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One Day Without Hong Kong Airport

Hong Kong’s aviation sector is expected to suffer losses of more than US$76.48 million caused by massive flight cancellations due to the recent protests that saw Hong Kong’s airport under siege. MioTech looks into the deep impacts this will have on Hong Kong’s world-renowned aviation hub.

Jiang Gu, Senior Software Engineer in Data Infrastructure2019-08-20

Hong Kong International Airport (HKIA), also known as Chek Lap Kok Airport, is the only civil aviation airport in Hong Kong. It covers an area of ​​1,255 hectares, including two runways and two terminals. It is the largest single area in Hong Kong, second only to Beijing Capital Airport China. The second largest airport. Hong Kong Airport is also the hub airport for Cathay Pacific Airways, Cathay Pacific Dragonair, Hong Kong Airlines, Hong Kong Express Airways, Hong Kong Cargo Airlines and Hong Kong Air China.

Source: Hong Kong International Airport Annual Report 2018/19

Under the management of the Hong Kong Airport Authority, HKIA provides safe, efficient and comfortable passenger services and cargo transportation. In 2018, the HKIA completed a total passenger throughput of over 74.67 million passengers a year, with cargo transportation exceeding 5.12 million tons and flying more than 428,000 flights. In particular, HKIA relies on Hong Kong's unique trading port status and vigorously develops cargo transportation. It has been ranked first in the world's air cargo for nine consecutive years. In 2019, HKIA won the world's first International Air Transport Association IATA CEIV Fresh, becoming a partner airport.

Source: Hong Kong International Airport Annual Report 2018/19

HKIA is not only a transportation hub, it takes advantage of high passenger flow and logistics, combined with the characteristics of Hong Kong’s selling point as a shopping paradise, the Hong Kong Airport Authority develops a comprehensive range of franchised retail, airport security, property and advertising businesses. In 2018, HKIA achieved a revenue of more than 19.4 billion Hong Kong dollars and a profit of over 8.4 billion Hong Kong dollars.

In contrast with the Beijing Capital Airport which accommodates a far larger volume of traffic of more than 100 million passengers a year, the hub only generated 11.263 billion yuan. Even in Shanghai, which is considered a relatively efficient domestic airport which manages over 70 million passengers, the annual revenue generated was 9.313 billion yuan. This goes to show the level of efficiency and maturity that the Hong Kong airport operates by.

What happens if the airport closes for one day?

A rough estimate will show more than 200,000 people blocked or stranded in Hong Kong, if the airport is shut down for a day. Nearly 14, 000 tons of cargo delayed with more than 50 million yuan in direct loss of revenue. This does not include numerous other indirect economic losses.

Source: Hong Kong International Airport Annual Report 2018/19

The direct or indirect economic contribution of the HKIA accounts for about 5% of Hong Kong's GDP. More than 73,000 employees work in the airport, which directly bolsters Hong Kong's pillar industries such as trade, finance and tourism. In addition, the airport serves as an important gateway connecting Hong Kong and the Greater Bay Area to the world. The airport connects more than 220 terminals around the world. 80% of the passenger traffic are international, with 20% accounting for Mainland Chinese passengers. HKIA is also a multi-modal transport hub. With the Hong Kong-Zhuhai-Macao bridge connectivity, passengers can travel from Hong Kong to other cities and regions through cross-border transport services, providing passenger flow for inland areas.

Source: Hong Kong International Airport Annual Report 2018/19

According to the 2017/2018 Sustainability Report of the freight and cargo sector, HKIA has undertaken less than 2% of Hong Kong's total cargo, but the total value of foreign trade goods is close to 42%. HKIA is also a regional transit aviation hub, where 20% of the goods are transshipped to other regions. HKIA has taken full advantage of its cargo capacity to consolidate and enhance its position as a high-value-added cargo hub.

Hong Kong’s Influence in China

HKIA consistently adopts new technologies to improve automation and technological level. With its industry-leading management and service capabilities, HKIA has won numerous accolades around the world and has brought its advanced airport management capabilities to the Mainland to assist the development of China’s domestic civil aviation industry.

Hangzhou Xiaoshan Airport

The Hong Kong Airport Authority purchased a 35% stake in Hangzhou’s Xiaoshan International Airport in 2006 and established a venture to in partnership, operate Hangzhou Xiaoshan International Airport. In 2018, Xiaoshan Airport ranked 10th among the busiest airports in the Mainland. It ranked second among the top ten airports in the Mainland in terms of passenger traffic and cargo growth.

China’s Top 10 Most Busiest Airports by passenger traffic. Source: Civil Aviation Administration of China

Shanghai Hongqiao Airport

The Hong Kong Airport Authority and Shanghai Airport (Group) Co., Ltd. jointly established Shanghai-Hong Kong Airport Management (Shanghai) Co., Ltd., which is responsible for the operation and retail business of the Shanghai Hongqiao International Airport Terminal. Hongqiao Airport completed its refurbishment in October 2018, adding self-service registration and baggage check-in systems, self-service security inspection system, etc., which has greatly improved the airport’s automation levels and service quality. Hongqiao Airport was chosen as the "Best Airport in China" by the 2018 Skytrax Opinion Survey and was awarded with the "Platinum Certification" issued by the International Air Transport Association, to recognise the use of advanced technology at the airport.

