight Forwarding Centre (AFFC).
After inspection and sealing by Hong Kong Customs, the
cargo would be transported to Huangtian Airport by
vehicles with express transit labels issued by C&ED
through a special channel at Lok Ma Chau/Fu Tian Duty
Free Zone.   Simple customs declaration procedures were
applied to cargo transported through Lok Ma Chau/Fu Tian
Free Zone. The company appointed by the HKSAR Government
would check the seals on arrival of the cargo at the
Huangtian Airport.     The cargo would be loaded onto
airport for export if all the seals were untampered with.

13.34     For import cargo, it would be sealed by the
company appointed by HKSAR Government upon their arrival
at Huangtian Airport and would be transported to Hong
Kong by vehicles with express transit labels through the
special channel at Fu Tian Duty Free Zone/Lok Ma Chau.
Simple customs declaration procedures were also applied
to cargo transported through the special channel at Fu
Tian Duty Free Zone/Lok Ma Chau.

13.35     C&ED   and   Hong   Kong   Police Force  were
responsible for taking appropriate security measures in
relation to the special arrangements.

13.36     In accordance with the agreed arrangements made
with the appropriate authorities, C&ED entered into a
contract with SGS HK Ltd. for the company to act as a
sole agent to assist in sealing cargo containers at the
CLK airport and Huangtian Airport. C&ED also pointed out
the conditions attached to the special arrangements -

    (a)   all cargo consignments diverted to or from
          Huangtian Airport must be exclusively for
          export from or import into Hong Kong;

    (b)   the   airline   concerned   should   seek   prior

      approval   of   flight   diversion    from   the
      aeronautical authorities of the Mainland; and

(c)   prior arrangements should be made with AFFC to
      use the facilities at AFFC.

This special scheme was only applicable to cargo
freighters which were originally scheduled for landing
and taking-off at Hong Kong.

13.37     Apart from diverting the flights to other
airports, arrangement had also been made to use the
facilities provided on a temporary basis at the new
airport's Air Freight Forwarding Centre.

13.38     In response to requests from the Hong Kong
Shippers' Council and Hong Kong Air Freight Association,
the Government had also offered them rent-free usage of
the basement of the Kai Tak Passenger Terminal Building
which used to be the baggage sortation hall, for storing
delayed cargo pending their exportation out of Hong Kong.

13.39     A more efficient liaison mechanism was put in
place on 25.7.1998 with the support from the Government
and the AA to enable the traders, shippers and air cargo
industry to review progress in air cargo operation at the
new airport and consider measures to improve the working
procedures. An arrangement was agreed whereby HACTL and
AAT would operate hotlines to assist members of Hong Kong
Association of Freight Forwarding Agents (HAFFA) to
answer enquiries from the trade.

13.40     The meeting to discuss the above liaison
mechanism was attended by representatives from the Hong
Kong Shippers' Council, Hong Kong Exporters' Association,
HAFFA, Carrier Liaison Group, HACTL, AAT and AFFC.
Representatives from the ESB and AA were also present.



14.1      The Airport Authority is a statutory body
wholly owned by the Government.    It is responsible for
providing, operating, developing and maintaining the new
airport at CLK for civil aviation.      The new airport
project is one of the world‟s largest and most complex
infrastructure projects with a tight time frame for

14.2      ADSCOM   has    the   overall   responsibility   of
overseeing, directing and co-ordinating the ACP.          Its
executive arm, i.e. NAPCO is responsible for overall
project management and co-ordination. Insofar as the new
airport   project    is   concerned,    the   AA   has   full
responsibility   for    its   own   project-level   planning,
execution, control and management while NAPCO monitors
the overall progress of the airport programme, including
monitoring   and   observation    of   airport   system   and
operational development by the AA and that of its
franchisees including HACTL through the AA.

14.3      The preparation to full operation of the new
airport involves intensive and extensive planning by the
AA, its many contractors, franchisees and licencees,
airlines, commercial tenants and government departments.
It calls for a high level of co-ordination and co-
operation within AA itself, particularly between the
Project Division and the Airport Management Division and
between the AA, its business partners and Government. An
AOR programme is drawn up to identify and monitor the
progress of all these activities for a smooth airport‟s


14.4      For the purpose of AOR, the AA planned as early
as September 1994 for a “clear” trial period, i.e. a
period   dedicated   to   training,  trials   and   other
operational transition activities following substantial
completion of airport facilities and systems, and their
hand over to the operators. This plan provided a 4-month
period for airfield trial operations and a further 3-
month period for airport-wide trials.       This “clear”
period was contingent on the completion of main civil
engineering works and of airport commissioning and system
integration.     Unfortunately, there were delays and

slippages to various projects and a number of work
activities extended into the “clear” trials periods.
Such was the position in August 1997 when the AOD was
scheduled in late April 1998.

14.5      In August 1997, NAPCO prepared, in cooperation
with the AA, an assessment of the AOR process for the new
airport. According to NAPCO, the definition of AOR used
as a basis of the assessment was as follows -

          “The AOR process encompasses all steps
          necessary to transition the New Airport
          from    construction,      testing     and
          commissioning through familiarization,
          training, trials and relocation to
          ensure   safe,   smooth    and   efficient
          operations from the first day of
          airport opening, at a demonstrated and
          acceptable     level    of     operational
          standard.    This can only be achieved
          when the operator and all involved
          parties are fully familiar with the
          airport    facilities,      systems    and
          procedures, and only after systems and
          procedures are reliable, practised and
          proven.    The success of the process
          depends on a comprehensive level of
          integrated planning, coordination and
          management,    and   the     unconditional
          commitment, participation and sharing
          of information by all parties”.

14.6      In essence the above definition called for a
total reliability of all facilities and systems and total
familiarization on the part of personnel operating the
facilities and systems.      It gave no scope for any
failures from the first day of airport opening. Against
the definition, NAPCO had reservations on the readiness
of a number of critical issues which might frustrate the
commissioning of the new airport in April, 1998, as
recommended by the AA.

14.7      NAPCO‟s assessment also included reservations
on AA‟s strategic planning and organizational efficiency,
as follows -

    (A)   that AA planned to proceed with training on
          systems that had not been fully developed.
          There was a high potential that staff had to be
          “retrained” on the actual “Day One” system;

    (B)   lack of integrated AOR plans and programmes.
          There were a number of schedule and interface
          mismatches in the AA programmes; and

    (C)   lack of coordination within the AA and between
          the   AA  and   their  business   partners and
          Government departments on AOR issues.

14.8      The above assessment was presented to ADSCOM on
20 September 1997 with AA still pressing for an opening
date in late April 1998.      On 8 January 1998, ADSCOM
decided 6 July 1998 as the AOD, against the wishes of AA.
Government referred to the unavailability of the Airport
Railway as a reason for deferring the AOD to 6 July 1998.
On the other hand, the additional time between April and
6 July actually re-introduced a “clear” trials period.
Despite this decision, the AA in its letter of
10 December 1997 to the Administration re-confirmed that
the systems would be completed and in place no later than
15 February 1998, for hand over to the AA‟s AMD for final
training and trials and that the airport can be ready for
safe, smooth and efficient operation on an appropriate
date in the last week of April 1998.

14.9      Between the announcement of and the run-up to
AOD, a number of problems surfaced; mostly during
tests/trials of operational functionality.   There were
continued delays in physical works, facilities and

14.10     Apart from air cargo handling chaos which
lasted for more than one month, a lot of operational
problems emerged on AOD, important ones being -

      (A)   blank   FIDS   monitors   and   inoperable   LCD

      (B)   missing and incorrect FIDS information;

      (C)   gate change announcements not displayed on FIDS

      (D)   large number of unsorted baggages; and

      (E)   malfunctioning of ACS resulting in blockages
            and delays for both departing and arriving

14.11      Most of these problems occurred during the
trials and were repeatedly reported to ADSCOM by NAPCO as
risks   to   a  smooth  opening   of  the   new  airport.
Observations following our investigation are set out in
the following paragraphs.


