With a fiscal reserve of HK$709 billion as of the end of last year, the Hong Kong government is at its wit’s end trying to think of ways to spend its growing pile of cash.
And so it announced on Tuesday that it will build a third runway at Chek Lap Kok airport despite widespread opposition to the HK$141.5 billion project.
The government insists that Hong Kong desperately needs a new runway to expand the airport’s capacity in handling more flights amid the incredible growth of air traffic between the city and mainland China.
However, experts have pointed out that the two existing runways have yet to reach their full capacity.
In fact, they say, the current air traffic congestion is not due to airport capacity problems but results from the fact that the Chinese military controls the country’s airspace, including the one between Hong Kong and Shenzhen.
And so even before construction is to start next year, the mega infrastructure project has the makings of another white elephant — in fact, the city’s third — after the high-speed rail link and the Hong Kong-Macau-Zhuhai Bridge.
The project, which will involve the reclamation of 650 hectares of land and the construction of a new passenger building, is expected to be completed by 2023.
Unlike the high-speed rail link which is fully funded by the government, the money for the new runway will come from the Airport Authority, which will use its own funds, borrow money, and charge passengers and airlines with a special airport construction fee of around HK$180 each to cover the cost.
That’s well and good if the authority is a private enterprise, but since it is wholly owned by the government, all the money to fund project is still public funding.
Sadly, Hong Kong people, whose money will be used for the project, have no say in the decision to construct it. And to add insult to injury, the government, through the Airport Authority, will also charge Hong Kong passengers to partly defray the construction cost.
That’s bilking us twice for a project that did not get our consent. Brilliant.
The government did not bother to ask the Legislative Council for funding as it was probably afraid of suffering another filibuster from the pan-democrats.
Is forcing airport users to shoulder part of the cost the most suitable financial arrangement for the new runway? No.
The International Air Transport Association has warned of the risk that Hong Kong’s competitiveness may suffer if the Airport Authority raises the fees it charges airlines to pay for a third runway.
Tony Tyler, president of IATA and former chief executive of Cathay Pacific Airways, pointed out that imposing the new fee would be unfair: the airlines and passengers using the airport today would be paying for those who will use it tomorrow.
While the runway levy may not have a significant impact on Hong Kong’s air traffic, it could affect the airport’s competitiveness in the region. Already, Hong Kong is lagging behind other countries like Japan and Singapore in the area of budget carriers.
The decision to build a third runway may also involve some kind of political struggle with Chinese authorities over the control of air space in the Pearl River Delta region.
As has been pointed out by air transport professionals, Hong Kong has no urgent need to build a new runway as the PRD region has more than 10 airports in operation. What is needed is to enhance the cooperation of the Shenzhen, Macau and Hong Kong airports to fill the unused capacity.
Hong Kong airport needs to strengthen its status as a regional air hub, but that doesn’t mean is has to rule out cooperation with airports nearby.
As the new runway will be built on reclaimed land, green groups have also raised concern over the project’s impact on the environment. In particular, they note that the construction will affect more than a thousand hectares of Chinese white dolphin habitats, disrupting their movement and activities.
Another concern is the use of the new runway. Under current airspace arrangements, Hong Kong flights to the mainland avoid flying directly through Shenzhen.
If the same arrangement continues, the new runway will most probably be used for landings only. That means Hong Kong air traffic in terms of departures will remain the same even with the addition of the new runway.
Still, experts estimate that the new runway could add 15 percent capacity even if the runway is for landings only.
Hong Kong prides itself as a regional hub for air traffic. But the truth is the city is losing its competitive advantage as a connecting hub to China.
The city’s share of the market in connecting China to the rest of the world shrank to 17 percent in 2013 from 20 percent in 2005, according to IATA.
The new runway could become useless if more flights are using other airports such as those in Taiwan, Korea and Japan to connect to China.
Guangdong is transforming its economic structure to reduce its over-reliance on the manufacturing sector. This may also prove to be negative news as far as Hong Kong airport is concerned as the phaseout of factories from the province will mean lower demand for Hong Kong air cargo flights.
All this indicates that the HK$141.5 billion project could turn into another white elephant in the city.
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