After the ravages of the Covid years, Hong Kong’s aviation sector is reaching for the skies, with passenger numbers at Hong Kong International Airport (HKIA) expected to return to normal by the end of the year.
According to Airport Authority Hong Kong (AAHK), HKIA handled 40 million travellers and 276,000 flights in 2023, representing increases of around 600% and 100%, respectively, compared to 2022. Cargo saw an annual growth of 3.2% to 4.3 million tonnes. The airport also held on to its rank as the world’s busiest cargo airport in 2023, although the volume still hasn’t reached pre-pandemic levels, largely because of the economic climate.
In March this year, the airport saw 4.36 million passengers and 29,840 flights, representing year-on-year increases of 56.7% and 48.2%, respectively. Cargo registered a year-on-year increase of 15.1% to 428,000 tonnes, with HKIA posting double-digit year-on-year growth in cargo each month in 2024.
The airport’s HK$141.5 billion Three Runway System (3RS) is expected to be up and running by the end of the year, which will eventually increase its capacity to 120 million passengers and 10 million tonnes of cargo annually.
The scale of the 3RS is huge – equal to building a brand new airport beside the existing one. The project includes reclaiming about 650 hectares of land north of the airport island (that’s equivalent to 34 Victoria Parks), building the T2 Concourse and an associated apron, and constructing a 3,800-metre runway and taxiway systems (the existing North Runway will also be reconfigured). Additionally, a new, 2,600-metre Automated People Mover system will connect Terminal 2 with the T2 Concourse, transporting up to 10,800 passengers per hour, while a new baggage handling system will be able to process 9,600 bags per hour. While all three runways will be fully operational by the end of 2024, AAHK will deploy a flexible phasing strategy for the commissioning of the new 3RS passenger facilities, depending on post-pandemic air traffic recovery and passenger demand.
“HKIA is more than just an airport,” said AAHK CEO Fred Lam. “It is a global aviation hub in a strategic location in terms of air, sea and land. We are connected by Hong Kong-Macao-Zhuhai Bridge to the Greater Bay Area (GBA), one of the most economically vibrant regions in the China market. We are also connected by sea, as we are at the mouth of the Pearl River Delta.”
He explained that the goal was to transform the airport into an “Airport City,” which has been envisioned as a landmark for business and tourism that connects Hong Kong and the GBA. This includes SKYCITY, an integrated development project sprawling over 25 hectares of land, of which the retail and entertainment complex 11 SKIES is an integral component.
Private sector developers have been working on SKYCITY, including the Phase 2 development of Asia-World Expo (AWE), which will comprise the largest indoor performance venue in Hong Kong with 20,000 seats as well as space for exhibitions.
Discussing 11 SKIES, he said the project offers something not seen in Hong Kong before, as it is a very different concept featuring indoor entertainment besides shops and eateries. “With the revival of the live entertainment scene, consumer and trade shows at AWE, along with 11 SKIES, people will be spoiled for choice.”
Travellers driving to the city via the Hong Kong-Zhuhai-Macau Bridge (HZMB) will be able to access two new carparks offering 6,000 spaces, which will be opened in phases by the end of the year. This will allow “single plate” cars from Macao and Guangdong to come into the city.
AAHK is also planning a bridge with an autonomous driving system to ferry passengers along the Airport City Link, connecting SKYCITY and the Hong Kong Port Island of HZMB, with future plans for extension to Tung Chung city centre.
In February, AAHK successfully issued HK$5 billion retail bonds, the first for the general public by the airport operator in 20 years, with a tenor of 2.5 years and fixed interest rate of 4.25% per annum. The bonds were oversubscribed more than three times, totalling HK$15.69 billion from over 175,000 applications.
Airlines: The Sky is the Limit
The Cathay Pacific Group, which includes both Cathay Pacific and HK Express, expects to reach 80% of pre-pandemic passenger flights within the second quarter of 2024, while working towards reaching 100% within the first quarter of 2025, said CEO Ronald Lam.