(A)     The preparation and commissioning work by the AA
        for the opening of the new airport as well as the
        degree of AOR of the new airport as on AOD, i.e. 6

  July 1998

(1)   Despite the tremendous efforts on the part of
      the AA, it was not able to deliver the new
      airport on its opening at an acceptable level
      of operational standard.    While some inaugural
      glitches were understandable for a project of
      such magnitude and complexity involving input
      from numerous parties, the extent and immensity
      of breakdown and malfunctions of the flight
      display, baggage, airbridge and cargo handling
      systems and others went far beyond the expected
      teething problems that seriously hampered the
      smooth and efficient operations on AOD. The AA
      was over confident and had under estimated the
      compounding   effects    of    the   anticipated
      “teething problems” as they occurred on AOD.
      The AA had over relied on the temporary fixes
      and workarounds for AOD which posed substantial
      risk   for   smooth   and    efficient   airport

(2)   The AOR was primarily concerned, first and
      foremost, with safety and then with other basic
      and critical requirements for operating the new
      airport on its opening.        Against such a
      background, it is perhaps not difficult to
      appreciate that some of the 22 problems,
      identified by the AA as having manifested
      themselves on AOD or immediately thereafter,
      were not, by official definition, real AOR
      issues or at least were not, affecting the
      safety of the aircraft or its passengers.
      Indeed there have been no indications that
      public safety had ever been compromised on or
      since AOD.   It is of course equally true that
      inconvenience   and  delays   were   caused  to
      passengers and other airport users on AOD or
      shortly thereafter.

(3)   Some of those 22 problems were, however,
      indisputably among the critical items of the
      AOR programme.    Those connected with the air
      cargo operations, particularly the saga of
      HACTL, are vivid and classic examples falling
      under such a category.       In this particular
      aspect, the certificate of readiness was only
      issued by HACTL to AA on 18 August 1998, some
      six weeks after the AOD.    Such a fact, either
      by   itself  or   in   combination  with  other
      problems, may be taken as an indication that
      the new airport was not 100% ready for full
      operation on AOD.

(4)   In mid 1997, NAPCO observed that there was a
      lack of integrated AOR plans and programmes,
      and no demonstrated ability to track the
      sequence of required AOR steps within the AA‟s
      master programme.    A number of schedule and
      interface mis-matches in the AA‟s programmes
      were   also    detected.      This   deficiency
      highlighted problems in the overall planning on
      the part of AA.

(5)   The problems connected with FIDS performance on
      AOD, painfully disappointing to all, were not
      exactly totally unforeseen during the various
      development and testing stages of the system.
      Not all identified/known PRs, software or
      hardware defects were provided with permanent
      solutions, prior to AOD. There were so-called
      workarounds but such were temporary solutions
      only.    Such is another example for anyone
      subscribing to the idea that the airport was
      not really ready for opening on AOD.        The
      general failure of the ACS on AOD is another
      case in point.     The problem was identified
      prior to AOD but not “fixed” electronically on
      AOD.     There   was  too   much  reliance   on
      workarounds and assurances by AA on the
      reliability of critical items including FIDS
      and ACS.

(6)   Parts of the airport complex still looked and
      existed like a huge construction site on AOD
      with various items of construction/fitting out
      projects awaiting completion.     While airside
      safety was not affected, the general impression
      was that the new airport was not in an ideal
      situation in terms of overall readiness on AOD.

(7)   The contingency procedures for ACS states that
      access control is a legal security requirement,
      and if there is no system available, airport
      operations would essentially have to cease.
      Problems on ACS controlling the security doors
      came to light during the trials.         Whilst
      acknowledging the problems, the AA was not seen
      to have resolved the problems. Up to the time
      of write-up of this report, the ACS is still
      not fully functional and some doors are still
      manned by security staff.

(8)   Training/familiarization, or rather the lack
      thereof, is another critical area in the AOR
      programme.    The originally planned “clear”

trial period slipped and AA planned to proceed
with training on systems that had not been
fully    developed,   integrated,    tested and
commissioned.    The ultimate scenario was that
the final handover of “Day One” system took
place in June 1998 - 4 months after the
original target date of 15 February 1998.
Training programme was necessarily delayed and
compressed. There are good reasons to believe
that better co-ordinated training programmes
providing more hands on experience in a less
pressurized environment might have been what
was required for AA staff to master the systems
and better prepared for crises situation. This
is    particularly   important    when   it was
impossible to have a full scale test prior to

      (9)   In contrast with most of the airport facilities
            and systems, the CAD‟s Air Traffic Control
            Complex     building     was      completed      in
            February 1997.    The installation, testing and
            commissioning   of   the   air   traffic    control
            equipment and air navigation facilities and
            flight    data      processing     systems      and
            communications   systems   under    CAD   were   on
            schedule. Training of staff was not “trimmed”
            and the facilities, equipment and systems were
            in a state of readiness on AOD.        The natural
            consequence was that it was smooth sailing for
            CAD on AOD and thereafter.

      (10) The compression of the training programme for
           FIDS from 6 weeks to 2 weeks appeared to be a
           compulsory compromise in face of a tight time-
           frame rather than a result of justified
           streamlining.   The 2-week training programme
           was the bare minimum which fell short of the

      (11) The position in late June 1998 was that despite
           AA‟s repeated assurances, NAPCO anticipated
           risks to the smooth operations of the new
           airport in the light of problems on the
           facilities and systems critical to the airport

(B)   The framework and mechanism established by the AA to
      achieve its purposes and to discharge its functions,
      both prior and subsequent to the opening of the new
      airport; and whether the framework and mechanism are
      adequate and effective for their intended purposes

      (12) There were internal organizational problems
           within the AA.   It is almost common knowledge
           that the working relationship between the PD
           and the AMD is something more than what can be
           comfortably labelled or dismissed as friendly
           competition or healthy internal rivalry.  This
           impression was categorically pointed out to
           ADSCOM by the CAD and NAPCO.

      (13) The airport is now being operated, by and
           large, smoothly, both in terms of passenger and
           air cargo services.    There is no conclusive
           evidence that the framework and mechanism
           established by the AA has failed or been
           inadequate or otherwise ineffective to achieve
           its intended purposes.    What might have gone

wrong was that people taking charge had not
discharged their duties effectively.

      (14) The internal organizational problems manifested
           within AA were known to the Government and AA
           Board of Directors in 1996. As a follow-up of
           the consultancy report, a senior government
           official was seconded to AA in January 1998.
           This was a prudent move on the part of the
           Government and AA.     It was noted that the
           working problems between the PD and AMD had
           still   not  been   adequately   addressed   and
           resolved by senior management and the AA Board.

(C)   The nature, extent, causes and results of           the
      various major problems affecting the new airport

      (15) The AA has identified some 22 problems.        They
           were discussed in Chapter 12.        Although FIDS
           was generally believed to be the major problem
           on   AOD    for   failing   to   provide   accurate
           information for processing passenger, aircraft
           movement,    and   ramp   and   baggages   handling
           operations, it was not the only cause of the
           problems.     The immensity of the problems was
           the result of the compounding effect as they
           occurred on AOD. The malfunction of ACS which
           controlled the electronically operated security
           doors,    including    airbridges   doors   causing
           access blockages and delays for both departing
           and arriving aircraft and the need to re-assign
           gates and more aircraft to remote stands. The
           crash of SAS on AOD caused the need to perform
           gate allocation manually. Eventually, the most
           crude    workaround    using   “whiteboards”    was
           resorted to.

      (16) The chaos on the ramp and the unforeseen demand
           for ramp services at remote stands coupled with
           communications difficulties as the TMR system
           was unable to be used beyond capacity, were
           results of the snow-balling effects as problems
           compounded each other.     These problems also
           revealed the inadequate communications and lack
           of co-ordination between the AA, airlines, ramp
           handlers and bus crews.    Finally, the baggage
           problem was a result of inadequate operational
           training and familiarization of the BHS by
           operators and ramp handlers.

      (17) The HACTL problems have many causes but the
           effects of the unsatisfactory FIDS performance
           on AOD appeared to have been exaggerated. The
           performance of the FDDS on that day should have
           a bigger impact than FIDS. Even if there had
           been no FIDS or FDDS problems, ST1 would still

have its operational problems on AOD.

