"Rapid reforms will fuel rise of China's airports"

Wednesday, November 3, 2004

Rapid reforms will fuel rise of China's airports
Hong Kong urged to drop regulatory barriers to keep its regional hub status
The South China Morning Post


Hong Kong's status as the region's primary conduit for travellers and air
trade is not under immediate threat from airports across the border but
China's aggressive agenda of aviation reform will see rivals emerge faster
than expected, a panel of industry experts warns.

Hong Kong needed to dismantle the regulatory barricades restricting the flow
of passengers and cargo across the border and liberalise its aviation regime
to protect its hub status, delegates at the Pearl River Delta Conference
were told yesterday.

"It is not enough for Hong Kong airport to operate fully and efficiently.
The whole cross-border supply chain has to operate fully and efficiently,"
said Howard Eng, airport management director for the Airport Authority.

Mr Eng said more flexible air-service agreements would also be an asset as
they would help Hong Kong's airport remain cost-competitive against rivals
across the border.

"As an airport, we would like to see as much choice as possible for the
passengers," Mr Eng said.

"The more liberal the aviation environment, the more opportunity market
forces have to play a role."

It is thought that Guangzhou's new Baiyun airport will take five to seven
years to develop the network of international flights required to challenge
Hong Kong as a passenger hub.

But with leading carriers such as Lufthansa, Air France and Northwest
Airlines all on the verge of inaugurating freighter services, Baiyun is
expected to siphon off a greater share of the region's cargo market sooner
rather than later.

According to an air cargo study commissioned by the Airport Authority in
June, Hong Kong is expected to handle only 47 per cent of south China's air
cargo by 2020.

Fortunately, the amount of cargo it handles annually by that time will have
more than tripled to 6.3 million tonnes, from the three million tonnes it is
expected to handle this year.

The report says an examination of the rapid emergence of the port of Yantian
in Shenzhen suggests that antiquated customs procedures, which have limited
the appeal of South China's airports, can be reformed quickly.

"Given a backdrop of greater overall liberalisation in China and greater
mainland customs reform, one might expect a quicker pace of development at
Guangzhou and [Shenzhen airport]," it said.

Peter Yin, vice-president (South Pacific) for Federal Express, suggested
Hong Kong had little control over many of the factors eroding its regional
competitiveness, such as the fact that Guangdong's airports were closer to
the factories, that they were cheaper to fly to and that they were growing
more efficient on an operational level.

"We are not talking about rocket science here. Guangdong is going to catch
up [with Hong Kong], and they will do it quickly," Mr Yin said.

"What Hong Kong can control is the network of airlines that calls at its
airport. And that remains restricted, especially in regards to [beyond
rights]."


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