A THIRD RUNWAY AT HONG KONG INTERNATIONAL AIRPORT IS CRUCIAL TO HONG KONG S ECONOMIC FUTURE
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1 A THIRD RUNWAY AT HONG KONG INTERNATIONAL AIRPORT IS CRUCIAL TO HONG KONG S ECONOMIC FUTURE Cathay Pacific firmly believes that a third runway at Hong Kong International Airport (HKIA) is a vital component in ensuring the long-term competitiveness of Hong Kong s airport and aviation industry and, by extension, underpinning Hong Kong s role as an important international financial, trading and logistics hub. HKIA is one of the world s leading international aviation hubs and it is critical to its long-term sustainability that it continues to develop in order to maintain that hardearned status. The aviation industry is crucial to the continuing growth of the Hong Kong economy and aviation plays a pivotal role in the Government s plan to promote Hong Kong as a logistics hub. Hong Kong is unique in that its role as a centre for regional and international aviation is set out in the Basic Law and the Airport Authority Ordinance. The airport is undoubtedly a superb facility that has spurred Hong Kong s economic growth in the decade since it opened, but if action is not taken on a number of fronts there is a danger that the hub will begin to lose its competitive edge. Of particular concern is the fact that HKIA is facing increasing capacity constraints which have already placed unacceptable barriers to airlines seeking arrival and departure slots. These fundamental problems are exacerbated by limitations arising from the airspace congestion over the Pearl River Delta region. However, as explained below, these airspace congestion issues are being addressed by the relevant authorities and their resolution is anticipated in a swifter timeframe than that of the capacity expansion of the airport itself. Taken together with various other capacity enhancement measures, Cathay Pacific believes that an early decision to build a third runway is required in order to ensure that HKIA maintains and builds on its position as Asia s premier aviation hub. Economic benefits of a third runway Aviation already makes a significant contribution to the local economy. A detailed study conducted by the Chinese University of Hong Kong (CUHK) showed that aviation contributed 8.2% of Hong Kong s GDP in 2007 and accounted for 7.7% of the city s total employment. Aviation is an industry vital to Hong Kong s current economic well being as an international financial, trading and logistics hub and to its continued prosperity in an increasingly competitive world. The CUHK study estimates that a fully utilized third runway would create an annual economic contribution of HK$37 billion to Hong Kong. Based on aviation s 8% GDP contribution, that means each additional flight mounted would contribute HK$450,000 to the Hong Kong economy. p. 1
2 Growing competition In the decade since HKIA opened, the aviation industry within the region has seen a dramatic change. There are now more airlines providing a greater number of flights from a growing number of airports. Hong Kong now faces growing competition from other rapidly developing hubs within the region, in particular Singapore, Taipei and Seoul. In Singapore, the authorities corporatized Changi Airport to meet challenges of rising competition from other airports such as Beijing, Seoul Incheon, Shanghai Pudong and Dubai. They have planned for the future expansion and development of Changi Airport infrastructure, with the aim of promoting Singapore as an air hub by restructuring and strengthening its airport operations. In Taipei, development works are planned for both Songshan and Taoyuan airports. By March 2010, Songshan airport will have a new international cargo terminal in preparation for the new international flights next year. For Taoyuan airport, authorities plan to renovate its 30-year-old Terminal One and are planning to add a third ternminal. The development of the Taoyuan Aerotropolis will also focus on enhancing the competitiveness of the Taoyuan International Airport. In Seoul, Incheon International Airport, just named the World's Best Airport in 2009, will have its second passenger terminal by 2015 together with its expanded cargo terminal. It will have four runways by The airport is projected to be transformed into one of the world s top-10 busiest by In the Mainland, airports such as Guangzhou and Shanghai are planning third, fourth and even fifth runways. Hong Kong is facing a very real danger of giving away its competitive advantage which is why it needs to move quickly and decisively on a decision to build the third runway. Such an action will undoubtedly serve Hong Kong s best interests. The growing competition of other hubs within the region and the runway capacity constraint at HKIA makes investment in a third runway an urgent requirement if HKIA is to retain its pre-eminent hub status. Current constraints At present, HKIA is constrained by insufficient runway slot capacity. Limitations arising from the airspace design over the Pearl River Delta (PRD) region which prohibits the use of parallel arrivals and departures on both runways also contribute to the problem. Cathay Pacific welcomes the undertaking by the relevant authorities to revise the airspace arrangements over the PRD. Cathay Pacific is encouraged that runway movements at HKIA would be gradually increased to 68 per hour by However, when set against the 7% annual growth rate at HKIA over the last decade to 2007, and taking into account the sharp reversal experienced as a result of the current global recession, and even with a slow recovery from the present downturn, HKIA will be fully slot constrained p. 2
