Important Notevps.hongkongairport.com/mp2030/consultancy_report/IATA.pdf · 2012. 2. 21. · Important Note Airport Authority Hong Kong (AAHK) is responsible for preparing the Hong

Important Note

Airport Authority Hong Kong (AAHK) is responsible for preparing the Hong Kong International Airport (HKIA) Master Plan 2030 and commissioning the associated consultancies. At different stages of these consultancies, the consultants produced various documents for AAHK’s consideration, culminating in the production of final reports. Where a final report was not produced, the consultants’ work was consolidated into the HKIA Master Plan 2030 Technical Report. As the reports were produced at different times, they may contain outdated or inconsistent contents.

The HKIA Master Plan 2030 was not drawn up solely on the basis of the various consultancies commissioned by AAHK, but also has incorporated input from relevant airport stakeholders as well as AAHK’s own input on the basis of its solid experience in airport operations. Hence, for any differences between the consultancy reports and the HKIA Master Plan 2030, the latter and the Technical Report should always be referred to.

Airport Authority Hong Kong

July 2011

International Air Transport Association 800 Place Victoria, B.P. 113 Montreal, Quebec Canada H4Z 1M1 Tel: +1 (514) 874 0202 Fax: +1 (514) 874 2662 www.iata.org

HKIA 2030 Primary Traffic Forecast

AIRPORT AUTHORITY OF HONG KONG

Variation to Contract Ref: C004-09

FINAL REPORT

30 July 2010

HKIA 2030 Primary Forecast – Final Report 3

Preface

IATA is pleased to submit this report presenting HKIA 2030 primary traffic forecast. it summarizes the approach followed and provides HKIA forecasts for passenger traffic, cargo traffic and movements. Contacts

Mr. Laurent Delarue, Head of Airport Consulting, IATA Consulting, is responsible for this project and remains at your disposal for any inquiries concerning this document at the following coordinates:

e-mail: [email protected]

Address: International Air Transport Association 800 Place Victoria, P.O. Box 113, Montreal, Quebec, Canada H4Z 1M1


Table of Contents Preface ........................................................................................................................... 3

Chapter 1 Executive Summary .................................................................................. 17

Chapter 2 Introduction ............................................................................................... 28

1. Context and Objectives........................................................................................ 28

2. Methodology ........................................................................................................ 292.1 Overall approach and structure of the report................................................................................... 30

2.1.1 Step 1 – Current and Historical Situation................................................... 302.1.2 Step 2 – Demand Growth Drivers .............................................................. 302.1.3 Step 3 – Demand and Movement Forecasts ............................................. 312.1.4 Step 4 – Industry Interviews....................................................................... 32

2.2 Data Sources................................................................................................................................... 332.2.1 PaxIS/AirportIS Traffic Database ............................................................... 352.2.2 Travel Agents Bias ..................................................................................... 36

2.3 Forecasting approach...................................................................................................................... 372.3.1 HKIA forecasting model ............................................................................. 372.3.2 Mainland China regions forecasting models .............................................. 392.3.3 The regression analysis module ................................................................ 392.3.4 The adjustment module.............................................................................. 452.3.5 The movement module .............................................................................. 472.3.6 Sensitivity analysis ..................................................................................... 48

Chapter 3 Current and Historical Situation................................................................. 50

3. Passenger Market ............................................................................................... 503.1 Mainland China................................................................................................................................ 503.2 Greater PRD.................................................................................................................................... 513.3 Hong Kong International Airport ...................................................................................................... 52

3.3.1 OD/TT and Regional Segmentation........................................................... 523.3.2 Airline segmentation................................................................................... 573.3.3 Route network ............................................................................................ 573.3.4 HKIA competitive position .......................................................................... 65

4. Cargo Market....................................................................................................... 694.1 Mainland China................................................................................................................................ 694.2 Greater PRD.................................................................................................................................... 704.3 Hong Kong International Airport ...................................................................................................... 71

4.3.1 OD/Transshipment and Regional Segmentation ....................................... 714.3.2 Cargo traffic by flight type .......................................................................... 754.3.3 HKIA Competitive Position on GPRD ........................................................ 76


Chapter 4 Demand Growth Drivers............................................................................ 78

5. Economic Development....................................................................................... 805.1 Economic Development of Hong Kong ........................................................................................... 80

5.1.1 Past Economic Development..................................................................... 805.1.2 Future Trends for Economic Development ................................................ 82

5.2 Economic Development of Mainland China .................................................................................... 835.2.1 Historical Overview .................................................................................... 835.2.2 Outlook for Economic Development .......................................................... 83

5.3 Economic Development of the Pearl River Delta Region (PRD)..................................................... 845.3.1 Historical Overview .................................................................................... 845.3.2 Future Trends............................................................................................. 85

5.4 Economic Development of the Yangtze River Delta Region........................................................... 875.4.1 Historical Overview .................................................................................... 875.4.2 Future Trends............................................................................................. 87

5.5 Economic Development of Rest of Mainland China........................................................................ 895.5.1 Bohai .......................................................................................................... 895.5.2 Rest of Mainland China.............................................................................. 90

5.6 World Economic Development ........................................................................................................ 91

6. Regulation and Policy: Air Service Agreements .................................................. 926.1 Hong Kong....................................................................................................................................... 926.2 Hong Kong and Mainland China ..................................................................................................... 956.3 Mainland China................................................................................................................................ 96

6.3.1 US – China agreement............................................................................... 966.3.2 Regional Air Service Agreements .............................................................. 966.3.3 Open-skies ................................................................................................. 976.3.4 Domestic sky deregulation......................................................................... 97

6.4 Cross-Strait Direct Links.................................................................................................................. 98

7. Regulation and policy: Trade Agreements........................................................... 997.1 WTO ................................................................................................................................................ 997.2 CEPA............................................................................................................................................... 997.3 CAFTA........................................................................................................................................... 1007.4 EFCA ............................................................................................................................................. 1017.5 Shenzhen Special Economic Zone (SEZ) expansion ................................................................... 101

8. Regulation and policy: Travel policy ...................................................................1028.1 Hong Kong..................................................................................................................................... 1028.2 Mainland China.............................................................................................................................. 102

8.2.1 ADS.......................................................................................................... 1028.2.2 IVS............................................................................................................ 1028.2.3 Multiple-entry Visa for Shenzhen hukou-residents .................................. 103

9. Tourism development .........................................................................................104


9.1 Tourism to and from HKSAR......................................................................................................... 1049.1.1 Outbound tourism from HKSAR............................................................... 1049.1.2 Inbound tourism to HKSAR..................................................................... 105

9.2 Tourism to and from Mainland China ............................................................................................ 1089.2.1 Outbound tourism from Mainland China .................................................. 1089.2.2 Inbound tourism to Mainland China ......................................................... 1109.2.3 Passenger travelling preferences ............................................................ 111

10. Modal competition: Air Sea competition...........................................................112

11. Cross-Boundary Infrastructure Development......................................................11411.1 TM-CLK Link and TM Western Bypass ......................................................................................... 11411.2 The Hong Kong Zhuhai Macau Bridge (HZMB) ............................................................................ 117

11.2.1 Impact on the economy............................................................................ 11711.2.2 Impact on connectivity within the GPRD.................................................. 118

11.3 Express Rail Link (XRL) ................................................................................................................ 120

12. Airport Development Strategies..........................................................................12212.1 Guangzhou Airport ........................................................................................................................ 122

12.1.1 Situation ................................................................................................... 12212.1.2 Infrastructure and passenger terminal development ............................... 12312.1.3 Air service development........................................................................... 12312.1.4 Accessibility and exposure on the catchment area.................................. 12412.1.5 Cargo Development ................................................................................. 124

12.2 Shenzhen airport ........................................................................................................................... 12612.2.1 Situation ................................................................................................... 12612.2.2 Infrastructure and terminal development ................................................. 12612.2.3 Air service development........................................................................... 12612.2.4 Accessibility and exposure on the catchment area.................................. 12712.2.5 Cargo development.................................................................................. 127

12.3 Macau Airport ................................................................................................................................ 12812.3.1 Situation ................................................................................................... 12812.3.2 Infrastructure and terminal development ................................................. 12812.3.3 Air service development........................................................................... 12812.3.4 Accessibility and exposure on the catchment area.................................. 12912.3.5 Cargo development.................................................................................. 129

12.4 Zhuhai airport ................................................................................................................................ 13012.5 Airports outside of GPRD .............................................................................................................. 130

12.5.1 Taoyuan airport ........................................................................................ 13012.5.2 Shanghai-Pudong .................................................................................... 13112.5.3 Beijing Capital International Airport.......................................................... 13112.5.4 Chengdu................................................................................................... 13212.5.5 Chongqing................................................................................................ 13312.5.6 Seoul-Incheon .......................................................................................... 13312.5.7 Kuala Lumpur........................................................................................... 134


12.5.8 Singapore-Changi .................................................................................... 13412.5.9 Other airports ........................................................................................... 134

13. Airline Development Strategies ..........................................................................135

Chapter 5 Demand and Movements Forecasts.........................................................150

14. Passenger Forecast ...........................................................................................15014.1 Passenger traffic forecast for Mainland China .............................................................................. 15014.2 Passenger traffic forecast for GPRD............................................................................................. 15114.3 Future HKIA competitive position .................................................................................................. 152

14.3.1 HKIA Competitive position within GPRD.................................................. 15214.3.2 Synthesis on the traffic lost due to competition........................................ 15614.3.3 Capacity considerations at GPRD airports (excluding HKIA) .................. 156

14.4 Passenger traffic forecast for HKIA ............................................................................................... 15814.4.1 Assessment of the adjustment factors ..................................................... 15814.4.2 HKIA Base Case Passenger Traffic......................................................... 171

15. Cargo Forecast...................................................................................................17615.1 Cargo traffic forecast for Mainland China...................................................................................... 17615.2 Cargo traffic forecast for GPRD .................................................................................................... 17715.3 Future HKIA competitive position .................................................................................................. 179

15.3.1 HKIA market share on GPRD traffic ........................................................ 17915.3.2 HKIA market share on GPRD international traffic.................................... 179

15.4 Cargo traffic forecast for HKIA ...................................................................................................... 18115.4.1 Assessment of the adjustment factors ..................................................... 18115.4.2 Base case forecast for HKIA cargo demand............................................ 190

16. Movement Forecast ............................................................................................19616.1 Passenger Aircraft Movements ..................................................................................................... 196

COMMERCIALLY SENSITIVE


16.1.1 Overall Trend ........................................................................................... 19616.1.2 Market Trends .......................................................................................... 19716.1.3 Assumptions by market............................................................................ 19816.1.4 Forecast for Passenger Aircraft Movements............................................ 20316.1.5 Passenger Aircraft Movements by Region............................................... 20416.1.6 Passenger Aircraft Movements by Aircraft Type...................................... 205

16.2 Cargo Aircraft Movements............................................................................................................. 20816.2.1 Historical Trend ........................................................................................ 20816.2.2 Future Trend ............................................................................................ 20916.2.3 Forecast for Cargo Aircraft Movements ................................................... 21016.2.4 Cargo Aircraft Movements by Region ...................................................... 21116.2.5 Cargo Aircraft Movements by Aircraft Type............................................. 211

16.3 Non-Commercial Aircraft Movements ........................................................................................... 21516.3.1 Historical Trend ........................................................................................ 21516.3.2 Forecast for Non-Commercial Aircraft Movements.................................. 21516.3.3 Non-Commercial Aircraft Movements by Region..................................... 21616.3.4 Non-Commercial Aircraft Movements by Aircraft Type............................ 217

16.4 Overall Forecast for Movements at HKIA...................................................................................... 218

17. Comparison with Official Forecasts ....................................................................22217.1 Passenger forecast........................................................................................................................ 222

17.1.1 Mainland China ........................................................................................ 22217.1.2 Hong Kong International Airport............................................................... 222

17.2 Cargo forecast ............................................................................................................................... 224

18. Sensitivity Analysis .............................................................................................22618.1 High and Low Cases ..................................................................................................................... 226

18.1.1 High and Low Passenger Cases.............................................................. 22718.1.2 High and Low Cargo Cases ..................................................................... 22818.1.3 High and Low Movement Cases .............................................................. 229

18.2 Traffic sensitivity to uncertain factors ............................................................................................ 23018.2.1 Construction of the Hong Kong Shenzhen Western Express Line (WEL)23018.2.2 HZMB impact to economy exceeding the GDP forecasts........................ 23218.2.3 No induction of new demand due to XRL ................................................ 23318.2.4 Higher new demand induction (15%) due to XRL.................................... 23418.2.5 Aggressive low-cost strategy implemented by MFM ............................... 23418.2.6 More severe impact of UPS / FedEx settlement in PRD ......................... 23618.2.7 Intensification of the shift from Air to Sea ................................................ 236

19. Appendices.........................................................................................................23719.1 Boeing and Airbus Forecasts ........................................................................................................ 23719.2 Abbreviations and Acronyms......................................................................................................... 23819.3 Statistical definitions ...................................................................................................................... 24119.4 GDP assumptions.......................................................................................................................... 243

19.4.1 GDP Assumptions for the base case ....................................................... 243


19.4.2 GDP assumptions for the high and low scenarios ................................... 245

19.5 HKSAR tourism projects................................................................................................................ 24819.6 Traffic distribution in GPRD........................................................................................................... 253

19.6.1 Guangdong International OD Air Passengers Market ............................. 25319.6.2 Connectivity at GPRD airports ................................................................. 254

19.7 Mainland China Transfer / Transit traffic ....................................................................................... 25519.8 Regional classification ................................................................................................................... 25619.9 Traffic forecast tables .................................................................................................................... 25719.10 Adjustments to the traffic forecast ................................................................................................. 286

19.10.1 Direct Links .............................................................................................. 28619.10.2 High Speed Train ..................................................................................... 291

19.10.4 Impact of airport / airline competition on HKIA cargo transshipment traffic

................................................................................................................. 29519.11 References .................................................................................................................................... 296




Table of Figures Table 1 – Evolution of Guangdong international OD passengers split into airports between 2007 and 2030 23Table 2 – Total passenger traffic growth for Mainland airports, GPRD airports and HKIA – 2008 to 2030 – in CAGR 24Table 3 – Total cargo traffic growth for Mainland airports, GPRD airports and HKIA – 2008 to 2030 – in CAGR 25Table 4 – Comparison of global growth in air traffic and GDP – 1971 to 2010 29Table 5 – HKIA Traffic Forecast Approach Followed by IATA 30Table 6 – Interviews Conducted by IATA 32Table 7 – List of data used by IATA to ground the Traffic Forecast 33Table 8 - Comparison of AirportIS and AAHK data1 - Sum of OD and TT traffic to each region – 2008 - in million passengers 36Table 9 – HKIA Forecasting model 38Table 10 – Outcomes of the regression analyses on passenger markets 40Table 11 – Outcomes of the regression analyses on cargo markets 43Table 12 – Illustration of the statistical event that might occur during the tie back process 44Table 13 – Adjustment factors to the passenger and cargo traffic baselines 46Table 14 – Distribution of Total China domestic, international and total airport traffic into region – 2008 – in % and passengers 50Table 15 – Individual and cumulated traffic of GPRD airports – 1993 to 2008 – in million passengers 51Table 16 – Regional distribution of HKIA OD, TT and total traffic - 2008 52Table 17 – Passenger traffic at HKIA split into regional markets – 2008 – in million passengers 53Table 18 – Year-on-year growth of HKIA OD and TT traffic – 1994 to 2008 – in % 54Table 19 – Evolution of the transfer rate of HKIA regional markets – 1993 to 2008 – in % 55Table 20 – HKIA passenger traffic growth by market segment and nature of traffic – 1993 to 2008 – in CAGR 56Table 21 - Number of international routes served daily from GPRD airports – Q1 2008 58Table 22 – Weekly frequencies and seats from GPRD to international destinations – Q2, 2009 59Table 23 - Evolution of the network to Asia excluding Mainland China at HKIA, CAN and SZX – 1st quarter from 2000 to 2008 – in daily air services 60Table 24 - Evolution of the network to long-haul destinations at HKIA, CAN and SZX – 1st quarter from 2000 to 2008 – in total air services / daily air services 60Table 25 – Average airfare paid by city for a long-haul destination (based on the location of the air ticket issuance) – 2008 – in US$ 61Table 26 – Number of international destinations serviced from a selection of Chinese airports – 2000 to 2010 62Table 27 – Domestic network served from SZX on a daily basis with identification of the routes served from both SZX and HKIA – Q2, 2009 62Table 28 – Domestic flights per week and seats per week from GPRD airports on routes served at least daily – Q2, 2009 63


