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  Official magazine of ACI
Monday, 02 July 2012 08:02

The China factor

Written by  Peta Tomlinson
The China factor All photos courtesy of Airport Authority Hong Kong.
Peta Tomlinson discovers more about the future development plans of Hong Kong International Airport as it aims to cope with ever growing demand from Mainland China.
It may not exactly be an old Chinese proverb, but with traffic soaring and showing no sign of slowing down, it could be said that he who hesitates will find demand outstrips capacity sooner rather than later.

And this could certainly be said of Hong Kong International Airport, which in the words of Airport Authority Hong Kong (AAHK) CEO, Stanley Hui Hon-chung, has had the "happy problem" of dealing with growth virtually ever since it moved to its current site at Chek Lap Kok in 1998.

Hong Kong's airport has always been a crowd-pleaser. Tales of legendary arrivals at Kai Tak, pilots deftly manoeuvering between the skyscrapers so close that passengers could watch the people inside, still live on today.

Indeed, 14 years after the old airport closed, landing at Kai Tak remains, in folklore, as one of the great aerial adventures.

For very different reasons, the new Hong Kong International Airport (HKIA) is newsworthy too, hailed upon its opening in 1998 as one of the largest engineering and architectural projects in the world.

From the outset, it was one of the busiest airports in a region of massive growth potential – so, of course, it was planned with future needs in mind. However, what nobody could have predicted, says Hui, is just how fast it would happen.

Other airports have also experienced double or even triple growth over the past decade, he points out, but only Hong Kong has the China factor, an economic miracle which has delivered "surprises after surprises" for 20 years.

From 28.6 million passengers and 1.6 million tonnes of cargo handled in 1998, HKIA recorded 53.9 million passengers, and  3.9 million tonnes of cargo, in 2011.

Aircraft movements over the same period have jumped from 163,200 to 334,000, while route destinations stand at about  160, up from 120.

Indeed in 2011, still a lean year for many airports, both  passenger trips and aircraft movements set new records at HKIA.

For the past two years, HKIA has surpassed Memphis International Airport to be the world's busiest cargo gateway.

And last year, the airport became one of the world's top 10 busiest passenger airports for the first time.

Hong Kong's advantage as an international financial, business and tourism centre is its hub location: apart from fast, frequent connections to all major cities in the Asia-Pacific, Hong Kong's geographical position enables travellers to get to half the world's population in five hours' flying time.

But the ace up this airport's sleeve is its doorway to China.  The mainland accounts for 22% of HKIA's passenger throughput,  but in addition to aviation entry points, the airport has been  developed as a multi-modal transport hub offering extensive land and sea connections to major cities in the Pearl River Delta (PRD).

Coach services directly from the terminal link the airport with  115 PRD cities and towns. SkyLimo provides a door-to-door deluxe service from HKIA to mainland cities, while daily high-speed ferries transit passengers to eight ports in the PRD and Macau.

This has brought HKIA to Hui's "happy problem", whereby long-term demand originally forecast on 2040 figures has now been advanced  20 years. By around 2020, HKIA will be saturated. Its solution is  a third runway.

It is, of course, never an easy task bringing an additional runway proposal to fruition, navigating the myriad of public, financial, logistical and regulatory hoops – especially for a city like Hong Kong, with its mountainous terrain adding extra difficulty.


T1_central_concourse

However, in March 2012, AAHK's wish list was realised when it received, in principle, approval from the government for a third runway system, subject to an environmental impact assessment and meeting a handful of other requirements.


The proposal was "sold" with estimates from airport consultants  that the third runway and associated expansion would contribute HK$167 billion ($21.5 billion) to Hong Kong's GDP in 2030 (around  4.6% of the total GDP).

Direct employment associated with HKIA would reach 141,000, and indirect and induced employment would increase to about 199,000 by 2030.

Knowing the existing two-runway system won't meet long-term demand growth, Hui welcomed the decision "with great relief". He certainly has no doubts about stating that the third runway is as an important step in strengthening HKIA's long-term competitiveness.

"If HKIA fails to expand in a timely manner, its connectivity to the world will be affected," he says matter-of-factly.

The primary area of concern raised during the public consultation process was the environmental impact of a third runway.

Hui's response is a pledge to make HKIA "the greenest airport in  the world". Already, moves are in place to reduce carbon intensity  by 25% airport-wide by 2015 from 2008 levels (implemented in December 2010), through schemes such as the use of electric  vehicles, and a concourse with over 35 green initiatives designed  to be one of the first BEAM Plus gold standard buildings in  Hong Kong.