“Cathay has been representing Hong Kong for more than 77 years as its home carrier. We have deep roots in Hong Kong, are proudly part of China, and we are connecting the world,” he said. “Last year, we announced the purchase of state-of-the-art single-aisle and freighter aircraft, bringing the total number of new-generation aircraft scheduled to join our fleets to more than 70, with the right to acquire a further 52 aircraft in future. These substantial investments are a reflection of our absolute confidence in the long-term future of the Hong Kong international aviation hub and our home city.”
This summer, the Group is increasing flight frequencies between Hong Kong and the Chinese Mainland to more than 210 return flights per week. Cathay Pacific’s Barcelona service will resume in June, while passenger flights will be launched to Riyadh in the fourth quarter of the year.
Cathay Pacific is also planning to introduce new cabin products: the all-new Business class experience – Aria Suite – and a new Premium Economy seat on its redesigned Boeing 777-300ER aircraft will be launched this year. This will be followed in 2025 by a new First class experience on its 777-9 aircraft, while 2026 will see the launch of a brand-new cabin on its Airbus A330 aircraft, including a new flat-bed Business class product. With regard to inflight dining and entertainment, the airline is collaborating with popular Hong Kong dining brands to develop special menus that showcase the city’s culinary excellence.
It also recently opened its first non-airport lounge at Shekou Cruise Home Port in Shenzhen for customers travelling within the Guangdong-Hong Kong-Macao Greater Bay Area.
In 2023, the airline was honoured with the World’s Best Inflight Entertainment Award at the Skytrax World Airline Awards, while Cathay Cargo was named Cargo Airline of the Year at Air Transport World’s Annual Airline Industry Achievement Awards.
Value carrier Greater Bay Airlines commenced service in July 2022. Since then, it has opened up eight popular destinations in Asia. Chief Executive Officer Liza Ng said with the addition of the eighth aircraft in March, the airline’s fleet size had doubled in a matter of months, bringing new opportunities as well as challenges.
“With the additional capacity, we have been able to increase flights to Tokyo, Osaka and Bangkok. We have also been able to add extra flights to meet the strong seasonal demand during the Easter holiday peak,” she said.
Network expansion and service enhancement to existing routes are key focuses of the airline as the tourism and aviation industries have been recovering well. Despite the highly competitive market, Ng said the airline would continue to explore new destinations. Following the launch of a daily service to Singapore in late April, new services are planned for major Mainland cities such as Shanghai and Beijing.
Ng hoped that with the 3RS scheduled for completion this year, the authorities might consider opening up traffic rights, bringing more opportunities to other airlines. “We believe competition leads to higher quality and efficiency, benefitting the overall development of the aviation industry and reinforcing Hong Kong’s status as an international aviation hub,” she added.
High-tech Air Cargo Solutions
Hong Kong’s standing as the world’s top air cargo hub is no accident – it incorporates a network of air connections, choice of carrier, freighter capacity, a strategic location in the heart of the vibrant Asian market and the GBA, and access to the Mainland. The city also boasts state-of-the-art infrastructure and resources, trade-friendly Customs, a bilingual workforce and a highly trained labour pool.
Wilson Kwong, CEO, Hong Kong Air Cargo Limited (HACTL), said HACTL was conceived as a driving force in the better utilization of limited air cargo capacity at the old Kai Tak airport.
“Our entire history has been one of investment and innovation in creating the scope and quality of services needed to maintain our airline customers’ competitiveness,” he explained. This is typified by the billion dollar SuperTerminal 1 – the world’s largest multi-level air cargo handling facility, the COSAC-Plus community air cargo management system, customer mobile apps, and the Integrated HACTL Control Centre.
Kwong reiterated that this policy of using high-tech solutions to tackle everyday issues would continue. “In effect this means more of the same, but it will manifest itself in ever more creative and imaginative ways such as robotics and AI. But, just as importantly, we have now placed sustainability at the heart of everything we do, with our Sustainability Strategy Framework.”