Table 29- Evolution of domestic air services from the GPRD airports – 2001 to 2008 – In additional routes, annual increase in weekly frequencies and annual increase in weekly seats 64Table 30 – HKIA market share on GPRD airports traffic – 1993 to 2008 65Table 31 – HKIA market share on Guangdong international OD demand – 2004 to 2007 66Table 32 – Split of Mainland China OD international traffic into direct and connecting hubs by world region – 2007 – in passengers 68Table 33 - Mainland China total cargo traffic - 1993 to 2008 - in million tonnes 69Table 34- GPRD (excluding HKIA) airports total cargo traffic from 1997 to 2008 - in million tonnes 70Table 35 - Regional distribution of HKIA OD, TT and total cargo traffic – 2008 71Table 36 - HKIA O/D and Transshipment cargo traffic to each region – 2008 - in thousand tonnes 72Table 37 – Year-over-year growth of HKIA OD and Transshipment traffic – 1994 to 2008 – in % 72Table 38 - Evolution of the transshipment rate on HKIA regional markets between 1993 and 2008 and transshipment traffic in 2008 – in % and thousand tons 73Table 39 – HKIA cargo traffic growth by market segment and nature of traffic – 1993 to 2008 – in CAGR 74Table 40 - HKIA cargo traffic split by flight type – 2008 - in thousand tonnes 75Table 41 – HKIA market share to GPRD airports total cargo traffic and GPRD airports international traffic – 1997 to 2008 76Table 42 - HKIA competitive position compared to other GPRD airports- 2008 76Table 43 – Factors affecting air passenger and cargo demands reviewed as part of the forecast study 78Table 44 – Main impact of the drivers 79Table 45 – Hong Kong economic drivers as a % of GPRD – 1995 to 2007 81Table 46 – Estimated GDP and population growth rates for HKSAR – in CAGR 82Table 47 – PRD Economy as a % of Mainland China – 1990 to 2007 85Table 48 – Estimated GDP and Population Growth Rates for PRD region – in CAGR 86Table 49 – Estimated GDP and Population Growth Rates for YRD region – in CAGR 88Table 50 – Estimated GDP and Population Growth Rates for the Bohai region – in CAGR 90Table 51 – Estimated GDP and Population Growth Rates for the Rest of Mainland China – in CAGR 90Table 52 – GDP assumptions – 2009 to 2030 – measured in CAGR 91Table 53 – List of the main Air Service Agreements concluded by HKSAR 93Table 54 – Evolution of Qantas 5th freedom traffic at between LHR and HKIA, SIN and BKK from 2005 to 2008 – in passengers 94Table 55 – Mainland China Trade Agreements 99Table 56 – CEPA road map 100Table 57 – Former and recently extended perimeter of the Shenzhen Special Economic Zone 101Table 58 – Number of mainland visitors* to Hong Kong – 1994 to 2008 – in millions visitors 103Table 59 – Evolution of outbound tourism in Hong Kong – 2001 to 2008 – in million tourists 104Table 60 – Evolution of inbound tourism in Hong Kong – 2001 to 2008 – in million visitors 105Table 61 - Tourism and Hospitality projects in Hong Kong 106Table 62 – Top 10 Theme Parks in Asia – 2008 – in million visitors 107Table 63 – Evolution of outbound tourism** in Mainland China,,– 2001 to 2008 – in million tourists** 108Table 64 – Split of mainland outbound tourists into country of destinations – 2005 109Table 65 – Preferred international destinations by mainland tourists - 2008 110


Table 66 – Air freight as a ratio to world trade – 1996 to 2009 112Table 67 - Air Freight Share Trend of Video projectors/monitors commodity: Asia to United States – 2002 to 2007 - in thousands metric tonnes 113Table 68 – Current Surface Transport in the GPRD 115Table 69 – Future Surface Transport in the GPRD 116Table 70 – Comparison of the eastern and western banks of the PRD in terms of international travel propensity and GDP – 2008 117Table 71 – Change in the best access time from GPRD municipalities to the GRPD international airports further to the construction of the HZMB – in minutes 119Table 72 - Chinese railway infrastructure development map 120Table 73 – Evolution of the shortest rail travel time from Hong Kong between 2008 and 2020 – in hours 121Table 74 – Traffic evolution at CAN – in thousands passengers 123

1 2

Table 79 – Mainland China passenger traffic (excluding HKIA and MFM) – 2008 to 2030 – in passengers 150Table 80 – GPRD passenger traffic – 2008 to 2030 – in passengers 151Table 81 – GPRD share of Total China passenger traffic – 2008 to 2030 151Table 82 – HKIA market share on GPRD traffic – 1993 to 2030 152Table 83 - Guangdong International OD market at the GPRD airports – 2030 – in million passengers 154Table 84 - Distribution of HKIA OD passengers – 2030 – in million passengers 155Table 85 – GPRD airports (excluding HKIA) capacity and unconstrained demand – 2008 to 2030 – in million passengers 157Table 86 – Impact of Direct Links on HKIA passenger traffic – 2009 to 2030 – in thousand passengers 159Table 87 – HKIA market share on traffic between PRD and Taiwan 161Table 88 – Distribution within PRD of demand to/from Taiwan and other international destinations - 2009 161Table 89 – Share of direct traffic between Mainland China excluding PRD and Taiwan 162Table 90 – Breakdown of traffic between Mainland China and South East Asia into Chinese regions and direct / indirect routes – in % to the total traffic of each region to South East Asia 163Table 91 – HKIA market share on indirect traffic between Taiwan and Mainland China excluding PRD 163Table 92 – Model used to assess the HST impact on the relevant city pairs between HKSAR and ML China 166Table 93 - Current observation of the correlation of rail travel time and rail market share on OD traffic European and Japanese routes – 2008 – in hours and per cent of OD traffic 167Table 94 - HST market share from Hong Kong to the main cities served in Mainland China – OD traffic 169Table 95 - Passengers diversion from air to rail – from Hong Kong – 2020/2030 - in thousands OD both way passengers 169Table 96 – HKIA traffic forecast – Total, OD and TT traffic – 2008 to 2030 – in passengers 172Table 97 – HKIA total traffic by region and share of total – 2008 to 2030 – in passengers 173



Table 98 – HKIA OD passenger traffic by region – 2008 to 2030 – in passengers 174Table 99 – HKIA TT passenger traffic by region at HKIA – 2008 to 2030 – in passengers 175Table 100 – Cargo traffic at mainland airports – 2008 to 2030 – in tonnes 176Table 101 – Cargo traffic at GPRD airports – 2008 to 2030 – in tonnes 177

Table 103 – HKIA market share to GPRD total cargo traffic – 1997 to 2030 179

Table 105 – Impact of Direct Links on HKIA cargo traffic – 2009 to 2030 - tonnes 183Table 106 – HKIA market share of traffic between PRD and Taiwan 184Table 107 – Distribution of Gross Industrial Output Value in Guangdong – 2008 – in % 185Table 108 – Share of direct traffic between Mainland China (excluding PRD) and Taiwan 185Table 109 – HKIA market share of indirect traffic between Taiwan and Mainland China 186Table 110 – Impact to HKIA OD traffic of UPS and FedEx settlement in SZX and CAN – 2008 to 2030 – in tonnes 188Table 111 - Impact to HKIA Transshipment traffic of the competition – 2008 to 2030 – in tonnes 188Table 112 – Distribution of the manufacturing activities of computers and communication equipment around PRD – 2008 – in number of firms and market share 189Table 113 – HKIA cargo traffic forecast – Total, OD and Transshipment traffic – 2008 to 2030 – in tonnes 191Table 114 – HKIA total cargo traffic by region and share of total – 2008 to 2030 – in tonnes 192Table 115 – HKIA OD cargo traffic by region – 2008 to 2030 – in tonnes 193Table 116 – HKIA Transshipment cargo traffic by region at HKIA – 2008 to 2030 – in tonnes 194Table 117 - Tarmac Transshipment cargo – 2008 to 2030 - in tonnes 195Table 118 – Difference between movement and passenger growth at HKIA – 1998 to 2008 196Table 119 – Long-haul sector planning and average cost curve 197Table 120 – Passengers per movement in 1998 and 2008 and annual evolution over the period 198Table 121 – Passengers per movement assumptions from 2008 to 2030 and annual evolution over the period 198Table 122 – Passenger aircraft movement and ratio passengers per movement – HKIA - 2008 to 2030 203Table 123 – Passenger Aircraft Movements by Region at HKIA – 2008 to 2030 – in movements 204Table 124 – Passenger aircraft movement split into aircraft code – 2004 and 2008 – in % of total passenger aircraft movements 205Table 125 – Split of Passenger Aircraft Movement into Aircraft Type at HKIA – 2008 to 2030 – in % of Passenger Aircraft Movements 207Table 126 – Compared year-on-year evolution in payloads per cargo and passenger flights at HKIA – 1998 to 2008 – in % 208Table 127 – Forecast for Cargo Aircraft Movement at HKIA and related data – 2008 to 2030 210Table 128 - Cargo Aircraft Movements by Region at HKIA – 2008 to 2030 – in movements 211Table 129 – Passenger aircraft movement split into aircraft code – 2004 and 2008 – in % of total passenger aircraft movements 212Table 130 – Split of Cargo Aircraft Movement into Aircraft Type at HKIA – 2008 to 2030 – in % of Cargo Aircraft Movements 214Table 131 – Forecast for Cargo Aircraft Movement at HKIA and related data – 2008 to 2030 215




Table 132 – Non-Commercial Aircraft Movements by Region at HKIA – 2008 to 2030 – in movements 216Table 133 – Split of Non-Commercial Aircraft Movement into Aircraft Type at HKIA – 2008 to 2030 – in % of Non-Commercial Aircraft Movements 217Table 134 – Projection of total number of movements at HKIA – 2008 to 2030 218Table 135 – Total Aircraft Movements by Region at HKIA – 2008 to 2030 – in movements 219Table 136 – Split of Total Aircraft Movement into Aircraft Type at HKIA – 2008 to 2030 – in % of Total Aircraft Movements 220Table 137 – Split of Total Aircraft Movement into Aircraft Type at HKIA – 2008 to 2030 – in movements 221Table 138 - Comparison of IATA, Boeing, and Airbus passenger forecasts – 2009 to 2028 222Table 139 - Comparison of IATA, Boeing, and Airbus cargo forecasts - 2009 to 2028 224Table 140 – High and low passenger cases (based on P95 prediction interval) – 2008 to 2030 – in million passengers 227Table 141 – High and low passenger cases (based on P95 prediction interval) – 2008 to 2030 – in million passengers 227Table 142 – High and low cargo cases (based on P95 prediction interval) – 2008 to 2030 – in thousand tonnes 228Table 143 – High and low cargo cases (based on P95 prediction interval) – 2008 to 2030 – in thousand tonnes 228Table 144 – High and low movement cases – 2008 to 2030 – in thousand movements 229Table 145 – High, base and low movement cases – 2008 to 2030 – in thousand movements 229Table 146 - WEL net impact on HKIA passenger traffic – 2020, 2025 and 2030 – in million passengers 231Table 147 – HZMB impact to HKIA assuming higher impact on economy – 2008 to 2030 – in million passengers and tonnes 233Table 148 – XRL and HST impact to HKIA assuming no traffic induction – 2008 to 2030 – in million passengers 233Table 149 – Potential XRL and HST impact to HKIA considering a 15% induction – 2008 to 2030 – in million passengers 234Table 150– Potential impact to HKIA of MFM’s LCC strategy – 2008 to 2030 – in million pax 234Table 151 – Low-Cost airport traffic at a selection of European metropolitan areas – 2008 235Table 152 – Impact to HKIA OD traffic of UPS and FedEx settlement in SZX and CAN – 2008 to 2030 – in tonnes 236Table 153 - Impact to HKIA traffic of Air-Sea competition – 2008 to 2030 – in tonnes 236Table 154 – Composition of Asia according to Boeing and Airbus forecasts 237Table 155 – Boeing and Airbus forecasts for the Asia Pacific region, Mainland China and the world – 2009 to 2028 – in CAGR 237Table 156 – Illustration of the prediction interval concept 242Table 157 – Comparison of IATA’s GDP assumptions against the most recent forecasts released by EIU and Global Insight - Cumulated HKSAR GDP growth at index 100 in 2008 243Table 158 – GDP Growth Assumptions for World Regions 244Table 159 – Comparison of IATA’s low and high GDP assumptions against the most recent forecasts released by EIU and Global Insight - Cumulated HKSAR GDP growth at index 100 in 2008 245Table 160 – Top 10 Theme Parks in Asia – 2008 – in million visitors 248


Table 161 – Evolution in the number of foreign tourists handled at the Hong Kong Ocean Terminal – 2002 to 2008 – in thousand visitors 250Table 162 – Foreign tourists handled at the Hong Kong Ocean Terminal split into country of residence – 2008 – in thousand tourists 251Table 163 – Evolution of the worldwide cruise passengers – CLIA members – 1990 to 2009 – in million passengers 252Table 164 – Distribution of Guangdong-international passengers into location and airport 253Table 165 - Evolution of the weekly frequencies to Asia excluding Mainland China from HKIA, CAN and SZX – 1st quarter from 2000 to 2008 254Table 166 - Evolution of the weekly frequencies to long-haul destinations from HKIA, CAN and SZX – 1st quarter from 2000 to 2008 254Table 167 – HKIA markets regional classification 256Table 168 – HKIA OD and TT passenger traffic forecast - 1993 to 2030 – in million passengers 257Table 169 – HKIA total passenger traffic split into regions – 2008 to 2030 – in thousands passengers 258Table 170– HKIA OD passenger traffic split into regions – in thousands passengers 259Table 171 – HKIA TT passenger traffic split into regions – 2008 to 2030 – in thousands passengers 260Table 172 – HKIA Air Passenger split into OD and TT– in thousands passengers 261Table 173 – GPRD total passenger traffic split into GPRD airports without HKIA and HKIA – in thousands passengers 262Table 174 – GPRD domestic (Mainland) passenger traffic split into GPRD airports (exclude HKIA) and HKIA – in thousands passengers 263Table 175 – GPRD international passenger traffic split into GPRD airports (exclude HKIA) and HKIA – in thousands passenger 264Table 176 – Mainland China total passenger traffic – in million passengers 265Table 177 – Total China total passenger traffic split into main regions– in million passengers 266Table 178 – Total China international traffic split into main regions– in million passengers 267Table 179 – HKIA OD and Transshipment cargo traffic forecast - 1993 to 2030 – in million tonnes 268Table 180 – HKIA total cargo traffic split into regions – 2008 to 2030 – in thousand tonnes 269Table 181– HKIA OD cargo traffic split into regions – in thousand tonnes 270Table 182 – HKIA Transshipment cargo traffic split into regions – 2008 to 2030 – in thousand tonnes 271Table 183 – HKIA OD & Transshipment cargo traffic – 2008 to 2030 – in thousand tonnes 272Table 184 – GPRD total cargo traffic split into GPRD airports (exclude HKIA) and HKIA – in thousand tonnes 273Table 185 – Mainland China total cargo traffic – in thousand tonnes 274Table 186 – Total China cargo traffic distribution – in million tonnes 275Table 187 – HKIA movement traffic forecast - 1993 to 2030 – in thousand movements 276Table 188 – HKIA air traffic movements split into segments – 2008 to 2030 - in thousand movements 277Table 189 – HKIA air traffic movements for passengers split into aircraft code – 2008 to 2030 – in thousand movements 278Table 190 – HKIA air traffic movements for freight split into aircraft code – 2008 to 2030 – in thousand movements 279Table 191 – HKIA air traffic movements for non-revenue split into aircraft code – 2008 to 2030 – in thousand movements 280


Table 192 – HKIA total air traffic movements split into aircraft code – 2008 to 2030 – in thousand movements 281Table 193 – HKIA total passenger movements split into regions – 2008 to 2030 – in thousand movements 282Table 194 – HKIA total cargo movements split into regions – 2008 to 2030 – in thousand movements 283Table 195 – HKIA total non-revenue movements split into regions – 2008 to 2030 – in thousand movements 284Table 196 – HKIA total movements split into regions – 2008 to 2030 – in thousand movements 285Table 197 – Direct link Impact on OD passengers traffic – 2008 to 2030 – in thousands passengers 287Table 198 – Direct link Impact on TT passengers traffic – 2008 to 2030 – in thousands passengers 288Table 199 – Direct link Impact on OD cargo traffic – 2008 to 2030 – in thousand tonnes 289Table 200 – Direct Link Impact on Transshipment cargo traffic – 2008 to 2030 – in thousand tonnes 290

Table 203 – Competition Impact on Transshipment cargo traffic split into regions – 2008 to 2030 – in thousand tonnes 295



Chapter 1 – Executive Summary

A. Background In September 2008, AAHK produced in-house a set of preliminary forecasts up to 2030 to facilitate the preparation of the HKIA 2030 Airport Master Plan study. As economy and traffic deteriorated rapidly due to the financial crisis, the Airport Authority sought IATA’s assistance to develop a long-term base case traffic forecast up to 2030 for passenger, cargo and movements.