HKIA says it acknowledges the concerns of green groups towards  the third runway proposal, and has made an assurance that it will do all it can to minimise the impact of the airport on the environment and local residents.

"We are committed to handle the issue in a most responsible and professional way," says Hui, noting that public safety is the airport's number one priority.

"The Civil Aviation Department is in the process of upgrading our air traffic control systems to the latest available. This will help us be capable of processing more flights, at no less safety standards."

But not all eggs are in the third runway basket. Another of Hui's priorities is to "sweat the asset", which to him, means "maximising use of whatever we now have."

Further multi-modal integration with surrounding economic zones is also under development. Hui said that with the Hong Kong-Zhuhai-Macau Bridge and further Hong Kong boundary crossing facilities to be completed over the next few years, even stronger ties are being forged with the economic powerhouse of the world.

The upcoming express rail link connecting Hong Kong to the mainland's high-speed rail network will expand passenger reach into second and third-tier cities in China, further enlarging the catchment area of HKIA.

HKIA also builds business by collaborating with neighbouring airports. Its rationale: "Given we are part of the Chinese Mainland, it makes perfect sense for us to work closer together."

In 2006, AAHK bought a 35% stake of Hangzhou Xiaoshan International Airport and formed a joint venture company with the Zhuhai Government to manage its airport for 20 years.

It has also provided operational support and consultancy services to Beijing Capital International Airport (BCIA) for the successful commissioning of its new Terminal 3.

In addition, AAHK has set up a joint venture with Shanghai Airport  (Group) Co Ltd to manage Shanghai Hongqiao International  Airport's two passenger terminals, Hongqiao's east transportation  centre and retail business.

Knowledge and experiences are shared with other airports such  as Incheon International Airport and Singapore Changi. In 2011, HKIA signed a sister airport agreement with Chicago O'Hare  International Airport.

Hong Kong's free port status is leveraged to advantage through the development of Super Terminal 1 operated by Hong Kong Air Cargo Terminals (HACTL), which is equipped with a state-of-the-art automated cargo handling system and other special handling facilities such as perishable/refrigerated goods, dangerous and/or high value cargo, and livestock including horses.

This has attracted DHL to choose Hong Kong for its first large-scale automated express hub in Asia-Pacific, says Hui.

In further development of the airport's cargo business, the new Cathay Pacific Cargo Terminal is expected to begin operations in early 2013.

Along its growth journey, HKIA has also managed to keep on top of the customer experience, earning over 50 best airport awards to date. Recent accolades include Air Cargo World magazine's 'Air Cargo World of Excellence' WHERE `id` = a 'Director General's Roll of Excellence Award' from ACI and the 'Best Airport in China' award from Business Traveller China.

The airport's management teams understand that "however good our hardware facilities are, we still rely on our staff to deliver excellent service to passengers," notes Hui.

As a result, he says staff training and incentive progammes are held to deepen the customer experience, and AAHK is "constantly exploring new ways to meet or exceed passengers' expectations".

It's this service ethos that Hui says is pivotal to HKIA's winning formula. "HKIA and its business partners with 65,000 colleagues have a time-honoured service excellence culture," he comments.

"With a dedicated and talented workforce, HKIA is committed to seeking ongoing enhancements in every aspect of passenger service to provide travellers with the best airport experience."

AAHK has a three-tier planning process for meeting its growth needs, but says this can only be achieved with the community's support, and by working together for the long-term interests of Hong Kong.

Hui is a career aviation executive with a number of high-level positions on his CV, including CEO of Dragonair (held for nine years) and director of China National Aviation Corporation (Group).

Taking up the reins at HKIA in February 2007, he cites the third runway decision as the highlight of his tenure there so far. An extra runway means 50% more capacity – and he's happy with that.


Fact box
In 2011, HKIA handled 53.9 million passengers, 3.9 million tonnes  of cargo, and managed 334,000 aircraft movements
In 2008, HKIA accommodated 80% and 90% respectively  of international passenger and cargo traffic in the PRD region
About 65,000 people are employed by the companies and organisations operating on the airport island of Lantau
Without a third runway, HKIA would reach its current maximum capacity of 420,000 annual air traffic movements sometime  between 2019 and 2022.

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