(18) There    were  interface   problems   seriously
     affecting both the airside as well as landside
     operations.   The ramp handling problems were
     good examples.    The RHOs complained to this
     Office that up to AOD construction work was in
     progress in various parts of the new and
     enormous airport complex.   As a result, their
     routes to, from and within the cargo terminal
     were different during trial days and AOD and it
     was not possible to familiarize with the
     “geography” of the cargo handling area.      In
     this regard, CROW which was strictly a civilian
     body, comprising CTOs, RHOs and AA, might not
     have been as effective as it was first assumed
     or expected.   A more active and leading role
     played by the AA should have produced better

(19) The    introduction     of    competition     and
     deregulation of the once monopolized cargo
     handling/ramp handling services provided a new
     business environment alien to all who had
     worked in Kai Tak.   The number of CTOs to the
     number of RHOs in Kai Tak and in CLK were
     respectively 1:1 and 2:4 (including HACTL‟s
     dual role of CTO and RHO).     The AA had under-
     estimated     the     inherent      co-ordination
     difficulties of having new and old CTOs and
     RHOs operating smoothly on AOD in an unfamiliar
     and huge physical environment and had not
     prepared for the eventual complications.

(20) HACTL had a proud record of success for over 20
     years.   It is not surprising that the AA and
     Government had full confidence on HACTL‟s
     performance. As a result, both the Government
     and AA did not closely monitor the performance
     of HACTL although the Government did raise
     concern    for    the    lack    of    progress.
     Representatives of HACTL also expressed that
     they never doubted the readiness of ST1 on AOD.
     It should however be noted that HACTL‟s
     excellent   track    record   was   built    up,
     incrementally over 20 years, as a monopolized
     air cargo handler at Kai Tak.           A fresh
     assessment should have been made on the
     company‟s ability to stand ready to a tight
     time frame when substantial delays in physical
     works were reported; and to perform adequately
     under an entirely different environment.

(21) There were traces of evidence that passenger

    service   might  have   been   accorded  higher
    priority to cargo handling.    Prior to AOD, a
    Board member of the AA remarked that the issue
    with HACTL was a peripheral matter. The annual
    reports of the AA for 94/95, 95/96 and 96/97
    stated that air cargo services were regarded as
    part of airport support services, airside
    support services and aviation support services
    respectively. This thinking, together with
    over-confidence on HACTL‟s performance, might
    have led the AA to under estimate repercussions
    arising from a breakdown of the cargo handling
    service on AOD.

(22) As far as the FIDS as a problem area is
     concerned, some precious time, 14 months or so,
     had been lost due to disagreement between the
     AA and GEC/EDS on its designed functionalities.
     Although most of the disagreement was resolved
     by a settlement agreement in December 1997, the
     lost time could not be “bought back”, resulting
     in the shortening of the overall time-frame for
     the development, installation, testing and
     commissioning of the system and staff training.
     Furthermore, whether the decision to combine
     the FATs/SATs was a good and commendable move
     is still very actively disputed by the parties
     concerned.      The “combination” was agreed
     between GEC and the PD of AA in view of the
     time frame. The AMD was not consulted. It was
     not supported by the EDS.

(23) Both the HACTL project and FIDS could have
     produced better results on AOD had more time
     been allowed or made possible for their systems
     and equipment to be tested thoroughly and
     operating staff sufficiently trained on site.
     None of the parties involved, however, had
     officially asked the AA for recommending to the
     Government for a further postponement of the
     July   AOD.      Commercial   realities  almost
     certainly have had their parts to play.

(24) The AA took a conscious decision in May/June
     1998 to use the SAS, which was similar to the
     one used in Kai Tak and was developed as a
     standby system for aircraft stand allocation,
     because the TMS of FIDS was not ready then for
     testing, training and commissioning.       The
     decision was not made in consultation with or
     even formally notified to GEC/EDS before the
     AOD. The TMS was eventually made available in
     June 1998 and was used in parallel with SAS on

     AOD as a result of which AA staff had to input
     data into both the SAS and TMS on AOD.    Apart
     from diverting the AA staff resources, the
     delay in inputting data into the TMS had
     affected the ability of FIDS to display
     information timely.    It was unfortunate that
     GEC/EDS were not consulted on the effects of
     the decision on FIDS. The scenario reflected a
     lack of partnership between the AA and the
     systems   developer.      It  was   even   more
     unfortunate that the SAS crashed on AOD and the
     AA had to resort to manual stand allocation.
     In the event, TMS was used on Day 3 and
     operations improved.

(25) The system in use in Kai Tak differed a lot
     from FIDS in terms of sophistication and
     complexity.       Front-line    operators  must
     therefore be given ample opportunities for
     familiarization purposes.    The fact that they
     were experienced hands at Kai Tak have not
     negated their need for hands-on experience and
     on site training in CLK.      In short, it was
     imperative to develop staff ownership of the
     new system.      While bare minimum training
     programme may cope with normal and smooth
     operation, it presented real danger as staff
     would not be sufficiently trained to deal with
     unexpected   operational  problems    let alone

(26) Representatives of HACTL, AAT and RHOs reported
     a scramble for dollies on and immediately after
     AOD. The situation was caused by the inability
     to off load cargo and the run for empty dollies
     as   soon   as   the    landing   of   passenger
     carriers/freighters   became   imminent.     The
     problem was caused by the breakdown of FDDS,
     flight delays the confusion of cargo handling
     rather than by actual shortage of dollies.

(27) Since   the   announcement   of   the   AOD   on
     13 January 1998, AA had set up a committee to
     consider ceremonial and publicity activities of
     the opening of the new airport.     According to
     official records, familiarization tours and
     Miss Hong Kong Pageant were organized at the
     new airport prior to AOD.        Some of these
     activities brought part of the construction
     works to a temporary halt. Given that time was
     at a premium for construction works, it
     remained doubtful if the AA could really afford
     the    luxury   of    accommodating    publicity

           programmes “in situ”.

(D)   The contingency plans and remedial measure taken/to
      be taken to tackle the various problems, as well as
      their efficacy and effectiveness

      (28) HACTL had no concrete contingency plans for
           serious breakdown.   There was an intention to
           retain T2 at Kai Tak when April 1998 was
           recommended as the AOD.     This intention was
           abandoned when the AOD was finally set for
           6 July 1998.    Perhaps the only contingency
           element within HACTL was to achieve a 75% of
           its   designed  capacity  at   ST1   which  was
           estimated as more than sufficient for air cargo
           consumption in Hong Kong.

      (29) The   Standby   FIDS,   SAS   (standalone)   and
           workarounds may be considered as contingency
           facilities. It has been said that the Standby
           FIDS   is   not   available   in   other   major
           international airports and this “luxury” was
           developed on the strong recommendation of the
           CAD and endorsed by ADSCOM. Be that as it may,
           the fact remains that Standby FIDS was not used
           after FIDS did not function properly on AOD.
           The explanation advanced by AA was that standby
           FIDS would only be used in the event of FIDS
           total failure. If this came to pass, time was
           needed to unplug and plug the FIDS and Standby
           FIDS respectively and to allow two hours to
           resuscitate the FIDS before actually resorting
           to the Standby FIDS.    This process would take
           about 3 hours. This explanation does not tally
           with the Administration‟s understanding.     The
           Administration was under the impression that
           it would only take 30 to 45 minutes to switch
           from FIDS to Standby FIDS.     In the event, AA
           saw fit to fall back on “workarounds” and
           “whiteboards” in preference to Standby FIDS.

(E)   The decision by the ADSCOM on the opening of the new
      airport on 6 July 1998

      (30) In January 1998 AA assured ADSCOM that the new
           airport would be ready for opening even in
           April 1998 and that HACTL, in its turn, gave AA
           the necessary assurance, albeit on a best
           endeavour basis.   It can be said that setting
           the AOD on 6 July would give extra leeway to
           all parties concerned to stand ready for the
           airport opening.    The question is : given a
           history of the repeated delays and slippages in

     certain key projects including FIDS, should the
     Administration accept AA and HACTL‟s assurances
     in the face of NAPCO‟s concerns?       By late
     June 1998, occupation permits for HACTL and GTC
     were still outstanding while NAPCO consultants
     i.e. BECHTEL considered there were risks in
     operating the FIDS. These examples should have
     prompted the Administration to reassess the
     practicability of the AOD.