AAHK is also working with the GBA city of Dongguan to develop the “sea-air intermodal cargo transshipment” model, according to HKSAR Transport and Logistics Bureau. Once the first-phase construction of the permanent facility of the HKIA Logistics Park is complete, it will be able to handle up to a million tonnes of cargo per year.
Meeting the Challenges
While demand for air travel is rising, the sector has been struggling with a labour shortage as well as changing consumption and travel patterns. With the gradual recovery of air traffic, it was important to anticipate future manpower needs, especially to support airport expansion plans, said Fred Lam.
“The manpower crunch is an issue on two fronts,” he explained. “One is ground staff. When the borders reopened after the pandemic, the shortage of ground staff was an urgent issue. In addition to stepping up recruitment efforts, the airport community suggested the Government to consider allowing recruiting from outside Hong Kong if we could not find enough workers locally.”
He said the Government responded promptly, and a total of 1,300 imported labour have been working at the airport since last year. With additional staff hired locally and workers brought in from outside, airport manpower has been able to cope with the present traffic volume. But the airport is continuing to ramp up the workforce in view of passenger traffic growth. Airport companies have now started the second phase of recruiting another 3,000 people from outside Hong Kong.
The second challenge is air crew. “Airlines are working hard to train more pilots and recruit flight attendants. They have done well, but there is still a shortage at the moment, which is affecting some long-haul flights. The issue is being addressed urgently and should be resolved in a few months’ time.”
He said the sluggish economy had also affected consumption and travel patterns, which would take time to stabilize. “Air traffic is now at about 75-80% of pre-pandemic levels. Our current forecast is that we will return to normal by the end of the year as people love travelling. Before the pandemic, data showed that the average Hong Kong person travelled about 3.5 times a year, compared with 0.4 in the Mainland. There is immense potential for the Mainland market to grow. We are very optimistic about the future – once the economy picks up again, so will travel.”
Ronald Lam said while there remain significant challenges in the global aviation industry, such as recruitment and training of customer-facing employees as well as supply chain constraints, Cathay had absolute confidence in the ability of the Hong Kong international aviation hub and the sector to meet those challenges and continue to flourish.
“We began recruiting from mid-2022, and last year we grew our Group workforce by around 15%, or 3,000 people,” he said. “We plan to further grow our Group workforce by around 20%, or 5,000 people, in 2024. Meanwhile, our training activities in 2024 will be more than double what they were in 2023.”
Ng agreed that the labour shortage was hindering the development of the sector. “We are glad that the HKSAR Government together with the industry are doing their best, for instance through introducing the Labour Importation Scheme, to help tackle the issues. Greater Bay Airlines is recruiting pilots from both the local and international markets. We also extended cabin crew recruitment to Shenzhen last year.”
Kwong, who pointed out that airport jobs entailed long commutes, working in shifts, manual labour and working outdoors in sometimes inclement weather, said HACTL had also applied to the Government’s import labour scheme. The company is also rapidly advancing in robotics to enable it to do more with restricted staff availability – an approach which is applicable across all of Hong Kong’s logistics industry.
Building on the commitment to achieving net-zero carbon emissions by 2050, Cathay recently set a new near-term target to improve its carbon intensity by 12% from the 2019 level by 2030. The Group is pursuing increased adoption of sustainable aviation fuel (SAF), with the ambitious goal to have SAF make up 10% of its total fuel use by 2030. It is also moving towards more sustainable use of resources through incorporating circular economy principles into product and service design. This includes decreasing passenger-facing single-use plastic (SUP) items from an average of 7.7 pieces per passenger in 2019 to 1.5 pieces by 2025, and reducing cabin waste by 30% from the 2019 baseline by 2030.
Looking to the future, Ng said we should all be more confident as Hong Kong has the distinctive advantage of enjoying China’s strong support and being closely connected to the world under “One Country, Two Systems.” “As President Xi Jinping is in full support of Hong Kong’s ‘eight centres’ positioning as set out in the 14th Five-Year Plan, we are expecting more opportunities to come.”