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Airport upgrade warrants more options

Airport upgrade warrants more options

On June 2 the Airport Authority (AA) released its “Hong Kong International Airport Master Plan 2030”. One option outlined is a plan to upgrade the two existing runways at a cost of HK$23.4 billion with HK$432 billion of economic benefits. The other option is to build a third runway with an investment of HK$86.2 billion, accruing HK$912 billion of economic benefits over 50 years.

Which one do you choose? As the first upgrading option will still see saturation of airport capacity by 2017, then the obvious answer is the second option judging by its face value. I will certainly vote for option two if there is no third option on the table. But are there in fact any more viable alternatives?

I believe other related factors should be considered before making any decision. The first is about the site area and location of the airport. With two existing runways, the total site area of the airport is about 1,255 hectares. With an additional third runway, the total site area would then be 1,905 hectares. That is to say about 650 hectares of land will have to be reclaimed from the sea for the second option to work. As the reclamation will be carried out at a rather deeper seabed compared with the existing runway, the land reclamation alone will cost HK$38.9 billion plus an additional HK$9 billion to prevent the release of toxic mud.

This cost will be sufficient to build a new airport in the New Territories with one runway (option three). Then the new second airport could cater for another runway and meet needs beyond the 2030s or 2040s. But in the current option two, when all three runways are at full capacity by the 2030s, it will be impossible to build the fourth runway. So what will our options be if other potential locations have already been occupied?

The second factor concerns economic benefit. At first glimpse, one may believe the economic benefits from option two (HK$912 billion) is much better than option one (HK$432 billion), but if the investment between option two (HK$86.2 billion) and option one (HK$23.4 billion) are compared, it appears that option one will produce better benefits in terms of returns in the future, provided that there is another airport development before option one is saturated in 2017. If this is the case, then the combination of option one and option three appears to be better than option two alone.

Both option one and option two have the same capacity of 34 flights per runway per hour, thus the total capacity of option one ( with two runways) will be 68, and option two (with three runways) 102 per hour respectively. My third related issue is with how we can increase this capacity. Technically speaking, the capacity of any runway depends on aircraft types, its taxiway system, air traffic control techniques, and apron capacity, landing aids etc. If all conditions are satisfactory, the world maximum figure could rise to 50 flights per hour under the Visual Flight Rule. I wonder whether the Hong Kong record could be improved from 34 to 40 or 45 flights per hour without sacrificing safety as the first priority. If the capacity for the existing runways to handle flight movement could be substantially expanded, then the time before saturation would be extended.

The fourth factor regards the air traffic forecast. Flight movements at Chek Lap Kok International Airport have risen on average by 6.5 percent per year, and the two existing runways will become saturated by 2017. Although the growth figures may be accurate in retrospect, it may not necessarily have the same accuracy in forecasting the future. The reasons are twofold: one is the competition from adjacent airports, particularly Shenzhen Baoan Airport and Guangzhou Baiyun Airport. As they can build their airports with similar flight capacity at a cost of about 10 percent of that of Hong Kong, they collect much less airport charges than Hong Kong. Notwithstanding that the Hong Kong AA is operating under prudent commercial principles, Hong Kong AA may not compete with its adjacent counterparts respecting airport charges as Hong Kong has a much more expansive airport.

The other reason is the development of the super railway and highway networks on the mainland. In light of China developing the fastest super railway system in the world, a short-haul flight of up to 800 kilometers cannot compete in terms of cost and time, unless Hong Kong can have much shorter check-in time, cheaper tickets and more frequent flights. Medium-haul flights of about 2,000 km may also find it difficult to compete with the super railway network. With a more convenient highway network, Hong Kong residents who live in Kowloon and New Territories (East and North) may also prefer to use Shenzhen Baoan Airport rather than Hong Kong Chek Lap kok Airport in the future.

Based on this twofold analysis, I believe the forecast of 6.5 percent growth is too optimistic as short distance flights will be reduced, and medium-haul flights may have not grown as expected. If I remember correctly, the government had briefed the Legislative Council on its plan to proceed with the privatization exercise of the airport in February 2004, and the Economic Development and Labour Bureau published a consultation document on Partial Privatization of the AA in November 2004 that showed an unsatisfactory equity return of less than 2 percent in a worst-case scenario. It would be really interesting to note what made the AA take a U-turn on the subject of airport development.

I do not mean to discourage Hong Kong airport development. On the contrary, I strongly believe Hong Kong should have a wise strategy for airport development in order to maintain its status as a center of international and regional aviation as required by Article 128 of the Basic Law. More options and deeper study are needed.

The author is a current affairs commentator.

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