CHAPTER 1 - INTRODUCTION

BACKGROUND

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.

PURPOSE AND AMBIT OF THE DIRECT INVESTIGATION

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

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the new airport as on the AOD on 6 July 1998;

(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.

OTHER INQUIRIES INTO THE PROBLEMS 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.

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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.

THE OMBUDSMAN’S DIRECT INVESTIGATION

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.

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CHAPTER 2 - AIRPORT OPENING DATE

NEED FOR A NEW AIRPORT

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.

MEMORANDUM OF UNDERSTANDING

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.

ANNOUNCEMENT OF AN APRIL 1998 OPENING DATE

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),

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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 PAA.

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CONDITIONS PRECEDENT FOR AIRPORT OPENING

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.

GENERAL PROGRESS ACHIEVED BY 1997

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 1998.

REVIEW OF THE APRIL 1998 OPENING DATE

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.”

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AA’S INITIAL REACTIONS

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 recommendation.

MAKING OF THE JULY AOD DECISION

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 1998.

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 announcement.

AA’S FINAL AOD RECOMMENDATION

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

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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.”

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ANNOUNCEMENT OF THE JULY AOD DECISION BY THE GOVERNMENT

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.

AA’S RESPONSE TO THE ANNOUNCEMENT

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.

PROBLEMS ENCOUNTERED

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

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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 AOD.

IRREVERSIBILITY OR OTHERWISE OF THE JULY 1998 AOD

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 requests.

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CHAPTER 3 - AIRPORT OPERATIONAL READINESS

INTRODUCTION

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.

SOME SALIENT ASPECTS UNDER THE AOR PROGRAMME

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 airporton 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.

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INVOLVEMENT OF MAJOR ORGANISATIONS

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

MAJOR CONCERNS OF ADSCOM

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.

ASSESSMENT OF THE AIRPORT OPERATIONAL READINESS

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.

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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 operation.

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.

AIRPORT RELOCATION

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 1998Phase 2 : Advance Move 5 June to 21 June 1998

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Phase 3 : Main Body Move 22 June to 1730 hrs 5 July 1998Phase 4 : Night Move 1730 hrs 5 July to 0630 hrs 6 July

1998Phase 5 : Follow-on Move 0630 hrs 6 July to 5 August 1998

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.

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CHAPTER 4 - AIRPORT AUTHORITY

INTRODUCTION

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.

THE AA

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 management.

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

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created in January 1998 to strengthen the AA senior management team.

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INTERNAL SET-UP OF THE AA

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.

OVERALL CO-ORDINATION/MONITORING ROLES OF THE AA TOWARDS THE PREPARATION AND COMMISSIONING WORK FOR THE OPENING OF THE NEW AIRPORT

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.

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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.

FRAMEWORK AND MECHANISM ESTABLISHED BY THE AA AND THE ADMINISTRATION TO ACHIEVE THEIR PURPOSES AND TO DISCHARGE THEIR FUNCTIONS, BOTH PRIOR AND SUBSEQUENT TO THE OPENING OF THE NEW AIRPORT

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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.

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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.

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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 co-operation;

(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.

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CHAPTER 5 - AIRPORT DEVELOPMENT STEERING COMMITTEE

BACKGROUND

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.

TERMS OF REFERENCE/MEMBERSHIP

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.

RELATIONSHIP WITH THE AA AND NAPCO

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.

ADSCOM’S ROLES IN THE ACP PROJECTS

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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 schedule.

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CHAPTER 6 - NEW AIRPORT PROJECTS CO-ORDINATION

OFFICE

BACKGROUND

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.

ORGANISATION STRUCTURE

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.

ROLES AND FUNCTIONS

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

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fact that the construction phase of the airport had been completed and that it has now entered into an operational phase.

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RELATIONSHIP WITH CONSULTANT AND ADSCOM

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 development.

VIEWS OF THE ADMINISTRATION

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 postponed.

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CHAPTER 7 - CIVIL AVIATION DEPARTMENT

BACKGROUND

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 operations;

(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

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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.

CAD’S ROLE IN THE PLANNING AND PREPARATION FOR THE NEW AIRPORT

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.

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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.

KAI TAK/CLK TRANSITION WORKING COMMITTEE

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.

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CONCERN OF CAD ABOUT FIDS

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.

CAD’S VIEW ON PARALLEL OPERATION OF CLK AND KAI TAK FOR CARGO FLIGHTS

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

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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.

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CHAPTER 8 - AIRPORT CONSULTATIVE COMMITTEE

BACKGROUND

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.

ROLES AND FUNCTIONS

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.

RELATIONSHIP WITH THE AA

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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.

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Chapter 9 -

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).

ROLE OF ESB

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.

ROLE OF WB

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.

INVOLVEMENT OF BD AND FSD ON OCCUPATION PERMIT (OP)

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MAJOR GOVERNMENT BUREAUX/ DEPARTMENTS INVOLVED IN THE COMMISSIONING OF THE NEW AIRPORT

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.

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Inspection and Testing of Fire Service Installations at ST1

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.

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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.

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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

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to 2 July 1998 indicated that ACCS was ready for operation. Since AOD, the system has been running very smoothly.

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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.

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Chapter 10 - FLIGHT INFORMATION DISPLAY SYSTEM

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.

INFORMATION DISPLAYED BY FIDS

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.

PARTIES INVOLVED IN THE DEVELOPMENT OF FIDS

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

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

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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.

