ALL SYSTEMS GO!

The next phase in the growth of Hong Kong International Airport is now cleared for take-off following approval of a major redevelopment based around a third runway, writes Peta Tomlinson.

Landmass-wise, Hong Kong is one of the smallest world cities, but it has always had a big vision. Nowhere is this more evident than in the ambitious construction of Hong Kong International Airport (HKIA).

Built on a man-made island of land reclaimed from the sea, the city’s Sir Norman Foster-designed aviation gateway at Chek Lap Kok was unveiled in 1998 as one of the world’s largest and most advanced airport, and today, is one of the busiest. 

The pace of growth has put Airport Authority Hong Kong (AAHK) in the “happy” position of needing more room. Now, seven years after plans were first mooted to expand the airport into a three-runway system, government approval has paved the way for preparatory works to begin.

And Airport Authority Hong Kong CEO, Fred Lam, leaves you in no doubt that the new runway is pivotal to the long-term success of his gateway.

“The 2014/2015 financial year, ended 31 March 2015, was another record-breaking year for HKIA. Passenger volumes rose 6.6% from 2013/14 to 64.7 million. Cargo throughput also grew 5.5% to 4.4 million tonnes, making HKIA the busiest cargo airport in the world,” he says.

“While we are encouraged by the growing figures, we are also aware of the challenges. HKIA is now operating at over 90% of capacity, and will soon reach its saturation point. 

“There is a pressing need for HKIA to expand from its existing two-runway system into a three-runway system (3RS), which will provide a long-term solution to our capacity constraints.”

According to Lam, 73% of respondents to a public consultation process in 2011 supported the third-runway expansion, and following that, AAHK obtained in-principle approval from the Executive Council, a core policy-making body of the Hong Kong government. 

However, various environmental factors needed to be addressed, covering issues such as air quality, noise, ecology, etc. The final hurdle – the Environmental Impact Assessment – concluded that all potential impacts of the 3RS project would be reduced to an acceptable level.

Green light

In March 2015, the Executive Council gave the green light, affirming the need for the 3RS project as a catalyst to strengthen the city’s competitiveness as a global and regional aviation hub. It was a milestone moment, but only the beginning. 

Lam explains that the expansion involves much more than just building a new runway. “The sheer scale of the 3RS is indeed comparable to building an entirely new airport,” he points out.

“It includes the reclamation of approximately 650 hectares of land to the north of the existing airport island as well as construction of a third runway, taxiways and an apron with 57 parking positions. 

“In addition, the project also includes construction of the Third Runway Concourse (TRC), and expansion of the existing Terminal 2 (T2) into a full-service processing terminal. 

“Moreover, a new Automated People Mover system connecting T2 with the TRC, and a new high-speed baggage handling system will be built.”

Lam adds: “The TRC will feature green elements. Beautiful courtyards will be situated at the centre of concourse, together with other environmentally friendly features such as smart air conditioning, lighting, and solar power.” 

Industry reaction

Upon completion, the $18.2 billion expansion will have the capacity to serve an additional 30 million passengers annually. However, while the expansion itself has been widely welcomed by industry and the public, the decision to incorporate a user-pays component brought a mixed reaction. 

Tony Tyler, director general and CEO of IATA – a big supporter of the airport – weighed in with the view that there should be “ample scope” for the project to be funded through borrowings alone. Cathay Pacific Airways, which accounts for almost one-third of HKIA’s departure capacity, agrees.

While reiterating his “unequivocal support” for a third runway system, Ivan Chu, Cathay Pacific’s chief executive, says he believes its construction could be self-funded through existing income streams, “especially as the number of passengers moving through the airport continues to grow”.

Fees and charges

He notes that Airport Authority Hong Kong, which he claims “enjoys the highest net profit of any airport in the world and benefits from strong cash flows, a healthy balance sheet, and growing income from retail and aeronautical streams”, is “fully capable of financing the construction of the third runway through its own means without the need to impose additional financial burden on users.” 

Charges must remain competitive to ensure continued growth for aviation, tourism and related industries, Chu adds.

However, Lam defends the funding proposal based on a joint contribution and user-pays principle through three channels – namely bank loans and bonds, HKIA’s operational surplus and contributions from users as a “longer-term solution”.

In the interim, he says, AAHK is working on a number of facilities and services upgrades to continue providing a top-class experience for its customers.

“In 2014/15, the expanded west apron, which adds 28 aircraft parking stands to HKIA, became fully operational. Our Midfield Concourse, which will add another 20 aircraft parking stands, will be completed by the end of 2015,” he tells Asia-Pacific Airports magazine.

“The Midfield Concourse will be able to serve 10 million additional passengers per annum. In addition to upgrading our facilities, we have introduced arts and cultural elements to our airport this year. Passengers are now able to enjoy musical performances and appreciate works by Hong Kong artists during their stay at HKIA.”

In the years ahead, he comments, the 3RS will enable Hong Kong to overcome existing aviation capacity constraints, allowing the airport to continue to provide the city with a long-term competitive edge, and to serve as a source of pride for the people of Hong Kong.

“Most importantly, it will continue be an efficient, enjoyable and convenient airport for passengers from all over the world,” he says.

“The expansion of HKIA into a 3RS is more than just a transport infrastructure development, it is an investment in Hong Kong’s future. 

“HKIA is the heart of Hong Kong’s economy, supporting the city’s four pillar industries – trading and logistics, financial services, producer and professional services, and tourism – which together accounted for around 58% of the city’s GDP in 2013. 

“In addition, it will also bring us tremendous benefit, attracting more business, creating hundreds of thousands of jobs, as well as strengthening our city’s status as an international aviation hub.”

Hong Kong phenomenonHong Kong based Plaza Premium Lounge Management Limited, which opened the first of its global lounges at the airport in 1998, has rebranded as Plaza Premium Group to better reflect its business strategies and expansion plan.As a result it has a unveiled a new logo and adopted the new mission statement of ‘Making Travel Exceptional’.“We have organically grown from our position as the pioneer of the independent lounge concept to a global premium airport services provider, says CEO and founder, Song Hoi-see.“The new name marks a step towards reflecting the group’s increasingly diversified airport hospitality businesses. We believe that airports are a destination in their own right and our services and facilities will give travellers more reasons to enjoy their travel experience.” The rebrand coincides with the launch of two new brands – Aerotel and Allways – to its existing portfolio, which Hoi-see says consolidates the group’s evolving businesses into four core pillars – airport lounges; airport transit hotels; airport meet & greet services; and airport dining.Its first two Aerotel transit hotels will open at Singapore Changi and Abu Dhabi International Airport later this year and be followed by one at London Heathrow in 2016.The company is launching its new kerb to apron meet & greet service, Allways, in phases at seven airports across the globe – including Delhi–Indira Gandhi, Singapore Changi, Macau, Kuala Lumpur and Muscat in the Asia-Pacific region.Allways includes services such as buying welcome gifts, one-stop pick-ups, lounge stays, buggy service, baggage handling, limousine transfers to nearby restaurants and itinerary recommendations.“We strongly believe the travel experience begins the moment you step into the airport and that airport transit is a journey in itself,” adds Song.

economic benefits

The 3RS is anticipated to create 123,000 direct jobs and 165,000 indirect and induced jobs by 2030, and will bring an additional HK$455 billion in economic net present value when compared to the two-runway system in 2012-2061, insists AAHK. 

“This expansion will bring more business, more jobs and more convenience to Hong Kong,” concludes Lam. “The development of infrastructure of such magnitude is an extensive process that poses many challenges. We are well set to press ahead, and committed to striking a balance between development and environmental protection.”