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In some quarters, capacity sharing partnerships between HKIA and airports in southern China have been advanced as an alternative to HKIA moving forward with plans to build a third runway. Cathay Pacific has been rather outspoken on the issue, pointing out quite reasonably that Shenzhen and Hong Kong have separate governments, border controls and administrative systems. They also have different currencies, immigration requirements and air services agreements, not to mention leading operators and stakeholders. “Even if the challenges outlined above could somehow be resolved, there’s no reason to think that the other PRD airport hubs would surrender their runway capacity to Hong Kong. All of the PRD airports are in competition and this is good for passengers and other users,” said Cathay in one statement.
As HKIA weighs up its expansion options, the truth of the matter is that competition between Hong Kong and its Mainland rivals is fierce now and will intensify in the coming decade.
As previously reported here, the Pearl River Delta region of southern China produces over 25 percent of the country’s exports and is responsible for more than 10 percent of national industrial output. Over the last decade HKIA has retained its dominance of air cargo uplift from the region, a dominance that helped it become the world’s leading cargo airport in 2010. But its cross-border rivals of Guangzhou (CAN) and Shenzhen (SZX) are making inroads.
CAN saw volumes rise almost 20 percent in 2010 to 1.14m metric tons, helping the airport retain its status as the 21st largest cargo airport globally, according to figures from Airports Council International. Shenzhen, meanwhile, is now the 24th largest and one of the fastest growing cargo airports in the world, handling some 809,363 tons in 2010, a year-on-year gain of 33.6 percent.
Both airports have ambitious plans to expand by building additional runways and already boast the presence of major hubs operated by leading carriers – UPS at SZX and FedEx at CAN. The two logistics majors have been highly vocal about the service benefits that have been possible since the hubs were established. Both airports are now also improving service levels, supported by strong investment in hinterland infrastructure from regional and federal authorities. Alwyn Mendonca, (left) Managing Director for South China and Hong Kong at GAC, said these efforts are now bearing fruit. In the past, 90 percent of GAC’s airfreight cargo was handled at HKIA because it was the most cost-effective option, especially since GAC builds its own units in Hong Kong.
“However,” he added, “we are gradually seeing more cargo moving directly through Guangzhou and Shenzhen as customs in Southern China becomes more efficient. For every shipment, we carefully evaluate all options to find the best, and most cost-effective, way to get the cargo to its final destination.
“There has been considerable improvement in customs services at both CAN and SZX in the past few years. Paperless export declarations are now a reality for some general cargo, depending on the commodity, and it is now possible to complete the process within a day.”
Christian Hein, Vice President for air freight Product Management in the Asia Pacific at Schenker, said improved customs services were seeing more cargo directed to CAN and SZX, a trend he predicted would accelerate.
“There are more domestic and international carriers calling into these two airports now and they offer good connections overall,” he added.
“There are increasingly more customers requesting us to operate directly out of these two airports due mainly to their proximity to manufacturing operations, and to a certain extent, an increasingly influential and sizeable consumer market. “Though the fuel surcharge level is higher than Hong Kong, the overall freight rate all-in is still competitive.”
Robert Timmerman, (right) Area Manager Greater China at Panalpina, said that although airfreight rates were attractive from mainland airports, add-on fuel and security surcharges ultimately aligned pricing with HKIA.      “The fact is that the carrier portfolio in both Shenzhen—mainly served by Jade Airlines to date, and Guangzhou, which sees a diversified portfolio going forward, combined with the expanding China Southern fleet including Boeing 777 freighters—will allow us to provide direct lift from and to Mainland China to support the growth.
“Hong Kong, however, will retain its strengths in view of the local trading solutions available and successfully conducted for years.
“A dilemma going forward related to airlifting through Mainland airports are the restrictions related to second customs’ bond transfer. This cannot be conducted at present. If the Logistics Provider could build Aircraft ULDs themselves this would substantially increase control and thus reduce exposure on damages.” Andy Weber, (left) President of Kuehne + Nagel Asia Pacific, said CAN and SZX still lacked sufficient route coverage, flight frequency and airport cargo handling options, but had a speed advantage over HKIA in terms of accessing factories in the PRD because of overland transit times.
“Buyers increasingly demand high-speed delivery of products or components, and the time lost can constitute a competitive constraint,” he explained.
“This would suggest that Hong Kong’s future as a key air-cargo hub will heavily depend on its capability in providing speedy intermodal transports by land, sea or air between Hong Kong International Airport and the factories in South China.”
The final word on competition between HKIA and southern Mainland China rivals goes to Hein: “An additional runway [at HKIA] would definitely enhance competitiveness. Nevertheless, the competition between HKIA and other South China regional airports is keen and will remain so for years to come.”

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