DEVELOPMENT AND COMMISSIONING OF FIDS

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 Review Completed

30 Sept 95

Key Day 2 Final Design Review Completed

31 Jan 96

Key Day 3 Plant Commissioning Phase Testing and Commissioning Completed

31 Mar 97

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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

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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

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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.

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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.

PERFORMANCE OF FIDS BEFORE AIRPORT OPENING

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.

TRAINING FOR FIDS

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.

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PROBLEMS ENCOUNTERED/OBSERVED

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 EDSNo 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 GEC/EDS.

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

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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.

STANDBY SYSTEM PLANS

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

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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

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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.

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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.

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CHAPTER 11 - AIR CARGO AND RAMP HANDLING

AIR CARGO HANDLING OPERATION

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.

HACTL

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

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service, HACTL was also granted the right to provide ramp handling service to freighters.

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HACTL’S RELATIONSHIP WITH AA

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.

HACTL’S RELATIONSHIP WITH GOVERNMENT

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.

HACTL’S RELATIONSHIP WITH OTHER RAMP HANDLING OPERATORS (RHOS)

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.

SUPER TERMINAL 1

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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.

CONSTRUCTION OF SUPER TERMINAL 1

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

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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.

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SYSTEMS DEVELOPMENT

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.

PROBLEMS ENCOUNTERED BY HACTL ON AOD

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

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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.

ASIA AIRFREIGHT TERMINAL CO. LTD.

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 documentation.

CONSTRUCTION OF AAT TERMINAL

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

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before AOD on 9 June 1998. The certificate of Operational Readiness was issued by AAT in June 1998.

RAMP HANDLING OPERATION

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 operations.

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.

CAUSES OF COMPLAINTS ON AOD

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;

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(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.

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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 providers;

(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.

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Chapter 12 - PROBLEMS ENCOUNTERED ON AOD

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.

TWO IMPORTANT ADSCOM PAPERS ON AIRPORT READINESS

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.”

ADSCOM MEETING ON 4 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.

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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

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(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 restaurants

(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)

CURRENT POSITION

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 available.

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CHAPTER 13 - CONTINGENCY AND REMEDIAL MEASURES

INTRODUCTION

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.

AA STANDBY SYSTEM PLANS

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 plan.

(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 (GEC/EDS);

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

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(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 commitment.

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(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

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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 available;

(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.

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(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 1998.

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(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 opening.

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.

CONTINGENCY PLANS FOR HACTL

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 HACTL.

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

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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.

CONTINGENCY PLANS FOR AAT

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.

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CONTINGENCY PLANS FOR AIRPORT RELOCATION

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

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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 operation.

REMEDIAL MEASURES SINCE THE AOD

(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 notice.

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

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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,

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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.

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(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.

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(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 -

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(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.

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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.

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CHAPTER 14 - OBSERVATIONS

INTRODUCTION

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 opening.

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 opening.

AIRPORT OPERATIONAL READINESS

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

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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.

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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

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

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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 systems.

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 displays;

(B) missing and incorrect FIDS information;

(C) gate change announcements not displayed on FIDS monitors;

(D) large number of unsorted baggages; and

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

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.

SPECIFIC OBSERVATIONS

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(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 operations.

(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

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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

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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 AOD.

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(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 requirements.

(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 opening.

(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

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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.

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(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

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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.

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(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 results.

(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

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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

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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 crises.

(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

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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.

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(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 officials.

(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

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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 AOD2 January 1998 1 July 19988 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

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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 decision.

(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

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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 done.

OVERALL OBSERVATIONS

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.

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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.

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CHAPTER 15 - CONCLUSIONS

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 AOD;

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(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 ADSCOM;

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(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 1998.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 opening.

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;

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(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 problems.

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

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could have been reduced to acceptable and tolerable level.

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 airport;

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(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

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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

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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

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(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.

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CHAPTER 16 - RECOMMENDATIONS

INTRODUCTION

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 proud.

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.

FOR THE AA

(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

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facilities, systems and procedures required their input, support and/or co-operation.

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(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 airport.

(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

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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 airport.

(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

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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.

FOR THE ADMINISTRATION

(13) For major public projects, the Administration must clearly define the role, powers and

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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.

FOR THE ADMINISTRATION/AA

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

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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.

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CHAPTER 17 - COMMENTS ON THE DRAFT INVESTIGATION REPORT FROMORGANIZATIONS AND AGENCIES

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 :-

COMMENTS FROM THE AIRPORT AUTHORITY

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

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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.

COMMENTS FROM THE ADMINISTRATION

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 responsibility

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 thecommissioning of the new Airport

The Administration considers that ADSCOM is a policy making body responsible for providing

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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.

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(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.

COMMENTS FROM HACTL

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.

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CHAPTER 18 - FINAL REMARKS

RESPONSE TO ORGANIZATIONS’/AGENCIES COMMENTS

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

RESPONSE ON AIRPORT AUTHORITY’S COMMENTS

Relative Priorities for Passengers and Cargo Handling Services

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.

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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 misleading.

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RESPONSE ON ADMINISTRATION’S COMMENTS

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 responsibilities

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

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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.

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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 airport.

RESPONSE ON HACTL’S COMMENTS

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

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

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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 scheduling.

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

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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.

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THE OMBUDSMAN’S OVERALL COMMENTS

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 amendments.

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.

ACKNOWLEDGEMENT

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.

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IMPORTANT CONCLUDING NOTE

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 OmbudsmanRef : OMB/WP/14/1 S.F. 53January 1999

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