(31) In the letter of 15 November 1997 to AA, the
     Administration said that the AOD once set would
     be irreversible. This message was conveyed to
     all parties concerned.        It is therefore
     reasonable to assume that all parties looked to
     6 July as a firm date on which the new airport
     must be commissioned.    The irreversibility of
     the AOD was reiterated on no less than 7
     occasions   by   Government    and  AA   senior

(32) A    representative    of   the    Administration
     clarified to The Ombudsman that the Government
     would not hesitate to reconsider the AOD had
     there been the slightest suggestion from AA or
     HACTL that the new airport could not cope with
     either the passenger or the cargo flow on Day
     One.       By    “slightest    suggestion”,   the
     Administration      meant     “hard     evidence”
     represented by formal requests or reports from
     the AA or HACTL. The Administration was of the
     view that NAPCO was only a critical observer
     but not a monitor of the new airport project.
     Accordingly reservations by NAPCO on the AOD
     would not be regarded as “hard evidence”.
     Unfortunately, there was no record of the
     Administration having conveyed to the AA and
     other parties concerned of the above “thinking”
     or on the circumstances under which AOD might
     be deferred.     Representatives of AA, HACTL,
     etc., were of the understanding that the AOD of
     6 July 1998 was strictly irreversible.

(33) AAT, the competitor of HACTL at CLK obtained
     the occupation permit on 9 June 1998.    This
     must have placed HACTL under extreme pressure
     to meet the AOD.

(34) The option of “soft opening” for CLK or
     parallel operations in Kai Tak had never been
     raised to CAD or the Government officials and
     in writing by HACTL. Even if a “soft opening”
     was practical from an air traffic point of
     view, planning years before the AOD would have

    to be contemplated if this option was to be
    pursued.    Also, such operation would have
    necessitated the involvement of a large number
    of parties: the airlines, all the support
    service providers and a large number of
    Government departments.

(35) There were speculations that the AOD had been
     linked to important events which took place
     earlier in the same month.     Whilst the whole
     chain of developments appears co-incidental,
     there is no evidence to support such a linkage.

(36) It is an agreed fact that the decision on AOD
     was made by the ADSCOM, endorsed by the CE and
     noted by Executive Council.     In arriving at
     this decision, the Administration should have
     taken into account the recommendation of AA and
     the assessment of the AOR by Government members
     on the AA Board and by NAPCO.      According to
     minutes of its meetings, ADSCOM decided on the
     AOD on the following occasions :-

          Date of Decision           AOD
           2 January 1998        1 July 1998
           8 January 1998        6 July 1998

    The Administration informed a non Government
    official of the AA Board in confidence of the
    decided AOD on 9 January 1998.      The AA non-
    Government      Directors     deliberated     on
    12 January 1998    without  knowledge    of  the
    Administration‟s decision   taken on 8 January
    1998.   Whilst the AA Board recommended to the
    Administration “the last week of April 1998” as
    a feasible AOD, it would be incorrect to say
    that   the   decision   on AOD    was   made  in
    consultation with AA or indeed with anybody
    outside the Government.     It was a top down

(37) Some representatives of the AA considered that
     setting the AOD on 6 July, (some 2½ months
     behind the AA recommended date) might have led
     to a loss of momentum for the preparation work.
     Such a view was not reconciled by actual
     development as all parties concerned had been
     conscientiously working towards 6 July. On the
     other hand, the progress of civil engineering
     works,   the   development,   installation  and
     testing of FIDS, training of staff, GTC etc.
     unanimously pointed to the fact that the last
     week   of   April 1998   was   not   ready  for

           commissioning of the new airport.

(F)   Overseeing, steering and monitoring by the ADSCOM
      and the NAPCO on the overall progress of the new
      airport project and whether their functions have
      been adequately and reasonably discharged for the
      commissioning of the new airport

      (38) Given that the AA is a Government wholly-owned
           body, it is natural that senior officials sit
           on the AA Board of Directors.         The same
           officials were also members of ADSCOM. Whilst
           there might be conflict of interest, a distinct
           advantage was that officials on the Board might
           advise ADSCOM on the progress of the New
           Airport and assist the Administration to take
           important policy decisions.

      (39) According to the Administration, NAPCO was
           simply a critical observer but not a monitor of
           the New Airport Project.     Any reservation or
           even   adverse   report   on  the   progress  or
           readiness of the project was regarded only as
           “concerns”. The remit of NAPCO, as supplied to
           this Office clearly states that it oversees the
           New Airport Project and that one of its
           important functions was to “review and resolve
           problems”.      NAPCO is an executive arm of
           ADSCOM    and   in    this   regard    and   the
           Administration has a duty to take heed of the
           assessment by NAPCO on AOR activities and
           issues critical to the smooth and efficient
           operations of the airport on AOD to establish
           if the AOD was realistic.

      (40) ADSCOM membership is restricted to very senior
           officials. Its direct interface with AA is by
           reports from Government members of the AA Board
           of Directors and by inviting senior management
           of the AA to attend its meetings on selected
           items.    Unfortunately, it did not have a
           direct, formal interface with non-Government
           members of the AA Board who had to rely on
           their subordinate senior management staff to
           convey to them the thinking of ADSCOM.     This
           might have inhibited communications between
           ADSCOM and non-Government members of the AA
           Board.    The latter were part-timers whose
           involvement in terms of man-hours with the new
           airport project must be relatively limited than
           that for their Government counterparts and to
           the AA senior management.

    (41) The overnight relocation of the airport from
         Kai Tak to CLK was completed smoothly, despite
         inclement weather.   All participants of this
         relocation exercise headed by the Government
         and AA are to be complimented for a job well


14.12     The AA and to an extent the Government had not
adequately concerned themselves with the fact that given
AOD would effectively be the first full scale trial run
of the airport operations and facilities and integrated
systems involving live load, passengers and aircrafts and
other users of the airport services, they had not paid
sufficient attention to the risks as contained in the AOR
status reports.   As a result, they were not adequately
prepared for the knock on effects of the teething
problems as they occurred one after another in the
initial hours on AOD and their adverse impact on the
airport systems, some of which remained insufficiently
tested and unreliable. The teething problems in the PTB
together with the breakdown of HACTL‟s cargo handling
service jointly became problems of immense proportion to
the surprise of all.

14.13     The AA and to an extent the Government had
under-estimated the magnitude and complexity of the new
airport operation which require a high level of input,
participation   and  co-operation   from   AA‟s numerous
business partners and their extensive interaction with
AA‟s progress on physical construction works and various
airport systems and operational developments in the run-
up to AOD. These numerous business partners, old and new
alike, were unfamiliar with the physical, systems and
business environment at the new airport and as such the
situation was made more difficult and chaotic.


15.1      The AA is a Government-wholly owned body which
is publicly funded.    It has the statutory function to
provide, operate, develop and maintain the new airport.
While it is the responsibility of the AA to directly
manage their contracts and works and Government should
not concern itself with matters of an operational nature,
the fact remains that Government has established ADSCOM
to oversee, direct and co-ordinate the ACP. In terms of
the new airport project, ADSCOM provides an overall steer
on   issues   with   significant    policy  or   resource
implications.    It oversees progress on AOR issues
critical to the airport opening and decides AOD having
regard to AOR.   The ADSCOM has the support of NAPCO as
its executive arm to provide professional input and
technical expertise in monitoring the overall progress of
the airport programme.      Accordingly, ADSCOM has the
responsibility to ascertain and satisfy itself that the
new airport under the management of AA is ready for
operations safely, smoothly and efficiently from AOD. It
is a yardstick set by ADSCOM.

15.2      The AA Ordinance explicitly stipulates that the
AA is responsible for providing, operating, developing
and maintaining Hong Kong‟s new Airport situated at CLK.
Such responsibility effectively covers the supervision
and monitoring of its franchisees who are providers of
airport services.    As with Government, the AA cannot
absolve its responsibility on the monitoring of the work
progress of its franchisees.

15.3      The AA had all along been advocating late April
1998 as an achievable AOD.       Problems which surfaced
between January 1998 and June 1998, e.g. FIDS software,
ACS, lack of familiarization on the part of personnel
operating the airport systems and slippages of civil
engineering works, all pointed to doubts, if not risks,
to a smooth opening of the new airport.