B. Approach

As detailed in chapter 2, IATA has developed an original 4-step approach to forecast unconstrained passenger, cargo and movement traffic at HKIA, GPRD and Mainland China airports, based on a dual methodology combining top-down and a bottom-up analyses.

� The top-down analysis is based on regressions of historical traffic against GDPs of various regions and the assessment of unprecedented changes (not captured in the regression equations) in the airport market environment.

� The bottom-up analysis checks the relevance of the traffic forecast in light of the airline and airport strategies and the anticipated development of the competitive intensity.

The first step aimed at analyzing the relevant socio-economic and traffic data to characterize the historical dynamic of the various traffic segments at HKIA and surrounding airports.

In the second step, IATA analyzed the market environment of HKIA, identifying past and future, implicit and explicit drivers of the aviation demand at HKIA, GPRD airports and Mainland China airports. Considered traffic drivers relate to Economy, Air Service Agreements, Trade agreements, Travel policy, Tourism, Modal competition, Cross boundary infrastructure development, Airport and Airline strategies. IATA identified very strong and meaningful correlations between historical passenger and cargo demand and GDP. Traffic equations were established. Unprecedented changes in the airport market environment were identified for further analysis.

In step 3, unconstrained passenger and cargo demand as well as movements were forecast until 2030. These base case forecasts were checked against Boeing , Airbus and CAAC market forecasts. To conclude the top-down forecast, IATA also carried out a sensitivity analysis of the future traffic demand to different economic conditions and specific upsides and downsides.

The fourth and last step was essential in conducting the bottom-up analysis. IATA met with a wide range of government authorities, airlines and travel agents to better understand the market


situation, the future competitive intensity as well as the potential traffic development and eventually check the relevance of the top-down forecast and assumptions.

C. Current and Historical Situation on the Passenger market

Chapter 3 analyzes the recent evolution of the passenger and cargo market at HKIA, GPRD and Mainland China airports.

Mainland China

Mainland China airports handled 405 million passengers in 2008, of which 12% or 48.7 million were international passengers. Between 1993 and 2008, the international traffic grew almost 17% p.a. and the domestic traffic 12.3% p.a.

In 2008, the spatial distribution of traffic was very concentrated with the 3 main regions of mainland China (namely Beijing, YRD and PRD) accounting for 48% of the total airport traffic and 80% of the international airport traffic.

Greater PRD

Five airports are considered in the Greater PRD (GPRD) area: Guangzhou (CAN), Shenzhen (SZX), Hong Kong (HKIA), Macau (MFM) and Zhuhai (ZUH).

The traffic handled by the GPRD airports increased on average by 7.4% p.a. from 38 million passengers in 1993 to almost 110 million passengers in 2008. During the period of analysis, SZX developed the fastest with an annual growth exceeding 15%. CAN was second with 8.9% p.a. and HKIA was third with 4.3%. The three biggest airports had similar contributions to GPRD traffic over the period 1993-2008, CAN, HKIA and SZX increasing their traffic by 24.2, 22.7 and 18.9 million passengers respectively.

Hong Kong International Airport

In 2008, HKIA handled 48.6 million passengers of which 31.2 million (64%) were Origin/Destination (OD) passengers and 17.4 million (36%) were Transfer/Transit (TT) passengers.

Traffic to long-haul destinations (Europe, North America, Australasia, Africa and Middle East) represented about 25% of the total traffic in 2008. Mainland China accounted for about 21% and the rest of Asia for almost 54% (East Asia, Indian sub-continent and South East Asia).

On an historical basis, HKIA recorded a steady growth for most of the period 1993-2008. Total traffic increased from 25.8 million to 48.6 million passengers representing a 4.3% annual growth rate. Overall the share of TT traffic to the total traffic increased significantly over the analysis period, from 24% in 1996 to about 35% in the last years, reflecting the hub and spoke strategy


implemented by Cathay Pacific. However, since 2000 TT traffic has represented an almost stable share of the total traffic between 33% and 35%.

HKIA competitive position on GPRD and Guangdong

Over the recent years, HKIA was successful at improving its competitive position on the international segment.

HKIA market share on GPRD airports international traffic increased form 82% in 2004 to 84% in 2007. Particularly on the OD Guangdong international market, contested by all GPRD airports, HKIA improved its penetration from 62% in 2004 against 64% in 2008.

Several analyses carried out on the route networks from the GPRD airports confirmed the lead of HKIA on the international destinations. Between 2000 and 2008, HKIA opened more international routes (especially long haul ones) than Guangzhou airport. It was established that the development of CAN on international routes had been constrained by the small size and low affordability of its catchment base.

On the domestic routes, a fierce the competition with Shenzhen airport was noted, resulting in a declining competitive position for HKIA.

D. Current and Historical Situation on the Cargo market

Mainland China

The continuous investment of foreign enterprises in Mainland China and the liberalization of trade policies have significantly increased air cargo demand in the recent years. From 1993 to 2008, Mainland China’s cargo traffic grew six-fold, increasing at a CAGR of +12.9% and totalling 8.6 million tonnes in 2008 up from 1.4 million tonnes in 1993.

Greater PRD

Fuelled by an inflow of foreign direct investment, the GPRD region has seen tremendous growth. From 1997 to 2008, GPRD (excluding HKIA) airports traffic increased at a CAGR of 9.7%, reaching almost 1.4 million tonnes in 2008 and overperforming HKIA (+6.7% p.a.).

Hong Kong International Airport

HKIA serves as the main logistical gateway to the GPRD. In 2008, the total cargo traffic for HKIA reached 3.6 million tonnes; of which, 2.8 million tonnes were O/D traffic and 0.8 million tonnes was Transshipment traffic.

Traffic to long-haul destinations represented about 42% of total cargo in 2008. Mainland China accounted for about 12% and the rest of Asia for almost 46%. The high proportion of long-haul traffic makes HKIA as global cargo hub.


From 1993 to 2008, total cargo traffic at HKIA increased at a CAGR of 8% from 1.1 million tonnes to 3.6 million tonnes. OD traffic contributed to 75% of the increase in total cargo traffic, adding 1.8 million tonnes to the total traffic.

HKIA traffic with Mainland China recorded the strongest growth (+16.9% p.a. over the period 1993-2008), driven in particular by the growth of Mainland China international trade (+18.8% p.a. over the period 1993-2007) as well as the overall weak position of the air cargo industry in Mainland China.

HKIA Competitive Position on GPRD

HKIA has maintained a strong competitive position over GPRD for the last decade. Its market share of international cargo traffic to and from the GPRD airports slightly decreased from 98% in 1997 to 89% in 2008.

E. Demand Growth Drivers

Economic growth –measured by GDP- proved to be the key driver of aviation demand in local and global markets (for both passenger and cargo). Several drivers beside the economic growth had an implicit impact on the aviation demand and/or the competition to catch the demand. Chapter 4 analyzes the contribution and evolution of these drivers.

Economic development

The economy appeared as the primary driver to passenger and cargo traffic development.

Fuelled by the strong growth of the Chinese economy and the rebound of the world’s economy, Hong Kong’s economy should recover in 2010, with its GDP improving by +2.8% according to EIU. Driven by strong private consumption and flourishing financial services, GDP is forecasted to grow at an annual rate of 3.2% until 2030. The opening and growing economy of Mainland China will benefit Hong Kong as a financial and trading hub as well as a tourism destination. The links with Mainland’s economy were already prominent in 2008 with Mainland’s share of HKSAR trade reaching 48%. Although competition between Hong Kong-based and Mainland China-based companies will become fierce, new opportunities should outweigh the potential losses.

Mainland’s GDP growth rate has seen double digits in the past decades. In 2008, Mainland’s GDP topped US$4.4 trillion at an average annual growth rate of 10.2% in the period 2004-2008. GDP per capita reached US$3,150 in 2008. Economists predict foreign direct investment to remain at a high level over the medium term, fuelled by the still large disparity between production costs in the Mainland and those in the Western countries. As Mainland moves up in the value chain, import level will increase and reach a balanced level with exports by around


2020. Over the longer-term Mainland’s economy will slow down with GDP growth down to around 5.5% in 2030. In 2030 GDP per capita is forecast to reach about US$13,000.

Pearl River Delta area (PRD) is one of Mainland’s most dynamic regions, encompassing approximately only 0.4% of Mainland’s land area, yet contributing approximately 10.9% of Mainland’s GDP and 20% of Mainland’s FDI in 2008. Due to the continuous investment into the PRD region, manufacturing has continued to develop, increasing volume output. As Mainland’s future economy continues to grow, PRD GDP is forecast to increase at a compound annual growth rate (CAGR) of 6.6% over the period 2008-2030. By 2030, PRD GDP will reach US$1.8 trillion and Foreign Direct Investments will keep a high profile. PRD import and export values are expected to slow down slightly as the region’s economic focus shift from industry to services and markets become more mature and sophisticated.

Global economic recovery is expected to be taking into effect over the next few years, pulled by the strong performance and stabilization of Asia’s economies. Over the period 2008-2030, world GDP is expected to grow at a rate of 3.6% per annum.

Air Service Agreements

Air Services Agreements (ASAs) are a central component of the Aviation industry. Recent years have shown a continuous liberalization of the traffic rights, not only between HKSAR and their counterparts but also between Mainland China and the major world economies. Further deregulation is expected to happen in the short, medium and long-term. This continuing trend will enable existing markets to grow and new markets to emerge. Despite the intensifying airport competition triggered by this liberalization, HKIA, as a gateway to PRD and a hub to Mainland China, is uniquely positioned to take advantage of Mainland China booming traffic.

Direct links between Mainland China and Taiwan constitute an unprecedented factor. Their impact need to be assessed separately from the regression traffic model.

Trade Agreements

Trade agreements (WTO, CAFTA, CEPA) will keep playing a growing role, fuelling both imports and exports to Mainland China as well as supporting the development of the Chinese economy. Hong Kong economy will benefit from this stimulation thanks to the CEPA allowing a wide and increasing accessibility to the Mainland market.

Travel policy

Recent changes of the Mainland travel policy had a beneficial and sizeable impact on HKIA air passenger traffic. Perspectives for the coming years show that further liberalization is to happen. In particular, the likely extension of the “Individual Visit Scheme” (IVS) and the widespread implementation of Multiple-Entry Visa for Mainlanders visiting Hong Kong will pursue the past trends.


Tourism development

Tourism to and from HKSAR and Mainland China has been a major growth driver of international air traffic. Hong Kong is strengthening its attractiveness with new projects for the decade 2010-2020 to keep developing its visitors base.

According to the UN World Tourism Organization, Mainland China will become the world’s largest hospitality country by 2020 and one of the largest tourist source market with about 100 million outbound tourists.

Loosening travel policy, economic growth and air service agreements liberalization will drive further the buoyant increase of inbound and outbound tourists, particularly from Mainland China.

Modal competition: Air – Sea competition

For the past decades, air freight has been the preferred vehicle within the shipment industry because of fast and time-definite shipping. However a slight erosion from air transportation to sea transportation has been observed since the 90’s. This trend is expected to continue.

Cross-Boundary Infrastructure Development

Many infrastructure improvement projects around the GPRD were either approved or examined recently. Several of these projects will improve the accessibility to the GPRD airports: TM-CLK Link and TM Western Bypass (TMCLKL/TMWB), Hong Kong-Zuhai-Macau Bridge (HZMB) and the Express Rail Link (XRL). Enhanced accessibility strengthens the leading role of an airport on a specific market segment. These infrastructure developments represent unprecedented factors whose specific impact on traffic was assessed separately.

Airport Competition and Airline Development Strategies

IATA expects the competition amongst airports and airlines to intensify on both the passenger and cargo segments.

On the passenger segment, no break with the past is anticipated; all future trends pursue strategies and developments that started years ago. Guangzhou airport is bound to continue its infrastructure and facility development with at least two additional runways and a new passenger terminal bringing the airport capacity to 75 million passengers. Shenzhen airport will pursue its strategy to attract international traffic. A third terminal is to be completed in 2015 bringing capacity to 45 million passengers (altogether with the second runway to be opened in 2011). An ultimate capacity of 60 million passengers is targeted by 2030.

On the cargo segment, more radical changes are expected. As Mainland carriers will be deploying strategies to catch-up with foreign carriers, aggressive strategies will be deployed. Similarly, the strategic moves played by UPS and FedEx to Shenzhen and Guangzhou airports constitute a significant variation to the past trends. By 2015 cargo capacity at Guangzhou will


exceed 2 million tons. Shenzhen, Taipei-Taoyuan and Shanghai-Pudong have also ambitious plans to develop into logistics and cargo business. These moves are expected to have a negative impact on HKIA cargo traffic and have been assessed separately.

F. Passenger Forecasts

Chapter 5 presents the base cases for passenger, cargo and movements.

Passenger traffic forecast for Mainland China and GPRD

Driven by the flourishing economy and very favourable policy enhancements, IATA expects the Mainland passenger traffic to grow at a compound annual growth rate of 7.7% to reach 2.1 billion passengers in 2030 from 406 million passenger in 2008. GPRD airports will reach 387 million passengers in 2030 (+5.9% CAGR measured on total traffic) from 110 million in 2008.

Passenger traffic forecast for HKIA

Under the base case, IATA anticipates that HKIA will reach 97 million passengers in 2030, recording a growth of 3.2% p.a. between 2008 and 2030. Traffic growth stands down from the 4.3% p.a. growth rate recorded between 1993 and 2008. Over the period 2008-2015, a slower growth will be recorded due to the severe crisis that affected the global economy in 2009.

� Intensifying competition amongst GPRD airports and airlines will be responsible for diverting almost 17 million OD passengers from HKIA in 20301. This reflects a 41% market share on Guandgong international OD passengers in 2030 down from 64% in 2007. Despite the growing competition, in particular on GPRD, HKIA will remain the undisputed gateway for GPRD long-haul traffic, competing airports focusing on domestic and regional routes.

Table 1 – Evolution of Guangdong international OD passengers split into airports between 2007 and 2030

1 Measured against a theoretical baseline assuming no change in the airport environment.

Shenzhen, 8.5m 15%Macau, 6.5m

11%

HKIA, 23.6m 41%Guangzhou 19.5m

34%

TOTAL58.1m

Shenzhen, 0.5m 3%

Macau, 1.8m 11%

HKIA, 10.4m64%

Guangzhou 3.5m 22%

TOTAL16.2m

2007 2030

Source: AAHK, MVA, IATA


� The Cross-Strait direct links will result in a loss of 1.3 million passengers in 20301. The rapprochement policy between Mainland China and Taiwan will induce a new demand for tourism, having a positive impact on HKIA OD traffic. However a significant part of HKIA TT traffic between the two territories will be diverted to the direct air services.

