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HKIA to seek third runway funding

By Wong Joon San (HK Edition)

Hong Kong International Airport (HKIA) passenger volume hit record to 56.5 million last year, while flight movements grew 5.3 percent to 352,000, reflecting the pressing need for a third runway. Wong Joon San reports.

The Airport Authority of Hong Kong will make funding arrangements for Hong Kong International Airport’s (HKIA) third runway once the Environmental Impact Assessment (EIA) of the runway is completed.

According to Stanley Hui, chief executive officer of the Airport Authority Hong Kong, the EIA into a three-runway system at HKIA is progressing well and should be completed end of this year.

Speaking as a moderator at a recent panel discussion themed “How high can Asia’s air cargo industry fly?” held in Hong Kong, Hui revealed that work on the EIA which started in August last year, was progressing well and should be completed in “18 to 20 months”.

“Then we will be making funding arrangements, and if all goes well, work on the third runway will start in 2014,” he said, adding that based on the preliminary master planning commission, the cost of the project was expected to be HK$136 billion, if everything proceeded as planned.

Cost escalation

Hui pointed out that any major infrastructure project was likely to have cost escalation, and hopefully there would be no delays.

Yvonne Ho, general manager of the Hong Kong, International Air Transport Association, who spoke on the panel, emphasized on the need for greater risk assessment of the project and to ensure that security vulnerabilities are checked carefully and use of technology are optimized in the project.

“Our secured trade vision is to have secured security at the cargo’s origin. Using secured shippers, then the cargo need not undergo 100 percent cargo screening. Also, we will have the capability to detect any suspicious cargo, and to do this, we screen the cargo and certify and identify it as secured freight,” Ms Ho said.

Regarding whether shipping lines were grabbing a slice of the air cargo business, Hui points out that what goes on ships would not go on air, as airfreight mostly handled time sensitive and high value goods. “When shipments are behind time and if they face being penalized, even the cheapest commodity will go as airfreight to meet the delivery deadlines. What must go on air will go on air,” he says.

Related to air cargo demand, Hui said electronic components and products manufacturer, Foxconn’s new factory in Shenzhen had started operations with employment of 250,000 people and their numbers would reach 500,000 in the near future, reflecting that their products’ (iPhones and iPads) would increase air cargo demand.

Staff shortage

On the main issues faced by Cathay Pacific Airways, Ivan Chu, the chief operating officer, said shortage of staff and lack of land for logistics and warehouse were the airline’s main problems as it was seeing demand rising in the fashion and retail trade.

Asked whether iPhones and iPads were lifting air cargo demand, Chu says no doubt these had increased the air cargo volume to some extent. “Our shipping colleagues are catching up in arranging for transport of cargo, and so on the logistics side of the operations, these arrangements will improve,” he says.

Replying to a question whether the industry was being impacted by manufacturing facilities relocating from Southern China, Chu says some factories had relocated to Jiangzhou, Shanxi province, in the middle of nowhere with a population of 100 million. “Electronic production there has increased more than six times and it had become a manufacturing base with its cheap land and labour. Cathay, by flying a Boeing 747 to the city, is able to serve its needs,” he said.

Similarly, the airline is also meeting the needs of Chongqing and Chengdu where the government policies are attracting increased manufacturers to the area, Chu said, pointing out that: “We will adapt to the changes. In addition, Cathay’s subsidiary airline, Dragonair also serves these areas to support Cathay, with bellyhold cargo capacities.”

Edward Lau, Managing Director, TNT Express Worldwide (HK), who also spoke on the panel, said the company’s ability to expand in Hong Kong was impacted by the city’s runway restrictions as the third runway was still not built yet. He pointed out that it takes about 10 years to build a runway.

“Not having the runway on time would affect Hong Kong’s status as a hub. Aside from space constraints, work on the eco-system should also be carried out. And if a company offers cold chain logistics for pharmaceutical companies, they also need the supporting infrastructure,” he explained.

Lau said TNT’s Southeast Asia hub is in Singapore, which is in the heart of the ASEAN hub. He said the hub is clean and efficient and is close to China. Working with components produced in Singapore, they are shipped to Hong Kong and South China. Lau said: “Both Singapore and Hong Kong are complementing each other, and one territory’s gain is not another’s loss. I see the pie as getting bigger.”

Competition exists

Hui says the way manufacturing is planned and distributed ultimately works towards a total and bigger market. “Competition is there, but it is not a zero sum game.”

Chu also says that Cathay was getting better results in Hong Kong in terms of tonnage, and value. “We should not look at things from the competition point of view, but rather from cooperation with Singapore.”

Asked whether the trend of aircraft becoming larger would lead to them to replace freighters, Chu says presently 60 percent of cargo was carried by freighters while 38 percent were carried in the bellyhold of passenger aircraft, but did not directly answer the question.

Hui says that at HKIA, the fact that cargo is transported in bellyholds and also by freighters is one of the competitive advantages of Hong Kong. “Whatever cannot be carried by freighters to destinations which may not justify the use of a freighter, the cargo can still be transported in bellyhold of passenger airlines, particularly to destinations such as Guangzhou, Taipei or Sanya (in Hainan Island).”

HKIA to seek third runway funding

(HK Edition 01/19/2013 page2)




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