15.4      Doubts on the AOR shortly before AOD surfaced.
Important ones were -

    (a)   There were continued delays and slippages of
          works, facilities and systems in both the PTB
          and HACTL‟s ST1 since the announcement of the

    (b)   According to NAPCO‟s consultants‟ assessment,
          FIDS was only 91% reliable; as opposed to the
          AA version of being 98.7% reliable.  Risks on
          the usage of FIDS were pointed out by NAPCO‟s
consultants and hence drawn to the attention of

     (c)   The all important ACS was found and remained
           unreliable in the run up to the AOD; and

     (d)   AA only obtained the Occupation Permit for the
           PTB and Aerodrome Licence as late as 29 June
           HACTL finally obtained its Temporary Occupation
           Permit on 3 July 1998.

15.5      The AA planned for a “clear” trial period which
is dedicated to training, trials and other operational
transition following substantial completion of airport
facilities and system; and their hand over to the
operators.   For the airport to become fully operational
on Day 1, the AA is fully aware of the importance for the
availability of such a clear trial period and that all
systems    considered    essential    be   fully    tested,
commissioned   and   available   for   final,   operational
training and trials not less than 6 weeks prior to
opening to avoid trialing incomplete facilities and re-
training. Despite the putting back of the target of AOD
by over two months, the “clear” trial period was never
available as a number of works activities were extended
into the “clear” trial period and systems installation,
testing and commissioning continued in June 1998.        In
effect, essential AOR activities including training were
compressed and trials were conducted in parallel with
construction of physical works. As a consequence, it was
impossible to have a well tested and practised airport
critical to ensure smooth and efficient operations from
Day 1 .    It is much regretted that the insufficiently
practised operations, which gave rise to foreseeable
risks leading to significant efficiency problems at
opening, occurred as expected.       The immensity of the
airport problems was neither teething problems nor
inaugural glitches. They are indications of misjudgement
and mismanagement of disastrous proportions on airport

15.6      The doubts at paras. 15.3 and 15.4 above were
transformed into actual problems as follows -

     (a)   slow-down of the FIDS;

     (b)   malfunction of the ACS;

     (c)   serious cargo handling problems;

     (d)   missing/misdirected       baggages   for    air
           passengers; and

     (e)   substandard public facilities at the airport.

15.7      While there was evidence that the systems were
not sufficiently tested and problems not adequately
resolved prior to commissioning, the AA staff and their
business   partners  were   insufficiently   trained   and
familiarised with the new environment, facilities and
systems to deal with unexpected operational problems and
crises.    The airport problems were also caused by
inadequate supervision, management and coordination on
the part of AA and the insufficient          communication
between AA and its partners in the AOR planning and in
anticipating   and  containing   the   expected   teething

15.8      There is no evidence that parties concerned
including   AA,  HACTL    or other  AA   franchisees  or
contractors had officially reported that any aspect of
airport operation would not be ready by the AOD.     The
impression that the AOD was irreversible might have
discouraged parties concerned to make such reports even
though problems on various aspects of airport operations
were foreseen.   AA and parties concerned respected the
AOD and tried their very best to achieve the target,
despite extreme pressure.

15.9      There is no record that the Government or the
AA had tapped the advice and experience of international
airport management and/or cargo handling experts.      A
senior official of the CAD was “co-opted” to ADSCOM in
November 1997 from when he participated actively in the
discussions. Some of his proposals were also taken. His
co-option should have been made earlier and that
international experts should have been invited long
before the decision on AOD to advise on aspects of
airport operations the expertise of which was lacking in
Hong Kong.

15.10     The ideal scenario would be to critically
review the AOD after completion of all essential works,
systems and training, critical to the airport opening on
all aspects of airport operations, including PTB and
HACTL.   Even if the AOD had been announced it should
still be subject to review in the light of actual
progress on the ground. The airport problems could have
been avoided or at least the magnitude of these problems
could have been reduced to acceptable and tolerable

15.11     Several important “surrounding” factors must
not be overlooked in making the foregoing conclusions -

     (a)   that all parties concerned were under a genuine
           belief that commissioning of the new airport on

      6 July 1998 must be achieved “at all costs”;

(b)   probably because of the above belief, some
      problems which surfaced before AOD and certain
      incomplete works and systems problems were
      looked at optimistically in the hope that they
      might be reduced to “teething” problems and be
      resolved after the commissioning of the new

     (c)   and probably because of the above thinking, the
           Administration (represented by ADSCOM) was not
           fed with accurate reports describing the actual
           situation and magnitude of the problems and
           their   possible  consequences.     There   was
           evidence of the AA management misleading the
           ADSCOM into believing that FIDS and ACS were
           sufficiently reliable to meet the operational
           requirements on AOD.

15.12     Terms of references or remit existed for
ADSCOM, AA and NAPCO; and that the relationship between
AA and its franchisees, contractors etc. were laid down
in the contracts.    Unfortunately, some of these terms
were open to interpretation e.g. whether NAPCO was a
“monitor” or a “critical observer” of the new airport
project, and whether the relationship between AA and
HACTL was simply one of landlord and tenant.           In
addition,   a   somewhat   obscure  working/communication
arrangement existed between ADSCOM, AA non-Government and
Government board members, AA senior management and NAPCO.
This situation created communication problems to the
point of less-than-open or mistrust and contributed to an
underestimate of problems on AOD.

15.13     NAPCO‟s remit clearly states that it “monitors”
the progress of the new airport project.      Since 1996,
NAPCO has been making regular reports and recommendations
to ADSCOM on AOR vis-a-vis AOD.       In some instances,
ADSCOM had accepted NAPCO‟s recommendations in preference
to AA‟s. The Ombudsman appreciates that as NAPCO was not
a party to AA contracts and franchises, it had no direct
say in the performance of AA.      The Ombudsman further
accepts that any formal request for postponement of the
AOD should come from AA and not NAPCO.     However, NAPCO
being the executive arm of ADSCOM had a duty to draw to
ADSCOM‟s attention any inadequacies on the part of AA
which may lead to AOR problems.    In this regard, it is
observed that NAPCO had discharged its duty. From April
1998 to June 1998, it pointed out to ADSCOM, on three
occasions that because of pre-operational functionality
problems, risks existed on the smooth opening of the new
airport on 6 July 1998.   This Office does not therefore
subscribe to the view that NAPCO was simply a “critical
observer” and not a “monitor” and that its reservations
on the AOR were no more than “concerns”. From minutes of
its    meetings,   ADSCOM    had   repeatedly    expressed
dissatisfaction over AA‟s delays and slippages on a
number of projects.   It was also aware of AA‟s internal
organisation problems.     Against such background, any
reports or “assurances” from AA should be taken with
caution and be subject to meticulous scrutiny.     Clearly
there were differences in the level of confidence on AOR

between AA and NAPCO and one would have expected ADSCOM,
being the decision maker on AOD, should critically
assess, and re-assess the practicability of the AOD in
the light of NAPCO‟s reports. It is regretted that this
was not done.

15.14     Various problems on or shortly after AOD
emerged, some of which compounded each other.        The
snowball effects on all these problems created serious
confusion and chaos on the airport operation.       Such
snowball effects were of course never anticipated by the
Government or by any other party.

15.15     The Government‟s view on AOD was that the new
airport should be “safe, smooth and efficient”.       This
view was, according to NAPCO, based on the AOR definition
quoted in para. 14.5. There was no report of any safety
or security problems on AOD and there was no evidence
that safety and security had been compromised. Problems
on FIDS, ACS and passenger traffic were in the main borne
out at the trials and reported to ADSCOM by NAPCO.     The
efficiency of the new airport, particularly in relation
to the cargo handling was far from being smooth and
efficient.   All points considered, The Ombudsman is of
the view that on the basis of the Administration‟s
requirements, there were ample indications that the new
airport was not ready for commissioning on 6 July 1998.

15.16     It is not the objective of this DI to apportion
blame.   The Ombudsman is however of the view that the
Administration, AA, and HACTL for that matter should be
responsible for the chaos on AOD. Such chaos was caused
in    no   small   measure   by   oversight,   inadequate
communications and mutual understanding between the
Government and AA, by internal organization problems of
the AA and by over confidence on the ability of HACTL to
achieve readiness. In specific terms -

     (a)   The Administration (represented by the ADSCOM)
           had   failed  to   act  on   various  problems,
           including internal problems of the AA as soon
           as they became apparent. In the run up to AOD,
           it had also failed to assess the credibility of
           AA‟s assurances in the light of the NAPCO‟s
           repeated advice on risks.        This lack of
           proactiveness was compounded by the impression
           created by the Government that the AOD was
           strictly irreversible;

     (b)   There was a lack of communication between AA
           senior management and the Board of Directors to
           the extent that inadequate or even misleading
           information was submitted to the latter.    The

onus to resolve internal conflict amongst
Divisions fell squarely on the AA senior
management and the Board of Directors but
regrettably no positive action was taken to
stop the conflict.     Over confidence on the
ability of HACTL to the extent of leaving the
latter to operate by itself also lent to the
chaos of air cargo handling; and

(c)   although   not   an   organization   under  The
      Ombudsman‟s Ordinance, The Ombudsman holds that
      HACTL, through over confidence and failure to
      achieve an integrated readiness on AOD, was
      responsible for the breakdown of air cargo
      handling from AOD until August 1998.