� The Cross-Boundary infrastructures will have a positive impact on the economy of the GPRD, particularly on the western shore of the Delta, and on the accessibility to HKIA. This positive impact is already factored in the forecasting equations.

� The XRL won’t have a negative impact on HKIA traffic. As observed in European and Japanese benchmarks, XRL will induce a new demand that will benefit to the air transportation mode and will compensate the traffic diversion on the closest destinations served by the train.

The share of transfer and transit traffic will remain almost stable. On a regional basis, Mainland China is expected to record the highest growth (+5.2% p.a.) whereas Japan, with an almost stable traffic, will record the weakest performance.

Additionally IATA notes that the current PRD airports will not be able to accommodate the booming demand to and from PRD. This will have a positive effect on HKIA’s role. Capacity shortage at GPRD airports (excluding HKIA) will total 15 to 25 million passengers in 2020 and exceed 100 million passengers in 2030 based on current airport development plans.

Table 2 – Total passenger traffic growth for Mainland airports, GPRD airports and HKIA – 2008 to 2030 – in CAGR

Source: IATA estimates

9.1%

6.7%

2.2%

7.7%

5.9%

3.2%

Mainland airports GPRD airports HKIA

CAGR 08-15 CAGR 08-30


G. Cargo Forecasts

Cargo traffic forecast for Mainland China and GPRD

IATA expects that Mainland airports will handle 44 million tonnes of cargo in 2030, recording a yearly 7.7% growth from 8.8 million tonnes in 2008. By 2030, Mainland’s exports and imports are predicted to grow at 7 folds and 8 folds, respectively from 2008. GPRD airports are expected to grow their traffic to 17.8 million cargo tonnes in 2030 (+5.9% p.a.) from 5 million tons in 2008.

Cargo traffic forecast for HKIA

Under the base case, IATA forecasts a 4.2% annual growth for HKIA cargo traffic, driving cargo volume to 8.9 million tons in 2030. This represents a significant slow down from the 8% annual increase recorded between 1993 and 2008. Like for the passenger segment, a slower growth will be recorded over the period 2008-2015, due to the severe crisis that affected the global economy in 2009.

Table 3 – Total cargo traffic growth for Mainland airports, GPRD airports and HKIA – 2008 to 2030 – in CAGR


� Increasing competition, supported by several policy changes in Mainland China, is the main cause for the slow down. On the GPRD market, HKIA’s market share is forecast to decline from 89% in 2008 to 61% in 2030. This decline represent a diversion of almost 3 million tonnes on GPRD traffic. However HKIA will keep a dominant market share in 2030. On the

9.8%

6.6%

2.9%

7.7%

5.9%

4.2%

Mainland airports GPRD airports HKIA

CAGR 08-15 CAGR 08-30


transshipment cargo segment, an unprecedented development is projected with several airports willing to enter the Mainland China transshipment market like Shanghai Pudong.

� The direct links are expected to have a negative impact on HKIA cargo traffic totaling 669,000 tonnes in 2030.

� As a consequence of their relocation in the PRD, UPS and FedEx payload from HKIA to Asia will be partially trucked to SZX and CAN respectively. The potential diversion represents an estimated 243,000 tonnes in 2030.

� Like for the passenger segment, the Cross-Boundary infrastructures will have a positive impact on the air cargo demand and the accessibility to HKIA. These improvements are already included in the forecast.

The share of transshipment traffic at HKIA will slightly decrease. On a regional basis, Mainland China is expected to record the highest growth., with +5.1% p.a. over the forecast period. With +2.4% p.a., the traffic with Taiwan will be lagging behind due to the direct links.

H. Movement Forecasts The number of aircraft movements should grow two-fold from about 301,000 movements in 2008 up to 602,000 movement in 2030. This corresponds to a 3.2% annual increase. Over the forecast period, Mainland China will record the highest growth in total movements (+3.9% p.a.). The number of movements will exceed the declared capacity of the current runway system in 2020.

Passenger aircraft movement

The number of passenger aircraft movements will increase by about 3% p.a. from 250,000 movements in 2008 up to 480,000 movement in 2030. IATA estimates that the average number of passenger per movement will increase slightly from 194 in 2008 to 202 in 2030 (+0.2% p.a.). With +1.4% p.a., the segment to Mainland China will record the largest growth from 126 passengers per movement in 2008 to 170 in 2030. As a result of the direct links, the size of the aircraft between HKIA and Taiwan will decrease.

Narrow-body aircraft are expected to increase their market share from about 34% in 2008 to over 38% in 2030 pursuing the trend observed over the last years. Code D aircraft are phasing out and will represent a negligible part of the traffic after 2015. Overall wide-body aircraft (codes D, E and F) will see their market share decrease from 66% in 2008 down to about 61% in 2030. Code E will remain the dominant category with an almost stable 60% market share all along the forecast period.


Cargo aircraft movement

The number of cargo aircraft movements is expected to grow by about 4% p.a. from about 45,500 movements in 2008 up to 108,000 movement in 2030. The average payload per cargo movement will slightly increase (+0.4% p.a.) as a result of the downwards trend on air cargo yields and the availability of larger aircraft.

The overall result is a slightly increasing share for code E aircraft (from 59% of the movements in 2008 to 60.8% in 2030), a strongly decreasing share for code D (from 36% in 2008 down to 16% in 2030) to the benefit of code F (19% in 2030). Code C is expected to be stable overall (from 4.8% in 2008 to 4.5% in 2030).

I. Comparison with Official Forecasts

In comparison to official forecasts, IATA’s projection for Mainland China and HKIA looks conservative.

Between 2009 and 2030, CAAC anticipates a 9.3% increase in the passenger traffic of Mainland airports to be compared with 7.7% p.a. for IATA.

On both the passenger and cargo markets, IATA forecasts for HKIA are much lower than Airbus’ and Boeing’s one for Asia.

J. High and Low Cases

As a primary approach, IATA defined high and low traffic cases reflecting the interval in which one expects future traffic to be with a 95% probability given the historical figures (traffic and GDP) and their correlation. A reality check based on high and low GDP assumptions gave very close outcomes.

These cases defines a range of 89 – 105 million passengers and 8 – 9.8 millions tons in 2030. It corresponds 552,000 to 652,000 movements.


Chapter 2 – Introduction

1. Context and Objectives

In September 2008, AAHK produced in-house a set of preliminary forecasts up to 2030 to facilitate the preparation of the HKIA 2030 Airport Master Plan study. In late 2008, markets deteriorated rapidly and uncertainties around traffic and forecast increased substantially. The Airport Authority therefore sought IATA’s assistance to:

� Review the in-house versions of the long-term forecast up to 2030 in detail (passenger, cargo and ATM expected case),

� Provide an independent opinion on the expected case forecast based on IATA’s proprietary passenger ticketing database information, industry and market knowledge,

� Suggest potential revisions to the expected case (passenger, cargo and ATM), if any. The present report details the approach, assumptions and outcomes of the traffic forecast developed by IATA for HKIA at the horizon 2030.


2. Methodology

At global level, air traffic proves to be highly correlated to economic activity measured by GDP.

Table 4 – Comparison of global growth in air traffic and GDP – 1971 to 2010

Source: IATA, ICAO, EIU

IATA has developed a specific approach to forecast unconstrained passenger, cargo and movement traffic at HKIA, GPRD and Mainland China airports.

IATA predicted traffic for a 20-year period from 2010 to 2030, using a dual methodology, combining top-down and a bottom-up analyses.

� The top-down projection is based on historical regressions of traffic against GDPs of various regions and the analysis of unprecedented changes in the airport market environment.

� The bottom-up analysis checks the relevance of the traffic forecast outcomes in light of the airline and airport strategies as well as the anticipated development of the competitive intensity.


2.1 Overall approach and structure of the report

IATA used the following approach based on four modules (see Table 5). The study was conducted between April and November 2009. This report has been divided into chapters in line with the working approach.

Table 5 – HKIA Traffic Forecast Approach Followed by IATA

2.1.1 Step 1 – Current and Historical Situation

Step 1 dealt with the collection and analysis of the relevant socio-economic and traffic data. The current and historical passenger and cargo demands were characterized covering HKIA, GPRD airports and Mainland China airports.

Chapter 3 summarizes this work, focusing in particular on the following dimensions:

� Total traffic evolution at HKIA, GPRD airports and Mainland China airports;

� Traffic by segment at HKIA: OD/TT for passenger, OD/Transshipment for cargo and regions;

� Route network at GPRD airports;

� Evolution of HKIA competitive position within GPRD.

2.1.2 Step 2 – Demand Growth Drivers

Step 2 analyzed the airport market environment. It led to identify past and future, implicit and explicit drivers of the aviation demand at HKIA, GPRD airports and Mainland China airports. Drivers’ contribution to past traffic growth was discussed and compared to their expected contribution in future years.

Traffic equations, based on historical regression against GDP, were established and unprecedented changes in the airport market environment were identified for further analysis.

Source: IATA Airport Competence Center

Current and Historical Situation

Demand Growth Drivers

Demand and Movement Forecasts

1 2 3

Industry interviews

4

Source: IATA Airport Competence Center

Current and Historical Situation

Demand Growth Drivers

Demand and Movement Forecasts

1 2 3

Industry interviews

4


Chapter 4 outlines the main passenger and cargo demand drivers:

� Economy;

� Air Service Agreements;

� Trade agreements;

� Travel policy;

� Tourism;

� Modal competition;

� Cross boundary infrastructure development;

� Airport strategies;

� Airline strategies.

2.1.3 Step 3 – Demand and Movement Forecasts

In step 3, IATA developed the 2030 base case forecasts for HKIA, GPRD airports and Mainland China airports The projections were checked against official forecasts.

Sensitivity of the future demand to different economic conditions as well as upsides and downsides was eventually tested and low / high cases were estimated.

The forecasting approach used is detailed in section 2.3.

Chapter 5 encompasses the following sections:

� Passenger forecast at Mainland China airports, GPRD airports and HKIA;

� Cargo forecast at Mainland China airports, GPRD airports and HKIA;

� Movement forecast at HKIA;

� Comparison to the Boeing and Airbus forecasts;

� Sensitivity analysis.


2.1.4 Step 4 – Industry Interviews

Step 4 was essential in conducting the bottom-up analysis. IATA Consulting met with a wide range of government authorities, airlines, travel agents, and rail operators (see Table 6) to better understand the current market situation and the potential traffic development and eventually check the relevance of the top-down forecast. These interviews provided a comprehensive understanding of the strategies of the main airlines serving Hong Kong, GPRD and Mainland China. More specifically, the interviews covered the following topics:

� Perception of the Hong Kong and GPRD market;

� Future development plans to address opportunities and threats –in terms of new air services or additional frequencies.

� Fleet plans;

� Marketing and distribution considerations.

Table 6 – Interviews Conducted by IATA

� Air China � Air France � All Nippon Airways � British Airways � Cathay Pacific Airways � China Eastern Airlines � China Southern Airlines � Continental Airlines � Hong Kong Airlines � Lufthansa � Shenzhen Airlines � United Airlines

� Hong Kong Transport & Housing Bureau

� Hong Kong Tourism Board � CAAC � Shenzhen Airport

Authority � International Air Rail

Organisation � International Air Transport

Association

� Arrow Travel Agency Ltd. � Swire Travel Ltd. � HIS Travel Agency Ltd.


2.2 Data Sources

IATA has used several sources of data to deliver the traffic forecast. The main ones used are presented in the table below.

Table 7 – List of data used by IATA to ground the Traffic Forecast

Category Data Source

Economy – Countries and World Regions

� GDP forecasts – Global Insight, Economist Intelligence Unit

� Historical GDP from 1993 to 2008 – World Bank

� World Economic Outlook -International Monetary Fund

Economy – Chinese Provinces

� China’s 11th Five-Year-Plan

� Historical GDP – China and Province Statistical Yearbook (2008 editions)

� GDP forecasts for PRD, Guangdong, YRD and Beijing – Experian

� Building a Hong Kong Shenzhen Metropolis – Bauhinia Foundation (2007)

� Hong Kong and the Pearl River Delta: The economic interaction - 2022 Foundation


Tourism – HKSAR

� Historical outbound and inbound tourism – Hong Kong Tourism Board

� Mainland China Visitors Arrivals – Hong Kong Tourism Board

� HKSAR Theme parks visitors 2008 – Economics Research Associates (ERA)

Tourism Mainland China

� Mainland China outbound and inbound tourism – China Statistical Yearbook 2008

� Beijing domestic visitors – Beijing Statistical Yearbook 2007

Taiwan and direct links

� Cross-Strait Business Normalisation Impact Study – CLSA Asia Pacific (2009)

� Hong Kong – Taiwan-led common market across the Straits – Bauhinia Foundation (2009)

� Taiwan Visitors Arrivals – Hong Kong Tourism Board (2008 and 2009)



HKIA traffic

� Actual traffic flow data from 1993 to 2008 – AAHK

� Actual O/D traffic data from 2005 to 2008 – IATA PaxIS

� Actual airfares from 2005 to 2008 – IATA PaxIS

� Historical Airline Schedules from 2000 to 2008 – SRS Analyzer and OAG

� Future Airline Schedules for 2009 and 2010 – SRS Analyzer

� Passenger Travel Pattern Study 2006 – Nielsen

� Transfer Passengers dwell time – AAHK, 2006 to 2008

� HKIA Master Plan 2020

� HKIA Master Plan 2025

GPRD traffic � Passenger surveys – MVA 2005, 2007 and 2009

� Report on Guangdong Propensity Study 2007 – Synovate

� Guangdong and Macau Statistical Yearbook 2008

� Actual traffic from 1993 to 2008 – Airport Authority

Airlines & Fleet development

� Airline annual reports

� ACAS database via Air Transport Intelligence

� Boeing, Airbus, Embraer, Bombardier website


Mainland China and world traffic

� Actual airport traffic from 1993 to 2008 – CAAC, AA and ACI

� World Air Transport Statistics – IATA, 1995 to 2004

� Policy to facilitate Air Cargo Growth – CAAC, 2009

� Global Market Forecast – Airbus, 2009-2028

� World Air Cargo Forecast – Boeing, 2009-2028

High Speed Train

� XRL services and travel time – Transport and Housing Bureau

� Analysis of Air – Rail competition in France – DGAC (2004)

� Feasibility of a high-speed railway network on the main corridors of the countries recently incorporated into the European Union – Lopez Pita, 2005

HZMB � Concept, Highways Dept

Express . Logistic

� DHL & DHL Logbook

� UPS & FedEx database

Air/sea shipment

� Merge Global – An End of an Era?, Global Air Freight: Demand Outlook and its Implications

� United States Census Bureau of Statistics (Department of Commerce)


2.2.1 PaxIS/AirportIS Traffic Database

PaxIS/AirportIS is an IATA proprietary traffic database fed by the airline tickets processed through the IATA Clearing House (practically all tickets distributed through GDS).

The IATA database provides the following data:

� True O&D traffic flows, start / end and connecting airports

� Full itinerary including airline details per segment

� Class of service data

� Travel month data

� Average fare information (per class)

� Reported BSP passengers plus full market-size estimates

� Geographic coverage: Worldwide

PaxIS/AirportIS mixes actual traffic figures and estimates for the tickets that are not sold through the travel agents. For the period analyzed in this Study, actual data accounted for about 60% of the total traffic. Estimates derive from complex models and secondary sources of information like airline schedules and national transportation statistics. The usual confidence interval for PaxIS/AirportIS is ±10%.

In order to better assess the confidence level, a comprehensive gap analysis of PaxIS/AirportIS was carried out against the AAHK traffic database. Several gaps due to the different nature of the databases were identified. After offsetting these gaps, the residual gap was only 3% with most of the considered geographical segments being within a range of ±2% (see Table 8). Three segments were noticeably outside of this range: Mainland China, Taiwan and Japan. A deeper analysis showed that for these geographical segments, PaxIS/AirportIS tended to overestimate the O/D market at the expense of the transfer market.

