The Chinese airports snapping at Hong Kong's heels

He Huifeng

There was joy in the streets of Foshan's backwater Gaoming district in mid-April when Guangdong Communist Party secretary Hu Chunhua affirmed plans to build an airport there by 2022.

The new, 35 billion yuan (US$5.1 billion) Pearl River Delta regional airport, designed to handle 30 million passengers a year, will be a key piece in the province's ambitious plan to have 31 big and small airports by 2030. It will join the delta's five existing key air hubs – Hong Kong, Macau, Guangzhou, Shenzhen and Zhuhai – to serve a dynamic area that's home 66 million people and has an economy as big as South Korea's.

Travelers stand in line to check-in at Hong Kong International Airport in Hong Kong, China, on Mar. 10, 2017.
Anthony Kwan | Bloomberg | Getty Images

While mainland China has many airports with few passengers – three-quarters of its 200-plus airports run at a loss – rapid growth in demand for passenger and cargo services in the delta is giving a boost to all five airports, with Hong Kong, Guangzhou and Shenzhen accounting for the most traffic.

Concerns about excessive competition between the airports were unwarranted for now, said Law Cheung-kwok, head of the Aviation Policy and Research Centre at the Chinese University of Hong Kong, because the overall market was still growing.

"Passenger numbers can increase in a geometric ratio in the coming years ... fuelled by the strong demand of Chinese spenders for travel and the emerging Chinese consumer economy," Law said, while adding that Hong Kong would see "fiercer" competition from mainland airports that were aggressively launching new long-haul flights.

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Hong Kong's role as an international air hub was once highly valued by Guangdong, which saw the city as its gateway to the outside world. High-value products from factories in the Pearl River Delta used to be trucked into Hong Kong before being flown to overseas markets, but the flow has been changing, especially since the launch of Guangzhou's new airport in 2004 and Shenzhen's in 2013.

Hong Kong International Airport, the leading airport in the region, handled 70.5 million passengers last year, up 2.9 per cent year on year. In comparison, Guangzhou's Baiyun International Airport handled 59.7 million passengers, up 8.2 per cent. Shenzhen handled 42 million passengers, up 5.6 per cent, and Zhuhai handled 6.1 million, which represented annual growth of 30.2 per cent. A record 6.6 million passengers passed through Macau airport last year, up 13.7 per cent year on year.

The five major airports, all within 150km of each other, are all striving to expand. Guangzhou plans to add a fourth and a fifth runway by 2025 and Shenzhen has plans in place for a third. Hong Kong aims to open a third runway by 2023 to boost capacity to 100 million passengers a year.

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Guangzhou's existing Terminal 1 was only designed to handle 35 million passengers a year, but a second, bigger, terminal will open next year. Expected to handle around 45 million passengers a year by 2020, the new terminal is being built at a cost of about 19 billion yuan.

Shenzhen is also planning a new terminal, with passenger traffic at the four-year-old airport now just 3 million short of its 45 million capacity.

However, Zhuhai, billed as China's biggest airport when it opened in 1995, has never come close to its 35 million passenger annual capacity.

People like retiree Zhu Yinghua and businessman Huang Honghui are making the most of the leisure and business opportunities provided by the region's increasing air traffic.

Zhu, a 65-year-old retired teacher from Guangzhou, made three overseas trips last year, visiting Russia, Turkey and the United States with her husband and friends. The trips cost between 6,000 and 10,000 yuan, quite affordable for retired teachers and civil servants in cities such as Guangzhou who receive monthly pensions of more than 6,000 yuan.

"It's much easier to travel to the other end of the world these days than travelling to Shanghai 20 years ago," said Zhu, who had never flown until 1993, when she was 41, and who made her first overseas trip in 1996 when she visited Singapore, Thailand and Malaysia via Hong Kong.

"I have to say now I like the Shenzhen and Guangzhou airports very much. They are more beautiful and modern than any other airport in China, including Beijing or Hong Kong."

The number of tourists heading overseas from mainland China has more than tripled in the past decade, hitting 122 million last year, and Guangzhou and Shenzhen are among the top sources.

The "Greater Bay Area", a region which includes Hong Kong, Macau, Guangzhou, Shenzhen, Zhuhai and some other mainland cities, is becoming the world's biggest market for aviation services. Passenger numbers in the region will reach 223 million a year by 2020, up from around 175 million last year, according to the China Civil Airports Association, which said such traffic would dwarf other bay areas such as Los Angeles, New York and Tokyo. Airports in the Tokyo Bay Area, home to 43 million people in 2015, handled more than 112 million passengers that year.

Hong Kong International Airport is making a push for retail
Hong Kong International Airport is making a push for retail

Hong Kong, the world's largest international air cargo airport, handled 4.5 millions tonnes of air cargo last year according to the Airport Authority, and the China Civil Airports Association predicts annual cargo throughput in the region, presently about 8 million tonnes, will top 10 million tonnes by 2020.

Huang, the 40-year-old co-founder of leading Guangzhou air logistics company R&T Transportation, says business is booming, with the firm handling about 5,000 tonnes of cargo a month, more than triple the amount a decade ago.

"I started up my logistics business 20 years ago and most clients are factories in the delta, from electronics giants like Huawei and Samsung to garment processors," Huang said. "In 1997, my company handled an average of 500 tonnes of cargo a month, 90 per cent of which was exported through Hong Kong airport."

He said Guangzhou's airport now handled three-fifths of R&T's shipments because it was closer to most clients. "If we pick up a delivery at 6pm, we can catch the flights leaving Guangzhou at 2am … it would take about two days to fly through Hong Kong," Huang said.

Meanwhile, airports in Southwest China cities such as Kunming in Yunnan province and Chengdu in Sichuan province were grabbing air cargo business from Hong Kong and Guangzhou.

"It took three days to travel from Kunming to Guangzhou by truck 10 years ago," Huang said. "But now, thanks for the rapid development of China's highway network, it only takes one day. Flying out of Kunming airport would help cut costs by 30 per cent compared with Hong Kong airport."

R&T now handles about 1,000 tonnes of air freight a month in Kunming.

Local authorities in major mainland cities such as Beijing, Shanghai, Guangzhou, Xian, Zhengzhou and Shenzhen were handing out generous subsidies and extra investment for local airports so they could operate more international routes, in line with the central government's "belt and road" trade and infrastructure initiative.

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"For example, the government of Zhengzhou, in Henan province, is offering subsidies of up to 300,000 yuan per overseas flight," Huang said.

While Hong Kong will remain a busy airport, its relative regional significance is set to wane as mainland airports get bigger and mainland airlines improve their hardware. Mainland Chinese carriers bought 164 Boeing planes last year, about a quarter of Boeing's total deliveries and the most from any country.

The mainland's three designated hubs – Beijing, Shanghai and Guangzhou – are trying hard to gain a prominent foothold on the global flight map.

In the 1990s and early 2000s, almost all tour groups from South China flew via Hong Kong, but times have changed. When Zhu, the Guangzhou pensioner, flew to New York from Guangzhou last year she transited in Beijing because "it's 1,500 yuan cheaper than flying through Hong Kong".

Zhou Guosheng, a Guangzhou-based tour guide who has been in the business since the 1990s and now specialises in luxury overseas trips, said: "A night in Hong Kong plus shopping time was once standard, but not any more."

Big mainland airports are even trying to lure non-Chinese travellers, who are now offered 72-hour transit visas.

Hong Kong's airport will see "growing challenges" from mainland ones, according to Guangzhou-based aviation researcher Peng Peng, who predicted Guangzhou would overtake Hong Kong airport in passenger numbers "within 10 years".