16.1      It is not expected that another airport or
public projects of comparable magnitude and complexity
would be built in Hong Kong in the foreseeable future.
However, other public projects such as the construction
of the second runway, the West Rail, extension of the MTR
to Junk Bay will continue and will involve co-operation
between the Administration, other public and private
sector organizations.

16.2      The lessons learned in the preparation and
commissioning of the new airport and the problems
encountered in the early days of the airport operations
are, however, invaluable to AA to reflect and review its
work so as to better discharge its statutory functions in
maintaining the new airport in the years to come.
Despite initial problems, the new airport is now capable
of operating safely, smoothly and efficiently. It is to
the credit of the hard work of many men and women who
have worked hard towards the common goal of providing a
world-class airport of which the people of Hong Kong are

16.3      For the Administration, the experience gained is
also helpful in its undertaking future public projects
which involves the participation and contributions from
various organizations and which requires the oversight,
steer and co-ordination at high level.

16.4      The following recommendations are made with the
objective to maintain the new airport as a world-class
airport and to avoid history repeating itself in other
major public projects for the consideration of the AA and
the Government.


     (1)   Ownership of Facilities, Systems and Procedures

           The AA should put in place mechanisms and
           measures to include the taking up of ownership
           among staff at various levels for both new and
           existing facilities, systems and procedures.
           AA should also encourage its business partners
           to share and take up this ownership if the
           facilities, systems and procedures required

their input, support and/or co-operation.

(2)   The Challenge of Change

      The building and commissioning of the new
      airport is a classic example of “a changing
      world” where established systems, procedures at
      Kai Tak were completely re-developed to fit
      into a new environment at CLK. Whilst the new
      airport has been commissioned, changes and
      adjustments are on-going.       Every Division
      within AA should stand ready to respond to
      change with a view to upkeeping a world class

(3)   Public Expectations

      It is an undisputed fact that the new airport
      project   involved   considerable  deliberation,
      planning and financial commitment. Up to AOD,
      the project was given excellent publicity which
      invariably raised high public expectation on
      its efficiency.    Events on AOD posed an anti-
      climax to such high public expectations.     The
      chaos is now over and high public expectations
      on the operation of the new airport appear to
      have returned.      It is recommended that AA
      should stand ready to anticipate and manage
      problems, and if possible, to give public
      advance notice to such problems and/or prompt
      explanations thereafter.

      Upkeeping A World Class Airport

(4)   Government-AA Relationship

      With the commissioning of the new airport,
      monitoring bodies such as the ACC has been
      disbanded while NAPCO or even ADSCOM will be
      disbanded in the near future.      A “residual”
      channel of Administration‟s participation in AA
      activities is through government members of the
      AA Board.   It is recommended that the latter
      should continue to act as a bridge between the
      “non-government AA”, AA senior management and
      the Government. In turn the AA should continue
      to monitor the performance of its franchisees
      and   other   business   partners   to   achieve
      operations and customer service excellence.

(5)   Performance Pledges

      To   provide   the         highest   possible   service

      performance    at    the     airport    and    for
      accountability purposes, it is recommended that
      performance   pledges    for    various   services
      directly provided by AA should be drawn up. AA
      should also encourage other service providers
      at the airport to draw up their own performance
      pledges.    An information leaflet listing the
      principal service providers and their telephone
      numbers should be produced for information of
      visitors and the travelling public if such
      services are not directly provided by the AA.

(6)   Relationship with Business Partners

      The Customers Liaison Group which represented
      the views of business partners and users of the
      airport services during the Kai Tak days should
      continue to function at CLK. There is no doubt
      that the input of business partners will be
      invaluable to the efficient operation of the

(7)   It is equally important for AA to set up
      mechanisms    to    strengthen   the  working
      relationship and establish rapport among its
      business partners in order to upkeep and
      continue   to  seek   operations and customer
      service excellence.

(8)   Public Suggestions and Complaints

      A comprehensive complaints handling system
      should be drawn up within AA.     The AA should
      also encourage its key business partners to
      have such system in place.          Apart from
      receiving and investigating complaints, it is
      recommended that AA should develop a positive
      complaints culture with ways and means to
      reducing complaints and achieving customer
      service excellence.    It is also recommended
      that AA should conduct customer opinion surveys
      regularly and review the findings with its
      business partners as appropriate with a view to
      gauging feedbacks and improving its services.

(9)   Contingencies and Training

      All   existing  contingency   plans  should  be
      regularly reviewed, updated and promulgated.
      Initial   and  refresher   training  should  be
      organized for new recruits and serving staff,
      and where appropriate extended to staff of AA‟s
      business partners respectively.
    (10) Staff Development

         It is for consideration of the AA to devise a
         staff development programme with a view to
         enhancing the professionalism of its staff in
         the management and operation of the new
         airport.   The airport must be run by people
         with a high standard of professionalism to
         support a world-class airport.

    (11) Organization Structure

         The effectiveness and efficiency of the AA was
         last reviewed by a management consultant in
         October 1997.    Some of the recommendations,
         including the creation of a DCEO post, were
         implemented.    The organization structure has
         necessarily changed with the commissioning of
         the airport.   The size of PD, for example has
         diminished whilst responsibilities for AMD have
         correspondingly increased.    AA should review
         the management structure including the duties
         of responsibilities of the DCEO post in light
         of the experience of airport operations.

    (12) The chaos on or shortly after AOD had enabled
         AA business partners to make concerted efforts
         to overcome difficult problems within a very
         short time.    Whilst such experience must be
         necessarily painful and unwanted, the chaos has
         built up a good working relationship amongst
         business partners. It is recommended that all
         parties   concerned  should   make  efforts  to
         sustain such a relationship, to work towards a
         common goal - a world-class airport - and to
         meet challenges and competitions.


    (13) For major public projects, the Administration
         must clearly define the role, powers and
         functions of all key players, and their
         relationships with each other.

    (14) Lines of responsibilities and communication,
         both intra and inter organization, must be
         clearly drawn up and agreed amongst the
         organizations.   This applies in particular to
         working systems and procedures which may not be
         adequately covered by statute or by commercial

         contracts.     The intention is that every
         organization should be left in no doubt of its
         duties and responsibilities and they must be
         made known to each other.

    (15) All inter-organizational activities should be
         conducted   with   maximum   transparency   and
         openness. There should be established channels
         to facilitate candid exchanges of views and
         opinions towards the common goals. All parties
         should be encouraged to report any difficulties
         and concerns even if such reports may lead to
         significant rectification measures, alteration
         of plans or target dates.

    (16) In   like   manner    important   decisions  or
         directives should as far as possible be made in
         full prior consultation with the organizations
         and key players concerned and with their
         participation in the decision-making process.
         There should be an effective mechanism to
         critically review and assess the state of
         readiness of various key developments prior to
         commissioning.   This is particularly important
         when full scale testing is not possible.


         Expertise and Independent Monitor

    (17) For    future     important    projects,    the
         Administration and AA should seriously consider
         enlisting the advice of external expertise as
         early as possible on aspects where such
         knowledge and expertise might not be available
         or adequate in Hong Kong.

    (18) It   is  for   consideration  whether  external
         monitors   should    be   appointed   to   give
         independent assessment on the activities and
         issues critical to the operational readiness of
         the project at opening.

    (19) Publicity Activities

         It is strongly recommended that any publicity
         activities must not interfere with normal
         operations or project work.     The latter must
         take precedence under all circumstances.

    (20) Monitoring Role

          The Administration must monitor the performance
          of the AA which in turn must monitor the
          performance of its franchisees.        For large
          scale   projects,   integrated   plans,    timely
          completion, adequate training and near “real
          life” trials should be closely monitored and
          the   effects   of    any   slippages,    faults,
          malfunctioning, etc. must be examined in time.