This situation was resulting in a slightly distorted mapping of the air traffic demand, particularly to/from Mainland China.

Corrective factors were determined and applied to increase the accuracy of the data.


Table 8 - Comparison of AirportIS and AAHK data1 - Sum of OD and TT traffic to each region – 2008 - in million passengers

Note: (1) AAHK traffic data excludes here unscheduled and transit traffic; traffic allocated into the regions based on the finaldestination.

Source: AAHK traffic data and IATA AirportIS, 2008

2.2.2 Travel Agents Bias

Additionally, during the interviews, several Chinese travel agents reported to “break” international connecting tickets to and from Mainland China to benefit from the cheap domestic airfares and cheaper international airfares from the big hubs.

For instance a travel agent looking for the best price to fly between Urumqi and Los Angeles might propose two separate tickets: 1/ Urumqi to Shanghai-Pudong (domestic ticket) and 2/ Shanghai to Los Angeles (International one).

This practice artificially increases the number of direct tickets from the major Chinese hubs at the expense of the indirect ones from second-tier Chinese airports.

All Mainland and Hong-Kong based travel agents that IATA interviewed confirmed this practice. They estimate using the breaking of the international tickets for 5% to 10% of the tickets they issue. Considering that this practice mostly concerns the outbound market and that the outbound market is less than 50% of the total international market, we have applied a 5% corrective factor to the base data.

These corrective factors were determined and applied to increase the accuracy of the data.

106

99

76

42

37

32

25 4

2

104

107

80

42

37

35

25 4

5

Total SE Asia ML China Taiwan Europe USA/Canada Japan Australasia Others

Mill

ions

AAHK AirportIS46

47.6

Note: Unscheduled and transit traffic accounted for 2.6Mpax in 2008

+3%

1% +8%

+5%

1% 0% +9% 0%

+2%


2.3 Forecasting approach

2.3.1 HKIA forecasting model

The forecasting model relies on a dual approach combining top-down and bottom-up analyses.

� The top-down projection is based on the characterization of the aviation demand drivers (see chapter 4) including regressions of historical traffic against various GDPs and the analysis of unprecedented changes in the airport market environment.

� The bottom-up analysis checks the relevance of the traffic forecast in light of the airline’ strategies.

Forecasts are outlined in the chapter 5 of the present report.

IATA’s top-down approach is made up of three main modules:

� The regression analysis module; This module projects total traffic as well as traffic by segment (OD, TT and regions) based on the regression analysis of historical traffic (cargo and passenger) against GDP. The baseline passenger and cargo traffic projection assumes no capacity constraints and no disruptive change in the airport environment evolution. In order to assess the potential changes in the airport environment, IATA reviewed the historical and forecast evolution of the main aviation demand drivers and competitive intensity factors. This analysis is detailed in chapter 4 and further details are provided in section 2.3.3.

� The adjustment module; It considers all the changes that are expected to impact the airport environment and that are not factored in the baseline traffic projections. Direct links constitute an example of such factors. The outcomes of the adjustment module are the passenger and cargo demand base case forecasts. Further details are provided in section 2.3.4.

� The movement forecast module; It derives passenger and cargo movements from the passenger and cargo base cases.

A diagram of the HKIA forecasting model is presented in Table 9.

Sensitivity analyses were conducted on specific factors presenting uncertainty such as the economy (see section 18).

HK

IA 2

030

Prm

ary

Fore

cast

– F

na R

epor

t

38

Tabl

e 9

– H

KIA

Fore

cast

ing

mod

el

Sou

rce:

IATA

Met

hodo

logy

Car

go d

eman

dPa

ssen

ger d

eman

d

Regression Analysis Adjustments Movement projection

(a) F

orec

ast f

or to

tal

pass

enge

r tra

ffic

HK

SA

RG

DP

(c) F

orec

asts

for p

asse

nger

O

D a

nd T

T

regi

onal

G

DP

(e) F

orec

asts

for p

asse

nger

O

D a

nd T

T by

regi

on

(g) A

djus

tmen

ts to

re

gion

al p

asse

nger

OD

an

d or

TT

(i) F

orec

ast f

or p

asse

nger

m

ovem

ents

by

regi

on

- Est

imat

es fo

r 200

9- C

hang

es in

the

envi

ronm

ent

+

Eco

nom

y

+ To

uris

m

+ R

egul

atio

n

+

Airl

ine

stra

tegi

es

+

HS

T co

mpe

titio

n

+ A

irpor

t com

petit

ion

+

Flee

t evo

lutio

ns

(i) F

orec

ast f

or a

vera

ge

pass

enge

r num

ber p

er m

vt

(b) F

orec

ast f

or to

tal

carg

o tr

affic

HK

SA

RG

DP

Wor

ld

GD

P

(d) F

orec

asts

for c

argo

OD

and

TT

regi

onal

G

DP

(f) F

orec

asts

for c

argo

OD

and

TT

by re

gion

(h) A

djus

tmen

ts to

re

gion

al c

argo

OD

and

or

TT

(j) F

orec

ast f

or a

vera

ge

carg

o pa

yloa

d pe

r pa

ssen

ger m

ovem

ent

- Est

imat

es fo

r 200

9- C

hang

es in

the

envi

ronm

ent

+

Eco

nom

y / T

rade

+

Reg

ulat

ion

+ A

irlin

e st

rate

gies

+ S

ea c

ompe

titio

n

+ A

irpor

t com

petit

ion

+

Flee

t evo

lutio

ns

(j) F

orec

ast f

or c

argo

m

ovem

ents

by

regi

on

(j) F

orec

ast f

or a

vera

ge

carg

o pa

yloa

d pe

r c

argo

mov

emen

t

(k) P

asse

nger

mov

emen

ts

by A

ircr

aft t

ype

(k) C

argo

mov

emen

ts b

y A

ircr

aft t

ype


2.3.2 Mainland China regions forecasting models

In parallel to the HKIA forecast, more simple forecasts were developed for Mainland China and the main regions such as GPRD (excluding HKIA), YRD and Beijing.

These forecasts followed a similar approach to the “regression analysis” methodology used for HKIA (first module of the HKIA forecasting model). Unless specified, no adjustments were applied.

2.3.3 The regression analysis module

2.3.3.1 Traffic forecast model and causal variables

Several forecasting models were considered and tested to identify the most suitable for this study. After careful review, three main model types were selected and reviewed (see description in section 19.3.), namely:

� Linear regression � Simple Linear � Multiple Linear

� Log regression

� Linear regression based on growth %

In order to select the best model and variables, IATA applied the following criteria (see more detail in section 19.3):

� The type of model should fit with the expected evolution of the market. As an example, log models may result in exponential growth in the long-term that don’t fit with market expectations. For this reason, most of the models developed by IATA are linear models.

� Historical regression analysis should be conducted on a sufficient number of years. For a 20-year forecast, IATA considers that 15 years are adequate.

� The causal variables should have an obvious link with the traffic. GDP, the generic variable retained by IATA, has proven to be the primary driver for traffic evolution over several decades.

� Historical measures of the causal variable should be available and accurate. Inaccurate or unavailable measures can severely distort the projection.

� Reliable forecasts should be available for all variables. Inaccurate forecasts can severely distort the projection.


� Eventually statistical tests are run to select the best model and variables. These tests include the coefficient of determination, the Student's t-test and F-test. They are described in section 19.3).

Applying the above criteria and tests, simple and multiple linear regression models gave the best results and GDP was found the best variable to explain the historical traffic evolution. Alternative causal variables were tested and discounted.

2.3.3.2 Top-line passenger traffic regression

The top-line passenger traffic regression refers to the box (a) of the forecasting model outlined in Table 9.

HKIA total passenger traffic proved to be extremely correlated to HKSAR GDP (measured in real value). Similarly, total passenger traffic of each region of Mainland China was found to be greatly correlated to the region’s GDP. Table 10 details the causal factor used for the various forecasts and elasticity to each causal factor. All models included a dummy variable to factor in the specific effect of the SARS crisis on passenger traffic.

Table 10 – Outcomes of the regression analyses on passenger markets

Market Casual Factor

Regression period

Elasticity T-statistic R-squared Market CAGR

HKIA passenger HK real

GDP 1993-2008 1.03 34.9 0.99 4.3%

Mainland China passenger

Mainland China real

GDP 1997-2008 1.31 28.3 0.98 12.7%

GPRD (excluding HKIA) passenger

PRD real GDP

1997-2008 1.46 26.2 0.99 11.2%

YRD passenger YRD real

GDP 1997-2008 1.63 20.1 0.98 13.6%

Beijing passenger Beijing real

GDP 1997-2008 1.29 36.1 0.99 11.5%

Source: IATA Methodology


Comment about HKSAR GDP as the single driver for total passenger traffic

As mentioned in the introduction to section 2, global air traffic proves to be highly correlated to the economic activity. For Hong Kong, the best correlation was found with HKSAR GDP only.

Although traffic regression models usually involve several GDPs as independent variables (local and regional ones), such models were less satisfactory for Hong Kong. The additional GDP variables were generally found insignificant on a statistical point of view, meaning that such variables cannot be used to explain the traffic evolution.

Several reasons explain the particular situation of HKIA in this regard:

� About 75% of HKIA traffic is regional (to/from Mainland China and Asia);

� HKSAR and Asia GDP follow similar evolutions.

Comment about airfare as a potential traffic driver

Airfare is another independent variable that was considered and discounted. Several reasons explained why airfare was ruled out:

� Historical airfare were not available prior to 2005;

� Basic regression were carried out from 2005 to 2008 on a quarterly basis in order to increase the size of the tested sample. However no satisfactory correlation could be found. In most cases, the airfare variable was associated to a positive coefficient contradicting the general observation that reducing airfares drive traffic up.

It was concluded that the period 2005-2008 was not appropriate to test the significance of airfare as a driver.

� Cathay Pacific was interviewed about the potential role of airfare. While the Hong Kong based airline perceives that there is a strong and structural pressure on fares, it too acknowledged that the HKIA market is primarily driven by GDP and access to travel by more people.

� A 2007 global IATA study showed that Asian air traffic is slightly correlated to yield (elasticity ranging from -0.4 to -0.5). Considering an average airfare decrease by -1% p.a., an elasticity of -0.4 to -0.5 would result in a contribution of 0.4%-0.5% to traffic growth. In consequence and bearing in mind the dynamic growth in the market, the role played by airfares is limited.


Comment about other potential traffic drivers

Apart from economy and airfare, others drivers influence the airport environment and hence the future demand. Aviation policy, travel policy, airline strategies, competitive intensity are examples of such drivers.

Even though these drivers are not explicit variables in the regression equation, IATA compared the expected and historical contribution of these drivers to the demand evolution in order to detect any major change in the airport environment.

Comment about sources for economic data

IATA used various sources for the GDP forecasts:

� Economist Intelligence Unit (EIU) for the short and medium-term (up to five years);

� Global Insight (GI) for the long-term;

� Experian for the Chinese provinces.

The GDP data retained by IATA in July 2009 are conservative in light of the most recent economy forecasts. Section 19.4 details GDP assumptions.

2.3.3.3 Top-line cargo traffic regression

The top-line cargo traffic regression refers to the box (b) of the forecasting model outlined in Table 9.

For HKIA, total cargo traffic proved to be very much correlated to the HKSAR and world GDP (measured in real value). Table 11 details the causal factor used for the HKIA cargo forecast and corresponding elasticities.

A dummy variable was introduced in the cargo model to factor in the specific effect of the 9/11 events on traffic.

Similar models were developed for the total cargo traffic in Mainland China and in GPRD.


Table 11 – Outcomes of the regression analyses on cargo markets

Market Casual Factor Elasticity

1993-2008 T-statistic R-squared

Market CAGR 1993-2008

HKIA cargo HK real GDP

World real GDP

1.9* 181 0.98 8%

ML China cargo

ML China real GDP

0.9 63 0.99 12.9%

GPRD cargo excl. HKIA

Guangdong real GDP

1.2** 11 0.92 9.8%**

* measured against Real HK GDP ** regression period is from 1997 to 2008


Comment about other potential traffic drivers

Similarly to the passenger market, others drivers influence the airport environment and hence the future cargo demand. Aviation policy, policy on customs facilitation, policy incentive to facilitate logistics development, trade policy, airline strategies, competitive intensity are examples of such drivers. Although they are not explicit variables in the regression equation, these drivers are implicitly included in the equations and hence factored in.

2.3.3.4 Passenger traffic OD and TT sub-models

The sub-models for OD and TT passenger traffic refer to the box (c) of the forecasting model outlined in Table 9.

Regression submodels were formulated using HKSAR GDP for both OD and TT submarkets. While the sub models are independent from the main model, the sum of the sub-models must tie back to the main model.

In tying back to the main model, both passenger OD and TT were manually adjusted, taking into account market considerations (refer to section 14.2 for further details).


2.3.3.5 Cargo traffic OD and Transshipment sub-models

The sub-models for OD and Transshipment cargo traffic refer to the box (d) of the forecasting model outlined in Table 9. The approach followed for the cargo segments was similar to the passenger one. Underlying market rationale is provided under section 15.4.2.

2.3.3.6 Passenger traffic regional sub-models

The regional sub-models for HKIA passenger traffic refer to the box (e) of the forecasting model.

The sub-models were further broken down into regional segments. The causal variables used for each regional model, included the regional GDP and HKSAR GDP for some regions.

Two kinds of “statistical events” were observed while developing the regional sub-models:

� When proceeding to the “tie-back”, it was observed that certain traffic numbers had an adverse correlation to GDP growth. This “statistical event” is a common occurrence in a regression model at micro levels where the segment traffic growth is small relatively to other segments. A generic example below is given to further describe this occurrence (observed for both passenger and cargo traffic):

Table 12 – Illustration of the statistical event that might occur during the tie back process


Looking at the IATA passenger forecast, Japan experienced such a statistical event. In the tie back, Japan’s flat traffic growth prior to the adjustment resulted in its traffic declining after the adjustment (similar to the generic example provided above); but still having the same market share as before the adjustment.

2011 2012 2013

A C D

2011 2012 2013

A B C D

Traffic lost after tie back

Before tie back After tie back

2011 2012 2013

A B C D

2011 2012 2013

A B C D

2011 2012 2013

A B C D

2011 2012 2013

A B C D

2011 2012 2013

A B C D

Traffic lost after tie back

Before tie back After tie back


� Additionally, irregular traffic evolutions were observed on certain years and certain regions. This resulted from tying-back independent sub-models with the main model. It explains why the irregular evolutions are observed only at regional level.

Despite these “statistical events” that are well known by statisticians, the tying back approach is commonly used by forecasters as it is the most accurate method. In particular, the tying back approach takes into account the compensation that is observed between markets. For instance, at crisis time, as O/D demand shrinks, carriers such as Cathay Pacific would try to increase sales on remote markets and attract connecting passengers. On the contrary, when Hong Kong economy is flourishing and O/D demand is booming, Cathay pacific would focus on O/D passengers and will be less competitive on 5th freedom markets. Such compensation was observed in the recent years at HKIA. A forecast without any tying back would have increased HKIA overall projected traffic by over 10%.

2.3.3.7 Cargo traffic regional sub-models

The regional sub-models for HKIA cargo traffic refer to the box (f) of the model outlined in Table 9. The approach for the cargo regional sub-models follows the one for passenger. Each regional forecast was developed independently as a function of HKSAR and the region real GDP.

Like for the passenger forecast, the main statistical event was observed on the Japan segment.

2.3.3.8 Outcome of the regression analysis models

The outcomes of the first module are the passenger and cargo baseline forecasts.

2.3.4 The adjustment module

The adjustment module considers all the changes expected to impact the airport environment and that are not factored in the baseline traffic projections. Direct links are an example of such factors. The outcomes of the adjustment module are the passenger and cargo demand base case forecasts.

2.3.4.1 Adjustments to the passenger forecast

The application of the adjustments refers to the box (g) of the forecasting model outlined in Table 9.


