Hong Kong Airport predicts smaller September traffic decline

Hong Kong International Airport (HKIA) expects the impact of the recent civil unrest on its traffic to ease, with a smaller passenger decline in September and the potential for a significant rebound in 2020 results.

Although Hong Kong International Airport (HKIA) has been hit hard by the recent civil unrest in Hong Kong, airport officials predict a smaller traffic decline in September with the potential for a significant rebound in 2020 annual numbers.

The airport has already reported that its August traffic was down 12.4 percent year-on-year, which was mainly due to the protests that have swept the Special Administrative Region (SAR). This was the airport’s largest monthly decline since 2009.

However, the drop in September “will not be as severe in August,” said Michael Yuen, HKIA’s general manager for airport and industry collaboration. While it is too early to give specific numbers for September, it appears that monthly figures “will still be down, but not as much,” Yuen said on the sidelines of the World Routes conference in Adelaide. The same will apply to cargo volume at HKIA.

The airport was hit by about 1,000 flight cancelations in August due to the protests, some of which were at the airport itself. But there have been no cancelations related to the unrest so far in September, Yuen said.

Some airlines are cutting capacity in the Hong Kong market in response to the demand dip, including home-based carriers Cathay Pacific and Hong Kong Airlines, and overseas airlines such as Qantas. Yuen notes that some of the traffic decline is related to other factors such as the U.S.-China trade dispute.

The disruption will have a major effect on HKIA’s annual growth projections. The airport was previously forecasting average annual growth of at least 3 percent, but it now looks as if full-year 2019 traffic will be down by about 3 percent, Yuen said.

In the long term, growth is expected to come back to the forecast average, Yuen said. There could also be a much larger short-term rebound, although this obviously depends on when the situation in Hong Kong settles. If the unrest eases, there could be a double-digit year-on-year traffic increase in 2020, said Yuen.

To reduce disruption, a new rule means only passengers with tickets and approved aviation and airport workers are allowed to enter the terminal at HKIA. This has reduced sales at landside retail outlets to some extent, although most retail sales at the airport are airside and these have not been affected as much, said Yuen.

The current traffic disruption is so far not affecting HKIA’s plans for runway and facility development, Yuen said. HKIA plans to open its third runway by mid-2022. This will eventually allow a significant increase in slots at the congested hub.

Slot increases will be relatively modest in the short term, because one of the airport’s current two runways will be closed for renovation work when the third runway opens. There will be some minor growth, as the closed runway is in the middle of the other two, and there will be greater approach separation than is possible now. HKIA is also working on other procedural improvements in conjunction with local aviation authorities.

There will be a larger slot increase by the end of 2024, when all three runways are due to be operational. This will allow airport capacity to be increased to 102 hourly slots, compared to 68 now. The airport will  also add 57 new aircraft parking stands, 60 percent of which will be connected to terminal gates via airbridges with the remainder as remote stands.

HKIA is targeting a much larger traffic catchment area than just Hong Kong. It is also looking to draw demand from the broader region, including nearby provinces  in mainland China. The Greater Bay Area includes nine cities in mainland China, in addition to Hong Kong and Macau. While there are 7 million people in Hong Kong, there are 70 million in this broader region.

This strategy was helped by the opening of the new Hong Kong-Zhuhai-Macau bridge last year, which has dramatically cut the time it takes to travel by road to Hong Kong. A new high-speed rail line from Mainland China is also helping improve access.

Last year HKIA added 17 international destinations, with a “good mix of long-haul and short-haul destinations,” Yuen said. -Adrian Schofield