16.5      The AA Ordinance specifies that the AA shall
maintain   “Hong    Kong‟s   status   as    a   centre   for
international   and   regional   aviation”,   conduct   “its
business according to prudent commercial principles”, and
maintain “safety, security, economy and operational
efficiency”. The positive product of AA‟s statutory duty
is a world-class airport, to be brought about through
excellence in safety and security, operations, customer
service,    financial    performance     and    organization
management.   As stated in the proceeding chapters, this
DI is not intended to “identify the culprit” or to
apportion blame.    It is hoped that through an in-depth
examination of the problems encountered on AOD, the
quality of pubic administration (in this case airport
service) may be enhanced.


17.1      Copies of the full DIR were distributed on 28
December 1998 to the Administration and AA and relevant
extracts of the DIR to other agencies which had assisted
The Ombudsman‟s investigation.      All but one agency
submitted their comments, a lot of which were expression
of view points on The Ombudsman‟s preliminary findings.
Some raised updates or factual corrections to the draft
and these were incorporated into the Investigation
Report. Some important issues were however raised by the
AA, Administration and HACTL and are summarized below :-


17.2 (i)   The element of hindsight

           The AA asks The Ombudsman to bear in mind that
           there is unavoidably an element of hindsight
           both in The Ombudsman‟s draft report and in the
           response which the AA provides to it and to
           make due allowance for this factor when he
           reaches his final conclusions.

    (ii) Training and trials

           The AA does not accept that there was no full
           scale test prior to AOD or that training for
           staff had been inadequate.     The AA believes
           that staff had been thoroughly trained but were
           hampered by the slow running of FIDS. The fact
           that the Airport was able to recover within
           three to four days of the AOD is a clear
           indication   that   training  was   more   than
           sufficient for AOD.

    (iii)The responsibility of AA for the chaos

           The   AA  believes  that  the   framework and
           mechanisms it established were effective to
           achieve the intended purpose.     It does not
           agree that those in charge did not discharge
           their duties effectively.   The AA hopes that
           The Ombudsman will take into account the
           enormous achievements of the AA as a whole in
           constructing and operating what is by common

         consent a world class airport.     The AA also
         disagrees that it under-estimated the magnitude
         and the complexity of the new airport‟s
         operation and the input required from all its
         various business partners.
    (iv) Alleged misleading the ADSCOM

           The AA accepts that in using the words “the
           reliability of the system as a whole has been
           98.7% available”, the statement is misleading
           because it gives the impression that the whole
           system, not limited to the host servers and
           display servers, was 98.7% “reliable”. The AA
           also accepts that, persons knowledgeable about
           IT matters would have distinguished between the
           words “available” and “reliable”, the former
           word being more appropriate to describe the
           continuing working availability of the hardware
           components of a system.    The AA however does
           not agree (if that is suggested) that it
           deliberately lied to ADSCOM.


17.3 (i)   The need to consider all relevant evidence

           The Administration considers that this Office
           should take into account all relevant evidence
           brought to The Ombudsman‟s attention, including
           evidence   and    documentations   before   the
           Commission of Inquiry.

    (ii) The    use    of     hindsight    to    establish

           The    Administration    considers   that   the
           reasonableness of a course of action should
           only be judged against the circumstances and
           information available at that time. The use of
           hindsight   to   establish   responsibility  is
           therefore dangerous and unfair.

    (iii) The role of the Administration and ADSCOM in
          commissioning of the new Airport

           The Administration considers that ADSCOM is a
           policy making body responsible for providing
           policy decision and resolving difficulties in a
           high level in respect of ACP project.     It is
           not set up to deal with management and

operational matters.    The Administration also
considers it inappropriate to intervene into
affair of AA, including internal problems.
Direct Government intervention in the public
interest, in the functions of the AA is
strictly   prescribed  and   is   reserved  for
extraordinary circumstances.

    (iv) AOD

          The Administration does not agree that AOD was
          a top down decision.    It also considers that
          neither AA nor NAPCO had the impression that
          AOD was “irreversible”, as borne out by the
          evidence of senior officials of the AA.

    (v)   AOR

          The Administration is of the view that ADSCOM
          has not failed to heed warnings from NAPCO on
          critical issues. The Administration considers
          that NAPCO has never viewed AOD as a real risk.
          It also disagrees that there were ample
          indications that the new Airport was not ready
          for AOD, nor was there accurate justification
          warranting a revisit of AOD.


The Effects of FIDS towards Air Cargo Service

17.4      HACTL disagreed with this Office‟s observation
that the effects of the FIDS failure on HACTL problems
have been exaggerated.      HACTL considered that FIDS
failure had affected the entire airport operation,
particularly the operations of HACTL and the RHOs. HACTL
also commented that the knock-on effect of the RHO‟s
confusion at the cargo ramp interface area created a huge
congestion   and   backlog  which   eventually  triggered
downward spiral on the capability to transfer cargo in
and out of ST1.    Had there been no FIDS/FDDS problems,
ST1 would probably have coped on AOD despite its other
teething problems.

The Question of Over-Confidence towards the Breakdown of
Air Cargo Service

17.5      HACTL reiterated that it had not officially
requested for postponement of July 1998 AOD, because both
HACTL‟s and AA‟s senior management believed that the AOD
was “irreversible”.   HACTL further quoted the Notice to
Quit served on their facilities in Kai Tak on 25 March
1998 as a confirmation of their belief that the July 1998
AOD could not be postponed. To HACTL, only the clearest
evidence   of   operational   impossibility  would   have
permitted a successful request for further postponement
beyond that date.



18.1      The   Ombudsman‟s  response   to  comments   on
important issues by organizations/agencies are summarized


Relative   Priorities   for   Passengers   and   Cargo   Handling

18.2      This Office is of the view that, under the
franchise agreement with the HACTL, it is undeniable that
the AA played the monitoring role in respect of the
HACTL‟s construction and development of the facilities
prior to the airport opening and the provision of
services during the life of the franchise.           This
notwithstanding, this Office notes that one non-official
AA Board member remarked that HACTL was providing
peripheral service.    The annual report of the AA for
94/95, 95/96 and 96/97 stated that air cargo services
were regarded as part of airport support services
respectively. These were traces that the AA placed more
focus on passenger-related activities than air cargo-
related ones.

The Monitoring of HACTL‟s Work Progress

18.3      Although AA claimed that, given the apparent
respectability of HACTL and the apparently satisfactory
nature of its progress reports, verified so far as
possible by observation of activities on site, AA had
done enough by way of monitoring, it is not clear how
frequent these site visits were conducted to ascertain
HACTL‟s operation readiness to justify AA‟s claim.

The Question of Misleading ADSCOM

18.4      Some vital information from AA to ADSCOM were
found to be inaccurate to the point of either being over
optimistic on AOR or understating the severity of AOR
problems. The claim of “98.7% reliability of FIDS” was a
case in point.

18.5      Notwithstanding the above, The Ombudsman has
never suggested that the AA deliberately lied to ADSCOM.
In fairness to all, however, ADSCOM could have relied on
the misleading information to review (or not to review)
the practicality of the AOR. The Ombudsman also notes
that AA accepts that the statement in question was


18.6 (a)   The need to consider all relevant evidence

           All evidence presented to this Office has been
           duly considered. With the aim and objective of
           this DI, not all evidence so presented is
           relevant, nor is it necessary to quote each and
           every piece of evidence in the DIR or IR.
           Evidence   collected   from   any   source  was
           carefully weighed against available official
           records, by evidence of other parties and where
           appropriate by evidence of witnesses attending
           The Ombudsman‟s investigation meetings.

    (b)    The    use    of     hindsight     to   establish

           This issue is also raised by AA.

           All investigations are retrospective in nature
           in that scenarios are reconstructed to throw
           light on the causes of happenings. This DI is
           no   exception.       Such   an   approach   is
           distinguished from the use of hindsight.    The
           example quoted by the Administration does not
           take into account an earlier conclusion by The
           Ombudsman that doubts on the AOR shortly before
           the AOD had surfaced which should not have
           escaped ADSCOM‟s attention. This has led to a
           further conclusion on ADSCOM failure to react
           to problems.    All conclusions were as far as
           practicable drawn from actual situations plus
           expected foresight on such situations as at the
           points of happening.     No hindsight has been
           unduly applied.