From the review of the passenger traffic drivers, it was concluded that there is continuity in most of the drivers’ roles and intensity (see chapter 4). However, the Direct Links, the high speed train implementation and the construction of the Hong Kong-Zhuhai-Macau Bridge (HZMB) constitute major unprecedented factors. Therefore their specific impact on each traffic segment was assessed separately and added to the passenger baseline forecast.

As detailed in sections 14.4.1 and 15.4.1, assessment of the adjustment factors was made based on a combination of the following techniques:

� Benchmarking;

� Comparison to empirical observations;

� Interviews and desktop research.

2.3.4.2 Adjustments to the cargo forecast

The application of the adjustments refers to the box (h) of the forecasting model outlined in Table 9.

From the review of the cargo traffic drivers, it was concluded that there is continuity in most of the drivers’ roles and intensity. The unprecedented factors to be included in the model are exhibited in Table 13. Similar to the passenger forecast, their specific impact on each traffic segment was assessed separately and added to the cargo baseline forecast.

Table 13 – Adjustment factors to the passenger and cargo traffic baselines

Passenger Cargo

Direct Links Direct Links

High Speed Train Intensification of the competition on the

Transshipment market

HZMB Relocation of UPS and FedEx hubs to PRD from

the Philippines

HZMB



2.3.5 The movement module

The movement forecast module derives HKIA movements from the passenger and cargo base cases.

2.3.5.1 Passenger movements

The forecast for passenger movements per region refers to the boxes (i) of the forecasting model outlined in Table 9.

Several approaches have been considered to forecast the number of passenger aircraft movements. The one followed by IATA is based on assumptions on the average number of passenger per aircraft movement for each regional market.

Approaches using regression analysis have been tested and ruled out. The main reason for discounting these approaches is that, beside passenger demand, the number of movements is mostly driven by the fleet planning and network strategy of the airlines serving HKIA. These variables cannot be easily factored in the regression equations.

IATA made assumptions for each regional market were based on the following considerations:

� Demand growth;

� Potential for additional frequencies / new routes development;

� Current fleets and fleet plans of the main airlines serving the segment.

The rationale for each market is detailed in the section 16.1.3.

2.3.5.2 Cargo movements

The forecast for cargo movements per region refers to the boxes (j) of the forecasting model outlined in Table 9.

The approach to forecast cargo aircraft movements is as follows:

� Assumptions on the average future cargo payload in passenger aircraft are made, based on historical observation, benchmark and fleet plans.

� The payload on all-cargo flights is derived from the difference between total cargo and total cargo in passenger aircraft.


� The total number of cargo movements is the ratio of total payload on cargo flights and average payload by cargo flight, the latter being derived from the observation of the past trend and correlation between payload per passenger flight and payload per cargo flight.

� A similar approach is applied to each region. Payloads in passenger and cargo flights are based on the 2008 actual regional figures and the average growth rates applied for the total market.

Like for the passenger movements, approaches using regression analysis have been tested and discounted.

2.3.5.3 Non commercial movements

A very good correlation was observed between passenger volume at HKIA and non-commercial movements (R-squared of .98 and F-statistics of 156). This correlation was used to project the number of non-commercial movements.

2.3.5.4 Aircraft movements by type

The forecasts for passenger and cargo aircraft movements per type (boxes (k) in the model) were based on the following assumptions and considerations:

� Industry trends;

� Current fleet age;

� Main airlines’ strategies and fleet plans;

� New aircraft roll-out plans.

2.3.6 Sensitivity analysis

Alternatively to the base case, IATA estimated HKIA traffic under a low and a high cases.

IATA assessed the interval in which one expects future traffic to be with a 95% probability given the historical figures (traffic and GDP) and their correlation. The lower and upper traffic cases were based on this interval, referred as the P95 interval. Such method is usually considered by airport investors to define the low and high cases.

IATA carried out an alternative assessment based on lower and higher GDP assumptions.

Both approaches led to a similar range of passenger and cargo traffic.


In addition to the high and low traffic cases, potential impact of specific upside or downside events was assessed separately and outlined in section 18. The construction of the Western Express Line (WEL) is an example of such uncertain events.


Chapter 3 – Current and Historical Situation

3. Passenger Market

This section analyzes the recent evolution of the passenger market at HKIA, GPRD and Mainland China airports. The analysis covers the following key topics: Traffic segmentation into OD/TT, regions and airlines; Route networks; Airports competitive position. In particular the strong and stable competitive position of HKIA over the last years is highlighted.

3.1 Mainland China

Mainland China generated 405 million passengers in 2008, of which about 12% or 49 million were international passengers.

Between 1993 and 2008, the international traffic grew almost 17% p.a. and the domestic traffic 12.3% p.a. However, the international traffic remains a very small component of Mainland China’s traffic with a share of 12% in 2008.

The 3 main regions (namely Beijing, YRD and PRD) accounted for 48% of the total airport traffic and 80% of the international traffic.

Total China (Mainland China plus Hong Kong and Macau) airport traffic totalled 454 million passengers of which 87 million passengers are international (see Table 14). The Greater PRD (GPRD) accounted for 53% of Total China international airport traffic, 17% of the domestic airport traffic and 24% of the total airport traffic. GPRD outweighed YRD in all traffic segments and particularly on the international traffic segment.

Table 14 – Distribution of Total China domestic, international and total airport traffic into region – 2008 – in % and passengers

Traffic segment GPRD YRD BeijingRest of

MainlandChina

Total China traffic

Domestic 17% 16% 12% 55% 367 Mpax

International 53% 21% 15% 11% 87 Mpax

Total 24% 17% 12% 47% 454 Mpax

Note: Total China designates Mainland China, Hong Kong and Macau

Source: Airport Authorities, CAAC


3.2 Greater PRD

Five airports are considered in the GPRD area: Guangzhou (CAN), Shenzhen (SZX), Hong Kong (HKIA), Macau (MFM) and Zhuhai (ZUH). These airports are designated as GPRD airports.

The traffic to and from GPRD airports increased on average by 7.4% p.a. from 38 million passengers in 1993 to almost 110 million passengers in 2008 (see Table 15). Traffic has been steadily increasing except in 2003. The recent years saw an acceleration in the traffic growth as the traffic annual growth rate reached 9.4% p.a. over the period 2002-2008 up from 6% p.a. between 1993 and 2002.

During the period of analysis, SZX developed the fastest with an annual growth exceeding 15%. CAN was second with 8.9% p.a. and HKIA was third with 4.3%. ZUH and MFM were not in operation in 1993. In terms of absolute traffic volume, the three biggest airports had similar contributions to GPRD traffic over the period 1993-2008, CAN increasing its traffic by 24.2 million passengers, HKIA by 22.7 million passengers and SZX by 18.9 million passengers. MFM reached 5.1 million passengers in 2008 and ZUH 1.1 million passengers.

Table 15 – Individual and cumulated traffic of GPRD airports – 1993 to 2008 – in million passengers

0

20

40

60

80

100

120

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

Mill

ion

pass

enge

rs

0

10

20

30

40

50

60

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

Source: AAHK , CAAC, Airport Authorities, IATA estimates for 1995 and 1996 traffic at CAN and SZX

HKIA+4.3% pa

CAN+8.9% pa

SZX+15% pa

MFMZUH

GPRD

+7.4% p.a.

+6% p.a. +9.4% p.a.

Mill

ion

pass

enge

rs

0

20

40

60

80

100

120

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

Mill

ion

pass

enge

rs

0

10

20

30

40

50

60

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

Source: AAHK , CAAC, Airport Authorities, IATA estimates for 1995 and 1996 traffic at CAN and SZX

HKIA+4.3% pa

CAN+8.9% pa

SZX+15% pa

MFMZUH

GPRD

+7.4% p.a.

+6% p.a. +9.4% p.a.

Mill

ion

pass

enge

rs


3.3 Hong Kong International Airport

Located in the GPRD, HKIA has long been a major regional business centre and air transportation hub in the network of, among others, its carriers Cathay Pacific (CX) and Dragonair (KA).

3.3.1 OD/TT and Regional Segmentation

In 2008, HKIA handled 48.6 million passengers of which 31.2 million (64.2%) were Origin/Destination 2 (OD) passengers and 17.4 million (35.8%) were Transfer/Transit 3 (TT) passengers.

Traffic to long-haul destinations (Europe, North America, Australasia, Africa and Middle East) represented about 25% of the total traffic in 2008 (see Table 16). Regional traffic was made up of Mainland China accounting for about 21% and the rest of Asia for almost 54% (East Asia, Indian sub-continent and South East Asia).

Southeast Asia was the biggest regional market totalling 11.3 million OD and TT passengers (23% of total traffic, see Table 17). Mainland China was second (21% of total traffic) and Taiwan was third (17% of total traffic). Mainland China was the busiest TT market and Australasia the one with the highest proportion of TT traffic (over 50%).

Table 16 – Regional distribution of HKIA OD, TT and total traffic - 2008

Market OD TT Total

Mainland China 20.4% 21.4% 20.7%

Asia excl. Mainland China 57.4% 47.3% 53.8%

Long haul 22.2% 31.3% 25.5%

Note: Total traffic related to the ‘Others’ segment was found to be 68% to destinations in Asia excl. China and 32% to long haul destinations. IATA assumed a similar distribution of the OD and TT traffic related to ‘Others’.

Source: AAHK, IATA estimates

2 OD traffic: passengers that start or terminate their trip in HKIA 3 T/T traffic: passengers that pass through HKIA as transfer or transit traffic


Table 17 – Passenger traffic at HKIA split into regional markets – 2008 – in million passengers

On an historical basis, HKIA recorded a steady growth for most of the period 1993-2008. Total traffic increased from 25.8 million to 48.6 million passengers representing a 4.3% annual growth rate. Over the analysis period, TT traffic grew faster than OD traffic (+6.3% p.a. in comparison to +3.4%).

OD traffic was much affected by the 1997 financial crisis, the 2003 SARS outbreak and to a smaller extent by the 2001 global crisis (see Table 18). It took almost 8 years for the OD traffic to recover from these successive crises. OD traffic resumed growing only in 2004 catching up between 2004 and 2007 (+9% p.a.) after years of stagnation.

TT traffic experienced a more sustainable growth. Only the period 2001-2003 was actually affected by the 9/11 and SARS crisis.

8.0

6.4

5.0

3.12.6

2.11.4

2.73.3

3.73.3

0.5

1.8 1.6 1.4

SE Asia MainlandChina

Taiwan Japan Europe USA Canada Australasia Others

O/D: 31.2 million

T/T: million

Source: AAHK

1.7

17.4

8.0

6.4

5.0

3.12.6

2.11.4

2.73.3

3.73.3

0.5

1.8 1.6 1.4

SE Asia MainlandChina

Taiwan Japan Europe USA Canada Australasia Others

O/D: 31.2 million

T/T: million

Source: AAHK

1.7

17.4


Table 18 – Year-on-year growth of HKIA OD and TT traffic – 1994 to 2008 – in %

Overall the share of TT traffic to the total traffic increased notably over the analysis period, from 24% in 1996 to about 35% in the last years. Two distinct periods can be identified. The period 1996-2001 saw the most spectacular increase as the share of TT went up from 24% to 32%. The second period, from 2000 to 2008, recorded only a limited increase in the TT share from 33% to 35% (see Table 19). Several reasons explain this development:

� During the first period (1996-2000)

� As OD traffic was particularly affected by the adverse environment (financial crisis and transfer of HKSAR to Mainland China), network carriers partially changed their market focus from OD to TT passengers.

� In HKIA, most geographical markets actually saw the share of their TT traffic increase significantly taking advantage of the better economic environment in Europe, North America and Australasia. Long-haul markets had their TT rate growing from 24% to 34% and Asian excluding Mainland China ones from 22% to 30%.

� Even the transfer rate to Mainland China increased (from 33% to 42%) as Mainland China’s passenger demand was surging, number of air service agreements in place was limited and their scope was rather restrictive.

� The opening of the new airport in 1998 also played a significant role, improving the handling of connecting passengers.

Source: AAHK data

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

OD TT


Table 19 – Evolution of the transfer rate of HKIA regional markets – 1993 to 2008 – in %

� During the second period (2000-2008)

� The connecting traffic on long haul destinations kept growing from 34% to 44% only decreasing in 2001. Australia and North America in particular recorded the sharpest increase in their TT share. Fast growing passenger demand supported by a strong economy and the stop of the direct long haul flights between Australia and Europe are the main reasons for Australasia. For North America, the stop of many direct services to Asia due to the post 9/11 network rationalization carried out by the US carriers resulted in an opportunity for Hong Kong that could attract more TT passengers despite the overall depressed demand from the North America.

� The transfer rate to Mainland China decreased from 41% to 37% as air services agreements were being signed and more direct services were launched.

� The transfer rate to Asian countries (except Mainland China) remained quite stable (from 30% in 2000 to 32% in 2008). It resulted from the growing number of TT passengers on the long haul markets such as Europe and North America offset by the development of direct flights within Asia and particularly between Mainland China and the other Asian countries.

Source: AAHK data

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Asia excl. China

Long Haul

Mainland China

Source: AAHK data

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Asia excl. China

Long Haul

Mainland China


Table 20 – HKIA passenger traffic growth by market segment and nature of traffic – 1993 to 2008 – in CAGR

Region OD TT Total

Long-haul 3.9% 10.3% 6.1%

Europe 4.4% 7.6% 5.6%

USA / Canada 2.8% 10.9% 5.3%

Australasia 4.1% 15.9% 7.8%

Asia (excl. Mainland China) 2.7% 4.9% 3.3%

South East Asia 2.7% 6.4% 3.6%

Taiwan 3.0% 3.5% 3.2%

Japan 1.0% 0.5% 0.9%

Others 5.3% 9.8% 6.8%


Total 3.4% 6.3% 4.3%

Note: Total traffic related to the ‘Others’ segment was found to be 68% to destinations in Asia excl. ML China and 32% to long haul destinations. IATA assumed a similar distribution of the OD and TT traffic related to ‘Others’.

Source: AAHK

On a geographical segment basis, quite different trends were observed (see Table 20).

� Long haul segments (Europe, North America and Australasia) increased the fastest (+6.1% p.a. over the analysis period) driven by the TT traffic (+10.3% p.a. over the same period). Traffic to Australasia was particularly dynamic, boosted by the strong economy of Australia supported by the high price of raw materials.

� Regional segments (South East Asia, Taiwan, Japan and most of Others) recorded the slowest growth (+3.3% over the period 1993-2008) and in particular the OD traffic (+2.7% p.a. over the period). The successive crises in 1997, 2001 and 2003 strongly hit HKIA resulting in HKIA traffic overtaking 1996 traffic level in 2004.

� Mainland China was a dynamic destination (+5.3% over the period 1993-2008) with an even contribution of TT and OD to the growth. Mainland China recorded the highest surge in OD passenger demand.


3.3.3 Route network

The following section compares HKIA’s route network with other GPRD airports. In particular the various analyses carried out show why HKIA preserved its lead on the international destinations and how the development of CAN on international routes was constrained by the small size and low affordability of its catchment base. On the domestic routes, it is outlined how fierce the competition is, resulting in a weaker and declining competitive position for HKIA.



3.3.3.1 International routes from the GPRD

Current situation

On the international market, HKIA dominates the GPRD with 49 direct routes serviced daily. CAN offers 16 international direct daily routes, followed by SZX and MFM with 6 (see Table 21). ZUH is presently a domestic airport.

Table 21 - Number of international routes served daily from GPRD airports – Q1 2008

The overlap between the four airports offering international services is rather limited:

� 32 routes are serviced daily only from HKIA. On 5 of these routes (SGN, CDG, FUK, PUS, LAX), HKIA competes against services of four-weekly to six-weekly frequencies from the other airports. On the 27 other routes, either HKIA is the only airport in the GPRD to offer the route or the competitors offer a thrice-weekly or less frequent service.

