The year 2006 is an important year for Hong Kong aviation. The Hong Kong Civil Aviation Department, established in 1946 in the name of the "Directorate of Air Services", has just celebrated its 60th anniversary. Today, the Hong Kong airline that started its business with a converted propeller-driven DC3 named "Betsy" - also in 1946, as chance would have it - sees the size of its fleet reaching three digits for the first time in its 60-year history and celebrates the delivery of this state-of-the-art aircraft.

For aircraft manufacturers, reaching a fleet size of 100 in 60 years may be just a bit too slow. But for Cathay Pacific, it reflects how prudent and astute it has always been and explains why it has made money throughout all these years. The new aircraft, powered by Rolls-Royce Trent engines, will not be alone in Hong Kong. Indeed it is going to join a big family of more than 80 Airbuses on the Hong Kong aircraft register, with more than 320 siblings in Mainland China, and hundreds more in the Asia-Pacific region.

The importance of international transportation links to a city's economic development should not be underestimated. Traditionally Hong Kong's economic development has been built on our role as one of the world's leading ports. So many great cities in history owe much of their emergence to their role as transportation centres. Indeed, in the gospel according to [Cathay Pacific's CEO] Philip Chen, a city has no economic future unless it has a strong local airline.

I, too, subscribe to this view, but with two big caveats. First, the local airline must owe its strength to its commercial competitiveness in the market place, not governmental support. Second, that particular airline must be rooted in strong and loyal support from the local community which can identify its own interests with that of the airline.

This may be an increasing challenge as Cathay Pacific becomes not just regional, but a truly global and international operator. There are significant implications in a wide range of policy matters involving leadership, management, services, image, commitment and balance between commercial and public interests.

With the emphasis worldwide on speed and connectivity, a good aviation network supported by an efficient airport infrastructure is critical to the success of any economy. In Hong Kong's case, 33% of our 23 million visitors every year come by air. Over 30% [by value] of Hong Kong's imports and exports are shipped by air. Cathay Pacific's success is a major driving force behind Hong Kong's aviation development, which in turn supports our continued trade and economic growth.

Cathay Pacific's development is a typical Hong Kong success story. From a one-plane airline 60 years ago, it now boasts a sizeable, young and modern fleet which is the envy of many in the world. About 1,600 Cathay Pacific flights depart from Hong Kong every week. With its outstanding safety record, quality management and remarkable service, it has been repeatedly rated the world's best airline by various world-renowned organisations such as the Official Airline Guide. It is a brand name that Hong Kong people can be proud of.

Cathay Pacific is part of the Hong Kong community that works together relentlessly to capitalise on our location in the heart of the Asia Pacific region, our proximity to the Mainland and our excellent aviation network with both coverage and depth to keep Hong Kong ahead of our competitors as a leading aviation hub.

Our world-class airport has been rated the world's best since 2001 for five years in a row, offering to the travelling public an aviation network reaching 150 regional and long-haul destinations. It was also voted the most friendly airport for cargo by the Federation of Asia Pacific Aircargo Associations in 2005.

As the catchment area of our airport continues to expand deep into the Pearl River Delta in southern China through a network of seamless inter-modal transportation services, passenger and air cargo throughput are set to make new records. Last year, 40.7 million passengers and 3.4 million tonnes of cargo passed through our airport, representing an increase of 9.7% and 10%, respectively, over 2004. We expect to see continued growth in 2006 and beyond.

Taking advantage of this encouraging growing trend, and our traditional strength as a seaport and maritime centre, we have built a thriving logistics industry that has become one of the pillars of Hong Kong's economy.

Our strength as an aviation hub also helps another pillar of our economy, namely tourism, by bringing ever more visitors to Hong Kong and helping us become the world's 7th most popular tourist destination, and the only single-city destination in the top 10.

It would be remiss if I do not mention Cathay Pacific's achievements outside the aviation business. Cathay Pacific is the main promoter of the "Hong Kong Sevens" which has developed over the years to become one of the most successful sports events in the world. It sponsors the "Hong Kong International Races" which is one of the premier events on the world racing calendar.

It runs the "I Can Fly" programme under which Cathay Pacific pilots act as mentors for one thousand local students aged between 13 and 18 years in a 15-month programme to learn about aviation and participate in community service. Its sponsorship of the Hong Kong Philharmonic Orchestra and the Asian Youth Orchestra also helps enhance the cultural richness of Hong Kong. Cathay Pacific is thus not just a great airline, but an excellent corporate citizen.

I must however also acknowledge that, for both Hong Kong and Cathay Pacific, the future is filled with challenges. Hong Kong's status as an aviation hub is facing keen competition from the emergence of new airports with large capacity in the region. To stay ahead we will continue to expand and upgrade our facilities, and enhance our operational efficiency to provide better services to the travelling public and the business community.

To expand the "home-market" of the Hong Kong International Airport, we are pursuing initiatives to boost our surface connections with the Mainland. A new land connection with Shenzhen, one of the most prosperous Chinese cities situated right across our border, will open next year. This new link will more than triple the capacity for cross-boundary traffic, underpinning further passenger and cargo growth of our own airport.

For Cathay Pacific, the last thing they need is the government's advice on how to do their business. They are simply the envy of many airlines in the world. If the government has a role in the success of Cathay Pacific, other than the timely provision of the necessary transport infrastructure and appropriate and fair allocation of air rights, it would be our respect for the market and our steadfast commitment to maintaining a level and open playing field for all.

In the absence of market protection or government subsidy that are quite common in other parts of the world, Cathay Pacific, like all other Hong Kong airlines, has thrived on its own efforts. There is no better guarantee for a company's future than its own strength that is built-up through decades of keen competition. I have every confidence that Cathay Pacific will continue to do well in the future.