(11th June 2006, Hong Kong:) Hong Kong Air Cargo Terminals Limited (Hactl) notes last Friday's announcement that Cathay Pacific will acquire 100% of Dragonair. This announcement follows Cathay Pacific's application to the Airport Authority for a self-handling air cargo facility at Hong Kong International Airport.

Cathay Pacific and Dragonair's combined cargo volume is currently 40% of the Hong Kong International Airport total. The merger of the two airlines if combined with cargo self-handling would therefore create a dominant, vertically-integrated air cargo operation. Hactl believes that this development has the potential to negatively impact airlines, cargo terminal operators, freight forwarders and other participants in one of Hong Kong's key business sectors.

The Cathay Pacific/Dragonair merger and its implications for the rest of the air cargo industry must be carefully weighed by the authorities in the current debate over the future needs for cargo handling capacity at Hong Kong International Airport.

Any decision by the Airport Authority as to the future capacity requirements for Hong Kong International Airport will have long term consequences for its thriving cargo handling and logistics industry. There must, therefore, be a process of full and open consultation with all stakeholders.