Hong Kong’s third runway gets the green light

Hong Kong’s third runway gets the green light

HONG KONG — The government of Hong Kong has approved the building of a third runway at Hong Kong International Airport (HKIA), announcing that it would fund the $18.2 billion expansion through internal funds, external borrowings and higher user fees.

The third runway will be operational by 2023 and is intended to help Hong Kong compete with regional rivals. While it will enable the airport to handle 100 million passengers a year, it will boost the annual cargo handling capacity of Hong Kong to 9 million tons.

Last year HKIA handled a record 4.38 million tons of air freight, benefiting from a recovery in the industry that has carried through to 2015. Cathay Pacific and sister carrier Dragonair carried almost 30 percent more cargo in February than during the same month last year.

But there has been intense debate over the need for a third runway in Hong Kong. Critics say the narrow air corridors in the Pearl River Delta have led to crowded air space and a third runway will simply add to the congestion. Concerns have also been raised over the financing of the project and its environmental impact.

However, Hong Kong’s government traditionally follows the path of development, so there was little surprise when the third runway was approved.

“The three-runway system is more than a transport infrastructure project, it is essential to keep our economy going,” Anthony Cheung, Hong Kong’s secretary for transport and housing, told reporters.

Cheung said the runway would increase the airport’s capacity from its current 68 flights per hour to 102 an hour. It will only be used for landing aircraft.

Aviation industry heavyweights stood behind the decision. Cathay Pacific chief executive Ivan Chu said the runway was necessary to maintain the long-term competitiveness of Hong Kong as a premier aviation hub. “Building third runway is the only viable way for our airport to keep pace with future growth and to continue to support Hong Kong’s pillar industries in tourism, international trade, logistics, and finance and professional services,” he said.

Chu dismissed calls for the third runway to be financed through a user-pays approach, saying the carrier believes the Airport Authority “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.”

The financial burden will ultimately be imposed on Hong Kong taxpayers as the Airport Authority, of which the government is majority shareholder, will not pay dividends during the construction. That will shortchange the publiuc purse by an estimated $6 billion.

Unsurprisingly, the International Air Transport Association agrees that users should not have to foot the bill. Last week in Shanghai IATA chief Tony Tyler warned that Hong Kong could lose competitiveness if the Airport Authority raised airline fees to pay for the runway.

The Board of Airline Representatives in Hong Kong (BAR HK), which represents 76 airlines with operations in Hong Kong, was also breaking out the bubbly.

“Our members fully support the building of a third runway, which is in the economic interest of Hong Kong,” said Joe Ng, vice chairman of BAR HK. “Aviation is an industry that contributes some 8 percent to Hong Kong’s GDP and accounts for 8 percent of employment in the city; the third runway is urgently needed to maintain the airport’s competitive strength and to ensure continued growth for the benefit of Hong Kong.”

However, the insistence on giving the project the green light has ignored some significant problems. The skies over Hong Kong are crowded because of a "skywall" imposed by China between the city and the mainland air space, and a third runway will simply add more traffic to the limited area. At the moment, aircraft have to circle above Hong Kong to 4,800 metres before they can enter Chinese air space and continue on their journey.

Hong Kong's government will only say that the problems will "no longer exist" in five years. 

Contact Greg Knowler at gknowler@joc.com and follow him on Twitter: @greg_knowler.