� 17 routes are in competition between HKIA and one or more GPRD airport. Only 3 thereof them are long haul ones (DXB, FRA and SYD);

As a direct result of the above description, HKIA ranked first for the number of flights and seats offering 71% of the frequencies from GPRD to international destinations in Q2/2009 and 80% of the seats. Ranked 2nd and 3rd with 286 and 285 weekly-frequencies were MFM and CAN each accounting for 13% of the total GPRD, followed by SZX with 66 frequencies and only a marginal share of 3%. As for offered seats, CAN generated 10% of the total GPRD capacity followed by

Source: SRS Analyzer*Routes only serviced daily from HKG**Routes serviced daily from HKG and at least 4 times weekly by competition

17 16

6

5

27

HKG CAN SZX

Monopoly* Domination**Competition

49


MFM with 8%. Similar to frequencies offered, SZX was behind in terms of international seats offered generating 2% of the total GPRD seat offer.

Table 22 – Weekly frequencies and seats from GPRD to international destinations – Q2, 2009

Recent evolution

With regards to the international traffic that HKIA catches on the GPRD, it is essential to understand how HKIA’s competitive advantage evolved over the recent years.

Contrary to PEK and PVG (see section 3.3.3.2), neither CAN nor SZX experienced an impressive growth of their international network over the recent years. Furthermore the limited growth focused on regional destinations only. An analysis of the route development over the last eight years shows that HKIA maintained its competitive advantage to Asia and increased its competitive advantage to the long-haul destinations, both in terms of coverage and quality of the service.

� HKIA developed 9 daily services to Asia excluding Mainland China since 2000, of which 6 in the last 4 years. CAN increased its Asian network with 9 daily services too of which only 3 in the last 4 years. SZX only added 6 daily services to its Asian network.

� On the long-haul segments, the number of routes with daily services increased by +11 from HKIA, +3 from CAN. The total number of long haul routes (disregarding the frequency) grew by +7 at HKIA and +5 at CAN.

456,299

57,621 47,28412,099

HKG CAN MFM SZX

Source: SRS Analyzer Source: SRS Analyzer

1,579

286 285

66

HKG MFM CAN SZX

71.3% 79.6%

12.9% 12.9% 3.0% 10.1% 2.1%8.2%

Frequencies, in flights per week Seats, in weekly seats456,299

57,621 47,28412,099

HKG CAN MFM SZX

Source: SRS Analyzer Source: SRS Analyzer

1,579

286 285

66

HKG MFM CAN SZX

71.3% 79.6%

12.9% 12.9% 3.0% 10.1% 2.1%8.2%

Frequencies, in flights per week Seats, in weekly seats


Table 23 - Evolution of the network to Asia excluding Mainland China at HKIA, CAN and SZX – 1st quarter from 2000 to 2008 – in daily air services

Airport in the GPRD

Q1, 2000 Q1, 2004 Q1, 2008 Variation

2000 to 2008 Variation

2004 to 2008

HKIA 16 19 25 +9 +6

CAN 3 9 12 +9 +3

SZX 0 1 6 +6 +5

Source: SRS Analyzer, IATA analysis

Table 24 - Evolution of the network to long-haul destinations at HKIA, CAN and SZX – 1st quarter from 2000 to 2008 – in total air services / daily air services

Airport in the GPRD

Q1, 2000 Q1, 2004 Q1, 2008 Variation


2004 to 2008

HKIA 26/13 27/15 33/24 +7/+11 +6/+9

CAN 3/0 3/0 8/3 +5/+3 +5/+3

SZX 0/0 0/0 0/0 +0/+0 +0/+0


IATA has explored the potential reasons explaining why the service gap between HKIA and CAN stabilized and even increased instead of being reduced.

� The first apparent reason ties to the airline strategy (see section 13.1.1).

� Another reason, more essential, explains the recent airlines’ disinterest in CAN. The Guangzhou market is much smaller and actually less affordable than the HKSAR one.

� The Guangzhou market base is much smaller than the Hong Kong one. Based on IATA database collecting sales data from the travel agents, the travel agents located in Guangzhou issued only about 1/5th of the number of tickets issued by Hong



Kong-based agents on long-haul destinations. When narrowing down the analysis to business class tickets, IATA found out that Guangzhou-based travel agents only issued 1/20th of the number of business class tickets issued by Hong Kong-based travel agents.

� In addition to being much smaller, the Guangzhou market is also less “affordable”. As highlighted in Table 25, the average fare of the tickets sold in Guangzhou is 30% lower than the one in Hong Kong. The gap is 15% on business class tickets.

Table 25 – Average airfare paid by city for a long-haul destination (based on the location of the air ticket issuance) – 2008 – in US$

It reflects two characteristics of Guangzhou: lower standard of living in comparison to Hong Kong and smaller number of companies / headquarters using air travel in comparison to Shenzhen. The lower “affordability” of the Guangzhou market was confirmed by Air China and China Southern.

Considering airlines’ primary focus on the largest and most affordable markets, the previous analyses clearly explain why CAN couldn’t develop its international network as fast as HKIA and only played a residual role in the strategy of the airline serving the GPRD.

3.3.3.2 International routes from Mainland China

An analysis of air services over the last ten years shows that Beijing and Shanghai airports have progressively developed an international network comparable to the one from HKIA; HKIA still having an advantage on the quality of the service (higher number of routes with daily services). The opening of Chinese trade (WTO accession on 2001) and the implementation of several air services agreement (such as the US-Mainland China one in 2004) have significantly contributed to the network development in Beijing and Shanghai.

2,6412,527

2,307

2,546

2,290

Hong Kong Shenzhen Guangzhou Shanghai Beijing

961

703665

800

679


15%31%

Source: IATA AirportISSource: IATA AirportIS

Business class ticketAll-class ticket

2,6412,527

2,307

2,546

2,290


961

703665

800

679


15%31%

Source: IATA AirportISSource: IATA AirportIS

Business class ticketAll-class ticket


As outlined above, it is to be noted that Guangzhou experienced a much slower development.

Table 26 – Number of international destinations serviced from a selection of Chinese airports – 2000 to 2010

3.3.3.3 Domestic network from the GPRD airports

Table 27 – Domestic network served from SZX on a daily basis with identification of the routes served from both SZX and HKIA – Q2, 2009

Source: IATA SRS Analyzer

• Routes in blue: serviced from both SZX and HKIA

• Routes in orange: not serviced from HKIA

Source: SRS Analyzer, first quarter of each year Source: SRS Analyzer, first quarter of each year

0

10

20

30

40

50

60

70

80

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

CAN CTU HKG PEK SHA SZX

0

10

20

30

40

50

60

70

80

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

CAN CTU HKG PEK SHA SZX

* Excludes Mainland China destinations, direct flights only with commercial rights

International destinations with daily service

International destinations


Current situation

On the domestic market, 63 mainland destinations were serviced on a daily basis from CAN, 41 from SZX, 25 from HKIA, 6 from ZUH and 3 from MFM. HKIA is therefore competing with the 4 other GPRD airports offering not even half as many domestic daily destinations as CAN and only 60% of SZX’s ones.

Due to the number of domestic destinations offered from each airport and the shorter travel times to those destinations, the competition is more local than for Asian and long-haul routes. In particular, HKIA barely competes with CAN.

SZX competes on 23 of HKIA’s 25 domestic routes served daily with the exception of CAN and SWA that are not served from SZX (see Table 27).

HKIA ranked 3rd in the GPRD, offering 770 daily domestic flight services per week representing 15% of the flights and 17% of the seats from the GPRD to Mainland China (see Table 28).

SZX as HKIA’s nearest competitor offers 121% more frequencies and 96% more seats respectively over HKIA.

Table 28 – Domestic flights per week and seats per week from GPRD airports on routes served at least daily – Q2, 2009

Recent evolution

In terms of domestic routes development, only CAN and SZX showed dynamism in the recent years (see Table 29):

� CAN added 16 routes to its domestic network since 2000, from 62 to 78 routes;

� SZX was the most dynamic increasing the number of domestic routes by 18 from 44 in 2000 to 62 in 2008.

Source: IATA SRS Analyzer, 2009 Source: IATA SRS Analyzer, 2009

2,454

1,706

770

128 91

CAN SZX HKG ZUH MFM

389,768

283,521

144,907

19,715 13,218

CAN SZX HKG ZUH MFM

15.0%17.0%

+121%

+96%

Flights per week Seats per week

Source: IATA SRS Analyzer, 2009 Source: IATA SRS Analyzer, 2009

2,454

1,706

770

128 91

CAN SZX HKG ZUH MFM

389,768

283,521

144,907

19,715 13,218

CAN SZX HKG ZUH MFM

15.0%17.0%

+121%

+96%

Flights per week Seats per week


� The domestic network of both MFM and HKIA decreased by 1 route.

� The domestic network of ZUH shrunk by 3 routes.

In total, frequencies from the GPRD airports increased by 8.6% per year on average in the recent years. While ZUH and MFM grew very slowly, CAN, SZX and HKIA recorded a more significant growth.

� The largest growth was observed at SZX increasing by an average of 10.5% p.a.

� CAN was second with an annual growth rate of 9% representing nearly half of the total growth in volume within the GPRD.

� HKIA is ranked third expanding by an average of 6.0% p.a.

� ZUH and MFM grew by 2.4% and 2.1% p.a. respectively.

Similarly the development of the domestic seat offering from the GPRD airports was very dynamic as well (see Table 29).

Table 29- Evolution of domestic air services from the GPRD airports – 2001 to 2008 – In additional routes, annual increase in weekly frequencies and annual increase in weekly seats

Airport in the GPRD

Additional routes Annual increase in weekly

frequencies Annual increase in weekly

seats

CAN +16 +9% p.a. +7.7% p.a.

SZX +18 +10.5% p.a. +10.2% p.a.

HKIA -1 +6% p.a. +6.2% p.a.

MFM -1 +2.1% p.a. +1.7% p.a.

ZUH -3 +2.4% p.a. +4.6% p.a.

Source: SRS Analyzer


3.3.4 HKIA competitive position

The following section concludes about HKIA competitive position within GPRD. The analyses presented highlight that HKIA was successful at increasing its international traffic to and from GPRD and at maintaining its share of traffic between HKSAR and Mainland China.

3.3.4.1 HKIA share of GPRD airports traffic

In 2008, HKIA represented 44% of the GPRD airports total passenger traffic, masking a contrasted situation depending on the traffic segments:

� HKIA handled 84% of the international passengers (i.e. passengers to/from destinations outside of Mainland China, Hong Kong and Macau) ;

� Other GPRD airports handled 84% of the domestic passengers (i.e. passengers to/from destinations in Mainland China, Hong Kong and Macau).

During the last years, HKIA was even able to strengthen its competitive position on the international traffic. In 2004, HKIA processed 82% of the total international traffic handled by the GPRD airports. The most prominent reasons explaining this increase are the following:

� As mentioned in sub-section 3.3.3.1, HKIA successfully preserved and even improved its lead on the international destinations as CAN’s development on international routes was constrained by the small size and low affordability of its catchment base.

� HKIA also benefited from the surge in its TT international traffic (see section 3.3.1).

The evolution measured on the domestic market was different with HKIA’s share of domestic traffic eroding from 19% in 2004 to 16% in 2008.

Table 30 – HKIA market share on GPRD airports traffic – 1993 to 2008

Traffic segment 1993 1997 2000 2004 2008

Domestic (to Mainland China, Hong

Kong and Macau) n/a n/a n/a 19% 16%

International (outside of Mainland China,

Hong Kong and Macau) n/a n/a n/a 82% 84%

Total

69% 64% 60% 49% 44%

Note: Traffic between GPRD airports is counted as domestic

Source: CAAC, Airport Authorities, IATA analysis


Although HKIA increased its share of the international traffic, the overall airport’s market share declined from 49% in 2004 to 44% in 2008 as the result of the GPRD airports domestic traffic increasing twice as fast as the GPRD airports international one (+12.5% p.a. and 6% p.a. respectively). Overall this trend continues the on-going eroding trend initiated long time ago (see Table 30).

3.3.4.2 HKIA market share on Guangdong international demand

The following table shows that HKIA was able to maintain and even increase its competitive position on Guangdong international segment despite the additional air services offered from CAN and SZX.

Table 31 – HKIA market share on Guangdong international OD demand – 2004 to 2007

Airport used to travel internationally to/from

GPRD2004 2007

HKIA 62% 64%

CAN 21% 22%

MFM 15% 11%

SZX 2% 3%

Note: PRD international OD demand designates the air demand between a location within GPRD and a destination outside of Mainland China, Hong Kong and Macau

Source: AAHK, MVA analysis

� In 2004 the international OD demand to and from GPRD totalled 12.2 million passengers of which 7.6 million (62%) were handled by HKIA

� In 2007 the international OD demand related to the GPRD totalled 16.2 million passengers of which 10.4 million (64%) were captured by HKIA

� During the same period, CAN maintained its position, MFM faced a significant erosion in its competitiveness and SZX increased marginally its presence.


3.3.4.3 HKIA market share on traffic between Mainland China and HKSAR

For the domestic destinations, HKIA mostly competes with SZX and barely with CAN.

As a result of the fierce competition with SZX, it was assessed through passenger surveys that SZX was able to divert 2.2 million passengers which represented 26% of the 8.8 million passengers air demand between HKSAR and Mainland China in 2007. HKSAR related passengers include both HK residents taking flights in SZX (instead of HKIA) and Mainland/ other visitors people using SZX instead of HKIA.

This leakage rate is to be compared with the results from previous surveys at SZX. In 2004, it was estimated by MVA and AAHK that 1.6 million passengers of SZX were related to HKSAR resulting in a 26% leakage rate.

Despite the increasing number and quality of the services at SZX, HKIA maintained its share on HKSAR domestic traffic.

3.3.4.4 HKIA competitive position on the international traffic to Mainland China

The following sub-section analyzes the competitive position of HKIA as a hub to Mainland China.

HKIA plays a significant role as hub for Mainland China. IATA assessed that in 2007 about one third of Mainland China international traffic was indirect.

With almost 29% in 2007, HKIA captured by far the most indirect international traffic from Mainland China, followed by MFM accounting for about 7% (see Table 32). The first Mainland China hub was PEK with 6% whereas PVG and CAN only accounted for 4% and 3% respectively.


Table 32 – Split of Mainland China OD international traffic into direct and connecting hubs by world region – 2007 – in passengers

HKIA PEK SHA PVG CAN MFM Other top

hub

Asia Total 73% 27% 48% 4% 5% 4% 14% ICNJapan 92% 8% 2% 14% 39% 12% 0% ICN

Other Northeast Asia 95% 5% 1% 6% 15% 1% 0% ICNSoutheast Asia 79% 21% 28% 11% 5% 15% 0% SIN

Taiwan 0% 100% 70% 0% 0% 0% 24% ICNOther Asia 54% 46% 10% 3% 2% 4% 0% SIN

Australasia 35% 65% 35% 1% 5% 7% 0% SYDEurope 35% 65% 4% 10% 4% 1% 0% FRAUSA Canada Total 36% 64% 7% 10% 2% 0% 0% YVROther

Africa 13% 87% 23% 2% 1% 0% 0% ADDMiddle East 48% 52% 20% 7% 0% 5% 0% KUL

Other Americas 3% 97% 5% 4% 1% 0% 0% ISTGrand Total 62% 38% 29% 6% 4% 3% 7% FRA

Indirect traffic split into hubs

Region Total direct

Total Indirect

Source: IATA AirportIS, IATA estimates

HKIA’s market share is particularly high on the markets to Taiwan (70%), Australasia (35%), South East Asia (28%), Africa (23%) and Middle East (20%). To these specific markets, HKIA offers a perfect geographical location and a high quality of service. On the contrary, HKIA’s market share is low to USA-Canada (7%), Europe (4%) and Japan (2%). From most locations in Mainland China, connecting in HKIA to these markets would imply significant backtracking hence the market share.


4. Cargo Market

This section analyzes the cargo market at HKIA, GPRD and Mainland China airports covering the following key topics: Traffic segmentation into OD4 and Transshipment5, as well as into regions; airports competitive position; and, route networks. In particular, this section illustrates HKIA’s competitive positioning and its significance for GPRD.

