Paul Yeung says SAR government should exploit opportunities created by national development strategies and central government backing to strengthen HK’s position as an aviation hub

The trading and logistics industry, one of Hong Kong’s key economic pillars, has been under threat over the past decade. This is worrying, given that the industry employs some 730,700 people — the most among the four key economic pillars. While Hong Kong’s shipping sector faces increasing challenges, the aviation sector seems to be more resistant to global problems. However, if we look back to the past, we can see that Hong Kong’s development as an aviation center is not without twists and turns over the past decade.

Let’s turn back the clock to 2008, the year when the last global financial crisis hit the world hard. In the wake of the 2008 crash in the global economy, Hong Kong’s aviation sector suffered but rebounded strongly later, with data for the first half of 2010 suggesting that all lost ground had been recovered. Hong Kong remains Asia’s leading international passenger and air cargo hub, maintaining its relative attractiveness as an aviation hub in Asia. It seems that the foundation of the industry is strong enough to fence off such a huge challenge posed by a global financial crisis. However, this is not the end of the story.

The real challenge faced by Hong Kong’s aviation sector is a growing trend that sees economic activities shifting northward … As a result, Hong Kong’s long-standing locational advantages as a transhipping port for mainland exports are likely to be eroded

The real challenge faced by Hong Kong’s aviation sector is a growing trend that sees economic activities shifting northward. According to a Study of Hong Kong’s Aviation Industry: Current Challenges and Future Strategies, conducted by One Country Two Systems Research Institute, Hong Kong’s logistics hub is confronting the “challenge of remaining relevant”. The Chinese mainland has been trying to stimulate domestic consumption as part of its strategy to sustain economic growth after the global market crash in 2008, and the massive Pearl River Delta (PRD) manufacturing economy has been dedicating more resources to meeting demands of domestic consumers. An increasing share of consignments is being sent directly northward from PRD factories, rather than southward to Hong Kong. As a result, Hong Kong’s long-standing locational advantages as a transhipping port for mainland exports are likely to be eroded.

Hong Kong’s superiority in reliability and efficiency, and in the clustering of relevant services and skills, is fully recognized, but this may also be eroded gradually over the next decades. Another advantage Hong Kong can count on is that the government has determined to build the city as a regional headquarters hub — a key driver for aviation activity. The study released in 2010 suggested that the most significant single determinant of Hong Kong’s competitive advantage as an aviation services hub is the government’s ability to build capacity, including winning public support for a third runway and related favorable policies.

Consolidating Hong Kong’s status as an international and regional aviation hub was highlighted as a policy priority in the 2003 policy address. To cope with the air traffic demand of passengers and cargoes, the Airport Authority implemented a midfield expansion project, including the construction of a midfield passenger concourse, 20 aircraft parking stands, automated people mover linking to Terminal 1, a new cross-field taxiway, and relevant airfield infrastructure facilities.

Besides, a series of policies are introduced, including improving the infrastructure of the Hong Kong International Airport, replacing the Civil Aviation Department’s air traffic control system and developing a new headquarters. The Maritime and Aviation Training Fund was set up in 2014 to build up a vibrant, diversified and competitive pool of professionals and technical personnel to support Hong Kong’s future development in the maritime and aviation sectors. The determination of the government did contribute to the development and consolidation of the aviation industry during this period.

Harry Truman, the former US president, said, “There is nothing new in the world except the history you do not know.” Collaboration with neighbouring airports is a crucial task. We need to transform our counterparts into partners. The success of such a strategy hinges on whether the SAR government can collaborate closely with partner cities in the Guangdong-Hong Kong-Macao Greater Bay Area in improving air traffic management, facilitating more efficient use of regional air space and augmenting Hong Kong’s hourly take-off and landing capacity. The government’s capacity will be tested and challenged when it leads the aviation sector to embrace opportunities for further development.

In the “Outline of the 13th Five-Year Plan for the National Economic and Social Development of the People’s Republic of China” promulgated in 2016, the central government expressed its support for Hong Kong in consolidating and enhancing its status as international financial, transportation and trade center, as well as promoting financing services, business and commerce, logistics and professional services toward high-end and high value-added developments. The SAR government should take advantage of opportunities created by the latest national development strategies and the central government’s support to strengthen Hong Kong position as an aviation center.

The author is research officer of the One Country Two Systems Research Institute.


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