3 throughout the day by The airport will reach its capacity before a third runway can be built and commissioned. Cathay Pacific will continue to work with the Hong Kong Airport Authority (HKAA) and Civil Aviation Department (CAD) to seek solutions to this critical issue. Various capacity enhancement measures will improve the situation at HKIA but there is no question that a third runway is a crucial component in the equation. Hong Kong-Shenzhen Airport Rail Link not a viable alternative to a third runway We welcome the commitment by the Hong Kong Special Administrative Region Government to cooperate further with our neighbouring cities in the PRD and the urgency it places on the need to study and implement various major crossboundary infrastructure projects, including the HK-Zhuhai-Macau Bridge and the Guangzhou-Shenzhen-HK Express Rail Link. We also welcome the clearer positioning of HKIA as an international aviation hub in accordance with the pact signed by the five PRD airports on 7 March 2009, and the announcement that efforts will be stepped up to open up the airspace of the Greater PRD. We welcome the latest cooperation agreement signed between the HKSAR and Shenzhen Governments with regards to the rail link between the two airports. While the re-named Hong Kong-Shenzhen Western Express Line would provide some transport benefits for passengers travelling between Hong Kong and the PRD area, it would not remove the urgent need for a third runway at HKIA. This rapid rail link will serve passengers destined for tertiary points in the mainland which are not linked by air to either Hong Kong or the other regional hubs. We believe the link will need to be connected to the Guangdong city rail networks for it to be fully effective. This would increase the attractiveness and accessibility of HKIA as a gateway to the PRD and the rest of mainland China. We would also support the installation of full customs, immigration and quarantine (CIQ) facilities at Qianhai station, Shenzhen, to facilitate the seamless transfer of passengers commuting on an airport rail link. Complications and Limitations There is one major complication in developing such a link: Hong Kong and Shenzhen are not part of the same Administrative Region. They have separate governments; separate administrative systems (including a different currency); separate border controls; differing immigration requirements; different air services agreements; different airport operators/stakeholders; and different designated and operating airlines. None of these things can be simply traded across the legally defined boundary - in fact the Hong Kong SAR Basic Law defines this separation very clearly. p. 3
4 Even if the Basic Law was not a complicating factor, other attempts to link airports elsewhere in the world even linking two airports within the same metropolitan area have not proved successful. For example, in London, Heathrow and Gatwick do not operate as one airport and transfer traffic between the two is almost non-existent. In Montreal the attempt to link Mirabel and Dorval was a disaster. The former is now a huge white elephant. In the United States, both New York and San Francisco have been unable to generate transfer traffic between the major airports in each city. The airport rail link to Shenzhen can never provide an effective substitute for the operation of passenger services to primary and secondary points in the Mainland from HKIA itself. Passengers to such points will always travel via an air hub which can offer such connections thus it is vital that they are provided from HKIA. As noted, a rapid rail connection between HKIA and Shenzhen airports would best serve the passengers destined for tertiary points in the Mainland which are not linked by air to either Hong Kong or, vitally, to the other regional hubs. This is its value although of even greater value is its provision of easy access through intermediate stops for passengers traveling between HKIA and the PRD area. The rail link would thus provide some transport benefits but would not remove the urgent need to plan for a third runway at HKIA. Cargo Equally, a rapid rail link cannot provide a suitable cargo link. Small aircraft operating out of Shenzhen into tertiary points in the Mainland do not carry cargo in their bellies. Furthermore, the value of Hong Kong as a cargo hub is in the consolidation of cargo that relies on a single inbound and outbound hub combined with free port status. Splitting cargo operations would add complexity and cost, and result in the fast erosion of Hong Kong s current status as the world s numberone cargo hub. Cooperation with other PRD airports Cathay Pacific supports the HKSAR Government, the Civil Aviation Department and the Hong Kong Airport Authority in working closely with mainland authorities to increase the capacity and efficiency of the PRD airspace through better coordination. A coordinated approach to airspace and air traffic management is crucial if HKIA is to operate efficiently as a hub. However, directing traffic to other airports in the Pearl River Delta region can never be a practical substitute for a third runway. As an international financial centre, logistics hub and prime travel destination, Hong Kong needs to have its own airport and capacity to provide for the city s economic growth. Even with better coordination among PRD airports, runway capacity is still very much an urgent issue that needs to be addressed. Strengthening the HK hub p. 4
5 To be an effective hub HKIA needs to accommodate both large aircraft and smaller feeder aircraft. A mix of narrow-bodied feeder aircraft allow access to a broader choice of onward destinations. Without such options, passengers will travel via other regional hubs instead and the Hong Kong hub will wither. The world s great hub airports - London Heathrow, Frankfurt; New York JFK and so on - all have extensive feeder operations at the same airport. A high-speed rail link that served the wider community by connecting the three hub airports in Hong Kong, Shenzhen and Guangzhou to Western Shenzhen and Dongguan would be of value, as it would also provide an attractive connection for passengers to and from the PRD to the Hong Kong hub and enhance the transport infrastructure across the PRD. It would also be beneficial from an environmental perspective by reducing vehicular traffic across the region. Summary To serve Hong Kong s best interests, a third runway at HKIA needs to be built and it s important that all stakeholders, including airlines, should be deeply involved in the process. HKIA should not allow its strategic strength to be undermined by a failure to provide the necessary runway infrastructure. Suggestions that a third runway for Hong Kong could be located at one of the PRD airports, or that the problem could be solved by better coordination in moving passengers between the five PRD airports, are not workable solutions for the Hong Kong hub. This has been shown in other cities around the world, even where there is no border to cross when transferring between airports. The economic and social benefits of the third runway need to be carefully balanced with environmental, community and other considerations. We welcome the Airport Authority s undertaking of engineering and environmental feasibility studies for a third runway at HKIA. Cathay Pacific believes a third runway at HKIA is critical to sustaining Hong Kong as an international aviation hub and maintaining the city s economic competitiveness and vitality. Cathay Pacific Airways 31 August 2009 p. 5
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