Hong Kong has a plan to counter growing competition from airports in North Asia. It starts in 2023.
That is how long Asia’s busiest international airfield must wait before opening a third runway after a near 10-year delay in winning approval for the extension.
In the meantime, airports from Guangzhou to Taipei are expanding and adding more direct flights, taking business from Hong Kong’s top carrier Cathay Pacific Airways (0293).
Hong Kong International Airport is second only to Beijing in passenger traffic in Greater China, but with its runways on Chek Lap Kok island already close to capacity, it is likely to be overtaken by both Shanghai and Guangzhou before the third runway is ready.
Eric Lin, an analyst with UBS Group in Hong Kong says Chinese travelers increasingly are choosing direct flights over cheaper but longer trips via Hong Kong. The new runway will enable Hong Kong to handle 58 percent more passengers, raising its capacity to 100 million a year by 2023 at a cost of HK$141.5 billion.
Other regional airports, including those in Singapore and Kuala Lumpur, are planning to expand to a similar capacity.
Hong Kong’s challenges come as Chinese airlines are expanding their international offerings. China’s big three carriers – Air China (0753), China Southern Airlines (1055) and China Eastern Airlines Corp (0670) – have boosted direct flights to Europe and the US in the past three years, using longer- range planes such as Boeing 777 and 787, and Airbus Group SEs A350 that can make the trip without stopping.
Beijing now offers 40 percent more nonstop trips to Europe than Hong Kong does, Credit Suisse says. Hong Kong, meanwhile, will hit the maximum number of landings and takeoff it can handle next year, three years earlier than expected, it said.
Cathay’s sales are forecast to grow 12 percent in the three years through 2017, analyst estimates on Bloomberg show. That compares with 81 percent growth expected for Air China , 31 percent for China Southern and 32 percent for China Eastern.
Meanwhile, rival airports in North Asia are adding capacity to capture a share of the region’s booming air travel. Guangzhou will open a second terminal next year, while Incheon, which serves Seoul, will follow in early 2017. Taipei will add a third terminal by 2020. Shenzhen has increased capacity with a third terminal.