Hong Kong airport gears up for a greater role in the region 

The following is an article written by Hong Kong’s Secretary for Economic Development and Labour, Mr. Stephen Ip:

Can Hong Kong International Airport maintain its hub position? Will Hong Kong’s world-renowned airport slowly slip off the radar screen in the face of increased competition from nearby airports?

These are two of the most common questions I have been fielding since the opening of the new Guangzhou Baiyun International Airport in early August. 

Without a doubt, Baiyun is an impressive airport and, along with Beijing and Shanghai, will develop as one of three major hubs serving the massive domestic Mainland market. Baiyun’s opening no doubt marks an important milestone for China’s aviation sector. But, what it does not represent is a millstone for Hong Kong International Airport, or the emergence of a new southern China hub in Guangzhou at the expense of Hong Kong.

That’s because HKIA continues to build on its strengths to maintain and improve its competitiveness as the premier international aviation hub servicing southern China.

HKIA’s strengths lie in three areas: its extensive network; excellent inter-modal links; and a new model for airport development.

The success of any aviation hub depends heavily on the density of its network. After decades of effort, Hong Kong has established an extensive network of reliable air services. Under the framework of over 50 bilateral air services agreements, Hong Kong is now connected to 140 cities by 4,500 weekly services operated by some 70 international airlines. This extensive network represents a good mix between international services and services to the Mainland of China, and between long-haul and shorter haul regional services. More importantly, the network creates a highly competitive environment for airlines to offer quality services at reasonable prices to passengers and shippers. All of this adds up to put HKIA firmly in the first league of preferred transit hubs.

Hubs compete for catchment areas. To cast the net wide, it is vital to have good inter-modal links for passengers and goods. Apart from the air network, Hong Kong has highly integrated, efficient inter-modal links that feed land and marine traffic into the airport. We are taking a multi-pronged approach to expand HKIA’s catchment areas. For example, we are constructing rail and road links between Hong Kong and our neighbouring city of Shenzhen. We are planning an express rail link with Guangzhou and a bridge reaching the western part of the Pearl River Delta (PRD) area. Shuttling coach and ferry services are providing seamless connections between HKIA and major cities in the booming PRD, often referred to as the ‘factory of the world’. Customs formalities have been streamlined to enhance the efficiency of traffic flows. These projects and measures will greatly improve HKIA’s connectivity with the PRD as well as reduce transportation time and costs.

Modern hub airports also serve more than transportation functions. Regardless of the fact that our airport has been voted the world’s best by international surveys, HKIA’s operation model is continuously being reshaped and enhanced to make it an attraction in its own right. We are using the airport as a platform on which to attach various value-added elements. SkyMart, the passenger terminal retail mall with 160 shops and 40 catering outlets, epitomises the great variety of shopping found in Hong Kong. The new SkyPlaza project will add even more shopping facilities and a much-improved transport interchange.

In two years, the 70,000 square-metre AsiaWorld Expo will add a new dimension to international conventions and exhibitions facilities in Hong Kong, and will provide exhibitors, buyers and delegates with highly-efficient, easy and handy access to events and conferences from its site on the airport island. New tourism attractions are also being developed within a short distance of the airport – Hong Kong Disneyland is due to open in late 2005, while a state-of-the-art cable car system will whisk airport visitors up the verdant slopes of adjoining Lantau Island to the world’s largest outdoor bronze Buddha. A value-added logistics park is also in the pipeline. Within a few short years, HKIA will be the focal point of a cluster of trade, tourism and logistics facilities unprecedented in the region and probably the world.

Despite all that’s happening, some remain skeptical. We hear, for example, that the Government has adopted a ‘conservative’ aviation policy or that the HKIA imposes exorbitant charges. Both these claims are untrue and unfounded. 

For a good part of the past two decades, the Hong Kong government’s priority has been to lay down the necessary framework with bilateral partners in developing air services. In recent years, we have focused on liberalising the aviation market to introduce more competition. The process is gathering pace. Over the past year or so, we have reached very liberal agreements with almost all our major aviation partners in Asia, America, Europe and Australia. If these bilateral arrangements are deemed not open enough it is through no lack of trying on our part – rather it is our negotiating partners who have been reluctant to open up their markets. We will continue to press for a fair deal for our carriers, and international carriers wishing to come to Hong Kong.

In regards to charges, the facts provide a clear picture. According to IATA statistics on the world’s 20 major airports, HKIA ranked 7th and 11th in terms of charges paid by airlines and passengers respectively. A recent study commissioned by the Hong Kong Airport Authority revealed that, for outbound cargo originating in the PRD, total freightage was 10% lower from Hong Kong compared to similar freight shipped from neighbouring airports in Guangzhou and Shenzhen. 

In regards to competition between HKIA and the Baiyun international airport, this is really not a zero-sum game. Over the past five years (excepting SARS-hit 2003) HKIA and the old Baiyun have each seen passenger throughput grow by 4 million. Yet, there is a vast untapped market. Consider only the Pan-PRD area, which covers nine provinces in the Mainland plus Hong Kong and Macau. The Pan PRD area has a population of 450 million, same as that of the enlarged EU. At present, four major hubs in the EU (namely London Heathrow, Frankfurt, Paris and Amsterdam) handle 200 million passengers annually. By comparison HKIA and Baiyun combined handle 50 million passengers.

If we look at the different levels of economic development, a recent study by the Hong Kong Airport Authority indicates a positive correlation between income levels and number of air trips. For the more developed EU countries, the number of air trips is about 10 times that for China. Rather than worrying about whether HKIA and Baiyun will compete for passengers and cargo, we should perhaps be worrying about whether these two world-class facilities will be able to cope with the inevitable rising demand in an increasingly affluent Mainland market.

Investors in the aviation industry seem to take a different view. In recent months airlines and major players in the logistics field have expanded their fleets and upgraded their hub facilities at HKIA. This is undoubtedly a vote of confidence in HKIA and its future. And it is, of course, a confidence that I wholeheartedly share.


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