    (c)    The AOD

           The irreversibility of AOD was conveyed by the
           Administration to AA on 15 November 1997 by
           letter. The evidence of senior officials of AA
           and NAPCO to the COI has not been over looked.
           Their evidence is however not supported by any
           official   record   between  December 1997  and
           July 1998.    On balance, the Administration‟s
           letter, which remains the sole authoritative
           document on AOD, conveys a clear message to the
           AA   that  the   AOD   once  decided  would  be
           irreversible.     This message was faithfully
           disseminated to the AA Board at its meeting on
           17 November 1997     and    echoed    by    the

Administration   on   five   occasions   between
December 1997 and July 1998.     These “echoes”
were all documented and The Ombudsman feels
obliged to rely on official written records in
preference to “after-the-event” elaboration.

           There is no dispute that ADSCOM had been
           exerting pressure on the AA to report and to
           provide their assessments on all critical
           matters. The ADSCOM, however, did not proceed
           beyond this point to review the practicality of
           the AOD.     Contrary to the Administration‟s
           contention,    NAPCO  in   its   report   dated
           29 June 1998 clearly recorded a risk on the
           AOD.   Regardless of the types of the reports,
           i.e.   whether   they be   regularly  situation
           reports or specific advice, one would have
           expected ADSCOM to give in-depth and critical
           discussion on a report of risk by NAPCO shortly
           before the AOD.

    (d)    Monitoring and Supervision of the AA

           It is appreciated that Government should not
           under normal circumstances interfere with AA‟s
           internal   problems   which  nevertheless  were
           critically discussed at ADSCOM meetings.   Such
           discussions bore out the fact that the internal
           problems had reached a level which might
           frustrate the commissioning of new airport on
           AOD.   The AA Ordinance provided that the CE
           might    exercise   intervention   should   the
           situation so warrant.

           Despite the track record of AA, e.g. internal
           problems, slippages of projects, no positive
           action appeared to have been taken by the
           Administration to rectify the situation and no
           intervention had been suggested to the CE in
           the interest of the smooth opening of the


18.7 (a)   The Effects of FIDS towards Air Cargo Handling

           This Office notes from the RHOs that the
           problems experienced by the RHOs were not
           simply   related  to   FIDS.     Following  the
           breakdown of FIDS, flight information was
           disseminated manually through the AOCC and the
           RHOs resorted to the TMR communication system,
           which did not work properly on AOD. Apart from
           the problems with inaccurate, partial and
           manually supplied flight information, RHOs also
           experienced a shortage of dollies which they

      claimed to have caused by the failure of CTOs
      in off-loading the cargo from the dollies.
      HACTL claimed that the lack of advance and
      accurate   flights  schedule  information   had
      caused the circulation problem of dollies. No
      doubt, the FIDS failure had lowered the
      operational efficiency of HACTL, but it would
      seem that the massive variations of flight
      schedules had more to do with the dolly
      problem.   Perhaps if there had not been such
      massive variations of flights from schedules,
      the effect of FIDS failure on HACTL‟s operation
      might not be that great. In fact, this Office
      was told by HACTL that scheduled flight
      information was used on AOD in their work

      It took over a month for HACTL to restore the
      operation of ST1 to normal but the problems
      with FIDS were overcome within a much shorter
      period of time.   If the remaining problems of
      HACTL were only “teething problems”, then ST1
      would not have had to take such a long time to
      recover from the chaos on AOD.

      A senior HACTL official also admitted during
      the meeting with this Office that HACTL had
      failed to deliver an air cargo service at the
      expected standard.

(b)   The Question of Over-Confidence towards     the
      Breakdown of Air Cargo Handling Service

      On the Notice to Quit from the Kai Tak
      premises, HACTL was asked by Lands D to
      approach GPA if they had difficulties in
      vacating their premises by 6 July 1998.       It
      cannot be ascertained if the Government was
      asking whether HACTL would prefer to keep Kai
      Tak premises as a fall back in case of
      operational difficulty in ST1, which in fact
      really happened after AOD. Hence, the issue of
      Notice to Quit does not appear to be a strong
      evidence to support HACTL‟s belief that the AOD
      could not be changed.     Nevertheless, HACTL‟s
      understanding that the only way to change the
      AOD,   i.e.,  clear  evidence   of   operational
      impossibility, coincides with that of the
      Government. As HACTL considered that, with 20
      years experience in the industry, they would be
      able to achieve operational functionality on
      AOD, in spite of the last minute rush of
      fitting-out works and the limited testings

conducted on the systems, they did not ask AA
for recommending to the Government for a
further postponement of the AOD.     Apart from
the commercial considerations in maintaining
their position that ST1 would be ready for
operation on AOD, The Ombudsman is of the
opinion that there is an element of over
confidence on the part of HACTL to achieve an
integrated   readiness    on   AOD,   and   was
responsible for its breakdown of air cargo
handling from AOD until August 1998.


18.8      Through    their    comments    on    the    DIR,
organisations/agencies have put forward their points of
view   on   The  Ombudsman‟s   preliminary   findings   and
observations.     They   have   also   supplemented   their
evidence/statements previously supplied to this Office
and have clarified a fairly large number of factual and
technical points. All these comments have been carefully
considered by The Ombudsman. However, The Ombudsman does
not see fit to materially change his stance in Chapters
14, 15 and 16 of his DIR, save for factual updates and

18.9      The Ombudsman is pleased to note that all
recommendations set out in Chapter 16 have been accepted
in principle by both the Administration and the AA. Some
of the recommendations have already been implemented and
The Ombudsman looks forward to receiving regular progress
reports   from   the  Administration   and   the  AA   on
implementation of the remaining recommendations.

18.10     The Ombudsman stresses that the focus of this
DI is on administrative aspects : it offers opinions to
organisations concerned on administrative inadequacies
rather than apportioning blame.      In this light, The
Ombudsman believes that the recommendations in Chapter 16
will be useful in enhancing the quality of public
administration in general and upkeeping Hong Kong‟s world
class airport in particular.


18.11     Throughout   the  DI,   this   Office  held  24
investigation meetings, conducted 9 investigation visits
and   obtained   from   organisations   and   agencies  a
substantial number of files, documents and written
statements as evidence. The Ombudsman wishes to express
his sincere thanks to all organisations, agencies and
individuals who have assisted in this DI. The fact that
some of investigation meetings/visits were organised at
short notice and that organisations and agencies complied
with The Ombudsman‟s tight deadlines for submission of
evidence was indicative of the formers‟ cooperation and
support and these are gratefully acknowledged.

18.12     The Ombudsman thanks once again his honorary
legal   and  engineering   advisers  who   have   provided
invaluable expert advice throughout the investigation.


18.13     The New Airport Project is a combination of 10
major   infrastructure  “sub-projects”  which    tops the
world‟s topical agenda.   The complexity of problems and
difficulties confronting the Government, the AA and other
parties concerned cannot be over-emphasized. Within ten
years a modernized international airport nine times the
size of Kai Tak has been built.        Arising from this
project, the Lantau Island has been made accessible by
land transport from various parts of the Territory.
Today the Airport is functioning very smoothly both in
terms of passenger and air cargo handling services.
Airport security and aviation safety have never been at
stake.   Many targets of this Project have been achieved
and may perhaps be eligible for inclusion in the Guinness
Book of World Records.     The smooth relocation of the
airport within six hours on 6 July 1998 and under
inclement weather was indeed admirable.       Despite the
confusion and problems encountered on or immediately
after AOD and the break-down of air cargo handling
services at CLK from AOD to August 1998, any accusation
that the Government and AA have failed to achieve the
objective of providing a very effective international
airport (although not necessarily on AOD or shortly
thereafter), cannot be sustained.       It is therefore
strongly urged that this Direct Investigation Report
should be read in proper perspective.          Whilst not
strictly within the ambit of this investigation, The
Ombudsman feels that all parties involved including in
particular the Government and the AA have endeavoured to
achieve the desired objective and that every organization
and every person who have contributed to this project
must receive their due credit. Hong Kong is now proud of
her new airport.

Office of The Ombudsman
Ref : OMB/WP/14/1 S.F. 53
January 1999


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