Hong Kong Airport Authority’s Shareholding Structure. Source: AMI

Zhuhai Jinwan Airport

In 2006, Zhuhai entrusted the Hong Kong airport authority with the management of the Zhuhai airport and set up a joint venture Zhuhai-Hong Kong airport Management Co. Ltd.. The Hong Kong airport authority, which holds 55% of the shares, is in charge of services and operations at Zhuhai airport. In 2001, the Zhuhai airport had a passenger volume of 637,000 and a cargo and mail throughput of 11,400 tons, with a utilization rate of less than 10%. In 2018, passenger traffic at Zhuhai airport exceeded 10 million for the first time, with domestic cargo traffic increasing 24.1% to 46,393 tons, with 82.1% of scheduled flights at Zhuhai airport being on time.

Zhuhai Airport Authority's shareholding structure. Source: AMI

In recent years, the three cooperative airports have achieved rapid improvement in passenger flow, with Zhuhai having the least volume traffic out of the 2. Due to the transformation of regional roles, Shanghai Hongqiao airport has gradually reduced its freight share and steadily improved its air passenger service under limited airport conditions. Hangzhou Xiaoshan Airport maintains a high growth rate and is expected to become a large aviation hub.

Passenger Traffic and Cargo Traffic by Region: Zhuhai/Jinwan, Shanghai/Hongqiao, Hangzhou/Xiaoshan. Source: Civil Aviation Administration of China

Challenges Ahead

Throughout 2018, the HKIA were faced with two major issues:
1. Consolidating and strengthening HKIA as a hub of international aviation
2. Advancing and ensuring the smooth construction of the third runway in an orderly manner

In the past five years, although HKIA has set new records in various indicators, it is still operating on a limited number of runways. Despite the constant use of innovative technologies, Hong Kong's airport is operating at nearly its full capacity, with passenger and cargo growth rates on the decline. (The 18/19 annual decline was mainly due to the one-time gains brought to the SKYCITY Space City Hotel in the 17/18 leasehold land).

Guangdong-Hong Kong-Macao, Greater Bay Area - Opportunities and Challenges

With three airport situated within the Guangdong-Hong Kong-Macao, Greater Bay Area airport cluster (HKIA, Guangzhou Baiyun airport and Shenzhen Baoan airport) and two regional airports (Macau International Airport and Zhuhai Jinwan airport) within close proximity, it is the highest airport density in the region. In 2018 alone, the airports in the Guangdong-Hong Kong-Macao, Greater Bay Area have a total passenger throughput of more than 200 million, and a cargo and postal throughput of nearly 8 million tons. The transportation scale has surpassed the world-class airport clusters in New York, London and Tokyo, ranking the first in the world.

Compared with other airports in the Greater Bay Area, HKIA has always maintained its position as a leader. Guangzhou’s Baiyun airport and Shenzhen’s Baoan airport have followed in its footsteps. According to the 13th five-year plan for the development of Guangdong's comprehensive transport system, Guangzhou Baiyun airport and Shenzhen Baoan airport are both positioned as international aviation hubs.

Passenger traffic by region: Zhuhai, Hong Kong, Macao, Shenzhen and Guangzhou. Source: Civil Aviation Administration of China

Compared with the world famous Bay Area, the area and population of Guangdong-Hong Kong-Macao, Greater Bay Area are far larger than New York and Tokyo. And while GDP is expected to grow steadily, air travel frequency per capita is far lower than that of other bay areas. But with the development of economic activities and commerce and the improvement of people's living standards, the demand for air travel in guangdong, Hong Kong and Macao will still be in a period of rapid growth. The three major airports in the bay area are still in the stage of expanding their service capacity and connecting with each other in various ways to attain more passengers.

2016 Data comparison between Guangdong-Hong Kong-Macao, Greater Bay Area and world-renowned Bay Area. Source: https://www.china.com.cn/

With the successful opening of the Hong Kong-Zhuhai-Macao bridge in 2018, the development strategy of Guangdong-Hong Kong-Macao, Greater Bay Area has taken an important step forward. It only takes 45 minutes by car from Hong Kong airport to the Pearl River Delta via the newly established bridge. The Hong Kong Airport Authority also plans to construct a multimodal transfer passenger terminal and a closed carriageway next to the Haitian Ferry Terminal. Transfer passengers can take special buses to and from the Zhuhai and Macao ports via the Hong Kong-Zhuhai-Macao bridge to the Hong Kong airport, directly through the Hong Kong airport to their international destinations.

Three Track Runway

HKIA has been planning a three-runway system since 2011. However, the three runway system has gone through several setbacks. The construction plan has a steep total budget of 141.7 billion HKD. Moreover, the land reclamation needed for the project may have an impact on the environment. The project it seems is as complex, costly and time-consuming as the construction of the last project.

A third runway at Shenzhen's Baoan airport is scheduled to be approved this year at a cost of 9.2 billion yuan with plans to open in 2023 a year ahead of Hong Kong. The Pearl River Delta region's already limited resources in airspace is likely to be offered to Shenzhen's Baoan airport, reducing the value of Hong Kong's three-runway system. Moving forward, there is important work that needs to get done if Hong Kong wishes to maintain its position as a leader and as a pivotal aviation hub in the region.