Ever since the release of an environmental impact assessment and cost analysis for Hong Kong’s proposed third runway, the project has become a lightning rod for clashing ideas and opinions.
Some of the most notable are two misconceptions.
The first is cost.
The HK$200 billion (US$25.8 billion) investment required for the new runway is being compared with the cost of building a second runway in Shenzhen Baoan Airport, which was completed in 2011.
At 20 billion yuan (US$3.25 billion), the price tag for the Baoan runway is one-ninth the projected spending for a third Hong Kong runway.
However, the comparison ignores the fact that Shenzhen has ample land on which to expand its airport; Hong Kong has no such luxury. In addition, the proposed runway will be entirely built on reclaimed land — 650 hectares to the north of the existing airport island.
A substantial amount of the investment will go to environmental mitigation measures on water and air quality, sewage treatment and 250 related initiatives, areas in which Hong Kong has more stringent standards than Shenzhen.
Can Hong Kong afford it?
Weng Haiying, a senior research fellow at the Hong Kong Polytechnic University’s Public Policy Research Institute, notes that Chek Lap Kok airport’s final price tag was HK$153.3 billion, but when the government undertook the project during the run-up to the 1997 handover, its fiscal revenue was just HK$80 billion.
Hong Kong’s fiscal income grew to HK$447.8 billion in the 2013-2014 fiscal year, making the HK$200 billion runway investment in recurring expenditure over six or seven years well within its means.
Also, there are proposals to raise funds from the private sector and a “user pays” scheme to defray maintenance costs is being considered, according to Stanley Hui, former chief executive of the Airport Authority.
The second misconception is about necessity.
Opponents say Hong Kong does not need a third runway for a whole host of reasons, mostly related to cost and environmental concerns.
Instead, they want a kind of boutique airport for a niche market served by larger jets.
But the argument fails to take into account the economic implications.
Last year, Hong Kong’s aviation sector employed 250,000 people and contributed 8.2 percent of gross domestic product. Many cities would do whatever it takes to replicate those figures.
Today Chek Lap Kok is the world’s busiest air cargo hub (4.12 million tons of throughput in 2013) and eighth busiest by passenger traffic (59.9 million last year).
Tony Tyler, director general and chief executive of the International Air Transport Association, warns Hong Kong will lose its edge as a global aviation powerhouse if it does not add capacity. That would require a third runway.
Airlines allocate air capacity based on market demand, cost and other factors, he says. Most intercontinental passengers will first fly in small planes to key aviation hubs with an extensive connection network and transfer to larger jets for long-haul flights to their final destinations.
In Hong Kong’s case, up to one-third of traffic last year were transit passengers.
Hong Kong’s real edge lies in its extensive network that covers all major cities around the world and key destinations in many emerging economies and frontier markets including a number of second and third-tier cities in the Chinese mainland.
This is why Tyler disagrees with the idea of turning Chek Lap Kok into a boutique airport.
He cites the example of Myanmar which has been drawing foreign investors since its military rulers loosened their grip on politics and the economy.
Hong Kong airport is one of a few hubs that operate direct flights to Yangon, the country’s largest city, although the route is served by narrow-body planes with less frequent departures, he says.
If Hong Kong airport were to reduce services to non-mainstream destinations like Yangon under boutique airport approach, arch rivals like Singapore Changi Airport, Seoul Incheon Airport and Taipei Taoyuan Airport would move in to fill the slack.
At present, Hong Kong is a notch above Singapore, Seoul and Taipei in passenger traffic and cargo throughput.
However, if a third runway is built in a timely manner, Tyler estimates that Hong Kong could add 30 new destinations in the next 20 years.
This is the opposite of what happened to Kai Tak, Hong Kong’s old airport, when its limited capacity forced it to adopt a “larger jets, fewer flights” policy toward the end of its life in the 1990s, according to Cheung Waiman, chairman of the department of decision sciences and managerial economics of the Chinese University of Hong Kong.
Hong Kong airport is nearing operational capacity but it’s still one of the world’s strongest aviation players.
It would be a shame to see it reduced to an also-ran simply because of certain misconceptions.
– Contact the writer at [email protected]