4.1 Mainland China

Cheap labour, liberalization of trade, improving transport infrastructure and governments openness to new industries have driven Mainland air cargo growth in the recent years.

From 1993 to 2008, Mainland China’s cargo traffic has grown six-fold, increasing at a CAGR of +12.9%, handling 8.6 million tonnes in 2008 up from 1.4 million tonnes in 1993 (see Table 33).

Table 33 - Mainland China total cargo traffic - 1993 to 2008 - in million tonnes

Note: cargo traffic refers only to freight and excludes baggage and mail cargo Source: CAAC

Due to the global crisis following the 9-11 event, cargo traffic had decreased -17% compared with 2000. For the years after, cargo traffic increased steadily. In 2008, cargo traffic started to slow down due to the crisis.

4 OD traffic: payload starting or ending their journey in HKIA 5 Transshipment traffic: payload passing through HKIA

1.4 1.72.0 2.3 2.5

2.83.4

4.23.6

4.24.6

5.96.5

7.3

8.4 8.6

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Mll

on T

onne

s


4.2 Greater PRD

Fuelled by inflow of foreign direct investment, the GPRD region has seen tremendous growth in the past years (see Table 34).

Table 34- GPRD (excluding HKIA) airports total cargo traffic from 1997 to 2008 - in million tonnes

Note: Zhuhai airport has been omitted because of its small cargo throughput (11,000 tons in 2008). Source: CAAC, Airport Authorities

From 1997 to 2008, GPRD (excluding HKIA) airports traffic steadily increased at a CAGR of 9.7%, reaching almost 1.4 million tonnes in 2008. During the same period, HKIA increased its cargo throughput by 6.7% annually.

Faced only with an economic slowdown in 2001 and 2008, cargo traffic dropped just 2.5% compared to 2000 and slightly greater of 8% in 2008. Recovering quickly, GPRD airports (excluding HKIA) traffic improved 17% in 2002 compared to 2001. Though the PRD region is also daunted by economic crisis and slowdowns, it is also much more tolerable to the economic fluctuations compared to other regions across the globe.

0.05 0.07 0.05 0.07 0.08 0.11 0.14 0.22 0.23 0.22 0.18 0.100.10 0.11 0.15 0.20 0.210.29

0.35

0.42 0.47 0.56 0.620.60

0.350.41

0.450.49 0.46

0.500.45

0.510.60

0.65 0.690.69

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

MFM SZX CA N

0.50

0 .590.66

0.76 0.74

0.900.95

1.15

1. 30

1. 431. 49

1. 38

Mll

on T

onne

s


4.3 Hong Kong International Airport

HKIA serves as the main logistical gateway to the GPRD, one of the busiest industrial regions of Mainland China. The following subsection characterizes HKIA cargo traffic along various market segmentations.

4.3.1 OD/Transshipment and Regional Segmentation

Current situation

In 2008, the total cargo traffic for HKIA was 3.6 million tonnes; of which, 2.8 million tonnes were O/D traffic representing 78% of total cargo and 0.8 million tonnes was Transshipment traffic (22% of total cargo throughput).

Traffic to long-haul destinations (Europe, North America, Australasia, Africa and Middle East) represented about 42% of total cargo in 2008 (see Table 35). Regional traffic was made up of Mainland China accounting for about 12% and the rest of Asia for almost 46% (East Asia, Indian sub-continent, and South East Asia mostly). The high proportion of long-haul traffic makes HKIA as global cargo hub. Its reach is even broader than on the passenger segment whose long-haul traffic is 25%.

Applying AAHK’s regional segmentation (see Table 36), Europe was the biggest market in 2008 totalling 679,000 tonnes representing 19% of HKIA total cargo traffic. South East Asia was second with 595,000 tonnes and 16%. Europe was also the greatest contributor to the OD traffic with 601,000 tonnes accounting for 21% of HKIA OD traffic. The biggest contributor to the TT segment was Mainland China with 218,000 tonnes (i.e. 27% of HKIA TT traffic).

Table 35 - Regional distribution of HKIA OD, TT and total cargo traffic – 2008

Market OD Transshipment Total


Asia excl. Mainland China 47.2% 43.7% 46.4%

Long haul 45.1% 29.5% 41.6% Source: AAHK, IATA estimates


Table 36 - HKIA O/D and Transshipment cargo traffic to each region – 2008 - in thousand tonnes

Source: AAHK cargo traffic data, 2008

Recent evolution

From 1993 to 2008, total cargo traffic at HKIA increased at a CAGR of 8% from 1.1 million tonnes to 3.6 million tonnes. For the period analysed, Transshipment traffic grew the fastest at 11% CAGR from 169,000 tonnes to 814,000 tonnes. O/D cargo traffic increased at 7.4% CAGR from 1993 to 2008 from almost 1 million tonnes to 2.8 million tonnes. OD traffic contributed to 75% of the increase in total cargo traffic, adding 1.8 million tonnes to the total traffic and Transshipment represented an additional 645,000 tonnes.

OD traffic was more affected by the 2001 crisis than Transshipment traffic. In recent years (2004-2008), the gap between Transshipment and OD development pace increased with Transshipment growing much faster at +10.4% p.a. than OD at +2.5% p.a. (see Table 37).

Table 37 – Year-over-year growth of HKIA OD and Transshipment traffic – 1994 to 2008 – in %

Source: AAHK cargo traffic data

-20%

-10%

0%

10%

20%

30%

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

ODTransshipment

217

319270

427483

601

76

421

218

136

55104 111

7739

74

Mainland Taiwan Japan USA & Canada SE Asia Europe Australasia Others

Thou

sand

s to

nnes

OD: 2,814

Transshipment: 814


Overall the share of Transshipment has increased slightly from 15% in 1993 to 22% in 2008. This evolution resulted from the following trends (see Table 38):

� The main driver for the overall increase was Mainland China whose Transshipment traffic increased from about 10% of the total Mainland China cargo traffic in 1993 to over 50% in 2008. The most prominent reasons for this increase are:

� The surge in cargo traffic between Mainland China and Taiwan via HKIA contributed to a large extent to the relative increase in Transshipment traffic to Mainland China. Over the same period, the share of Transshipment traffic in HKIA cargo traffic to Taiwan grew from 23% to 43%.

� The weak competitiveness of Mainland China’s cargo carriers explains why airlines such as Cathay Pacific cargo increased their presence on the Mainland China market.

� The long haul market saw limited variations of its Transshipment share -between 13% and 16%. The highest were recorded in 2001 with 15.5% and in 2008 with 15.9%.

� The Asia excluding Mainland China market recorded a slight increase in the share of its Transshipment traffic from 16.4% to 21% in 2008. Taiwan and South East Asia are the most significant regional markets. In particular the strong growth in the traffic between Mainland China and Taiwan is likely to have benefited HKIA and contributed prominently to the development of the Transshipment share on Asia excluding Mainland China traffic.

Table 38 - Evolution of the transshipment rate on HKIA regional markets between 1993 and 2008 and transshipment traffic in 2008 – in % and thousand tons

Note: Definition of HKIA regional markets is provided in appendix Source: AAHK

0%

10%

20%

30%

40%

50%

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Asia excl. ChinaLong HaulMainland China

218

345

250


On a segment basis (see Table 39), the following trends were observed:

� Mainland China recorded the strongest growth (+16.9% p.a. over the period 1993-2008), driven by the surge in its Transshipment traffic (+33% p.a.). The overall development in Mainland China international trade (+18.8% p.a. over the period 1993-2007 according to the China Statistical Yearbook) and, as mentioned before, the increase in the cargo business between Mainland China and Taiwan as well as the overall weak position of the cargo industry in Mainland China explain the fast increase in total traffic with Mainland China and especially Transshipment traffic.

Table 39 – HKIA cargo traffic growth by market segment and nature of traffic – 1993 to 2008 – in CAGR

Region OD Transshipment Total

Long-haul 7.5% 8.4% 7.7%

Europe 7.6% 4.8% 7.2%

USA / Canada 6.2% 16.3% 7.4%

Australasia 4.0% 5.5% 4.5%

Others 10.7% 19.7% 12.6%

Among which Middle East 19.6% 6.2% 17.0%

Asia (excl. Mainland China) 6.7% 9.3% 7.1%

South East Asia 6.2% 9.2% 6.6%

Taiwan 7.8% 12.4% 8.8%

Japan 4.7% 4.2% 4.6%

Others 9.4% 11.2% 9.7%

Among which South Korea 7.9% 6.0% 7.7%

Among which India 16.7% 17.2% 16.9%


Total 7.4% 11.0% 8.0%

Note: Traffic related to the ‘Others’ segment was separated into the ‘Long Haul’ and ‘Asia’ regions. ‘ Others’ total was found to be 68% to Asian destinations and 32% to long haul ones; The split was 73% / 27% for ‘ Others’ OD and 61% / 39% for ‘ Others’ TT. Refer to appendix for definition of HKIA regional markets

Source: AAHK

� In the Asia region, beside Taiwan, the ‘Others’ (+9.7% between 1993 and 2008) and South East Asia (+6.6% p.a.) increased the fastest. Among the ‘Others’ segment, Middle East, India and South Korea are the largest markets, the fastest growing markets being Middle


East (+17% p.a. between 1993 and 2008) and India (+16.9% over the same period). The growth was particularly driven by the Transshipment traffic (+9.3% p.a. over the period) with on top of it Taiwan and ‘Others’ markets. Among the ‘Others’ segment, transshipment traffic grew the fastest to and from India (+17.2% p.a. over the period).

� In the Long-haul market, Transshipment traffic increased slightly faster than OD (8.4% p.a. in comparison to 7.5%). USA/Canada drove the growth of the long-haul Transshipment market whereas Europe led the growth on the OD side.

4.3.2 Cargo traffic by flight type

Hong Kong’s Airport Authority recorded a total of 2.2 millions tonnes transported in all-cargo flights in 2008, representing 61% of total cargo traffic handled at HKIA (see Table 40). The tonnage on passenger flights totalled 1.4 million tonnes.

Table 40 - HKIA cargo traffic split by flight type – 2008 - in thousand tonnes

Source: AAHK cargo traffic data, 2008

The share of cargo in all cargo flights grew from 43% in 1998 to 61% in 2008, all cargo flights catching 75% of the surge in cargo traffic over the last decade.

2,212

1,415

Flight Type

Thou

sand

s to

nnes

Belly

All Freighter


4.3.3 HKIA Competitive Position on GPRD

Representing just 22% of the GPRD cargo traffic in 1997, GPRD (excluding HKIA) airports have slightly increased their market share to almost 28% in 2008 (see Table 41). Likewise, claiming just 2% of the total GPRD international cargo traffic in 1997, the GPRD (exclude HKIA) airports have improved their market share reaching 11% in 2008.

HKIA has maintained a dominant competitive position for these last decade.

Table 41 – HKIA market share to GPRD airports total cargo traffic and GPRD airports international traffic – 1997 to 2008

Traffic segment 1997 2008

International traffic 98% 89%

Total cargo traffic 78% 72%

Source: CAAC, Airport Authorities, IATA analysis

The table below compares specific competitive drivers for the GPRD airports. In 2008, HKIA was offering the largest number of destinations. With the development of FedEx at CAN and UPS at SZX, the number of international services from the two PRD airports is expected to increase a bit. Even considering this development, HKIA offers by far the broadest network of international destinations.

Table 42 - HKIA competitive position compared to other GPRD airports- 2008

HubSize of Cargo

Facility (GFA sqm)

Capacity (tonnes p.a.)

Number of Airline Operators

Number of int’l destinations1

(cargo and pax)

HKIA 532,000 4,800,000 (2) 85 79

CAN 272,000 2,500,000 (3) 53 33

SZX 170,110 1,300,000 (3) 46 14

MFM 18,500 182,000 (3) 11 17

Notes: (1) International destinations exclude Mainland China, Hong Kong and Macau; situation in May 2008 (2) Total airport capacity is 5.2 million tons if including the tarmac capacity (3) Includes cargo and mail whereas HKIA capacity excludes mail

Source: Airport Authorities, SRS Analyzer



Chapter 4 – Demand Growth Drivers Although economic growth –measured by GDP- has proven to be the key driver of aviation demand in local and global markets (for both passenger and cargo), several factors beside the economic growth influence the airport environment and hence the aviation demand.

Chapter 4 analyzes the contribution and evolution of the following drivers:

� Economic development (section 5);

� Aviation Policy: Air Services Agreements (section 6);

� Trade policy (section 7);

� Travel policy (section 8);

� Tourism development (section 9);

� Air-Sea Modal competition (section 10);

� Cross-Boundary Infrastructure development (section 11);

� Airport development strategies (section 12);

� Airline development strategies (section 13).

As illustrated below, unprecedented changes in the airport market environment were identified to be further assessed and added to the baseline traffic projections.

Table 43 – Factors affecting air passenger and cargo demands reviewed as part of the forecast study

Substitution

� High Speed Train� Sea containerized shipping

New competitors

� Local airports� Hub airports (on the

Transshipment market)

Dem

and Airl

ines

� Economy� Tourism

� Cross Boundary Infrastructures

� Travelers’ preferences

� Air Service Agreements� Direct Links� Trade Agreements� Travel policy

� Hong Kong based carriers� UPS, FedEx� PRD based carriers� Other Chinese and

Taiwanese carriers� Low-Cost carriers

Competitive rivalry

Regulation

In red, factors presenting a disruptive change

Substitution

� High Speed Train� Sea containerized shipping

New competitors

� Local airports� Hub airports (on the


Dem

and Airl

ines

� Economy� Tourism


� Travelers’ preferences

� Air Service Agreements� Direct Links� Trade Agreements� Travel policy

� Hong Kong based carriers� UPS, FedEx� PRD based carriers� Other Chinese and

Taiwanese carriers� Low-Cost carriers

Competitive rivalry

Regulation

In red, factors presenting a disruptive change


The above drivers have two kinds of effects on a given market segment. Some impact demand and its growth while others affect the competition and hence how demand is distributed among the various airports addressing the given market.

Table 44 – Main impact of the drivers

Driver affecting mostly demand

Driver affecting mostly competition

Demand � Economy � Tourism


Regulation � Air Service Agreements � Direct Links � Trade Agreements � Travel policy

� Air Service Agreements � Direct Links

New competitors � Local airports � Hub airports (on the


Substitution � High Speed Train � Sea containerized shipping

Airlines � Hong Kong based carriers � UPS, FedEx � PRD based carriers � Other Chinese and Taiwanese

carriers � Low-Cost carriers

For the drivers affecting demand, IATA has reviewed their contribution to past traffic growth and compared it to their expected contribution in future years. Next sections conclude that slowing down economies in the long-term will be reflected by a slower traffic growth while the other drivers will maintain their contribution to the demand increase.

For drivers affecting competition, IATA combined an analytical approach (historical competitive development, HKIA demand forecast, PRD demand forecast, airport preference model ) and market considerations to assess competitive rivalry (airline strategies, airport strategies, market characteristics). Sections 14.3 and 15.3 provide a conclusion on the competitive position analysis showing an intensifying competition.


5. Economic Development

The economy appears as the main driver to passenger and cargo traffic development (see section 2.3.2). The following sections describe how analysts project the economy of the regions of interest to HKIA: HKSAR, PRD, Mainland China, YRD and the global economy. Main economies are forecast to develop along the past trend lines implying in particular a greater role for PRD within GPRD and a greater role for YRD within Mainland China at the expense of PRD.

5.1 Economic Development of Hong Kong

Hong Kong SAR, a city surrounded by the China Sea is internationally known for its financial districts and highly developed capitalist economy. Linked particularly to the surrounding cities and the world economy, Hong Kong was once a manufacturing base which has transformed itself to a service centre in Asia. This chapter aims to review the past and future economic developments of Hong Kong to provide a background to the elements that have affected and will affect air travel demand in the city.

5.1.1 Past Economic Development

Hong Kong SAR, located at the centre of the East Asia developing countries, is recognized for its liberal government and well developed infrastructure to support any business service. Hong Kong’s international networks and free trade policies have allowed for the city to establish itself as a business hub in Asia. Although dawned by a number of economic downturns, Hong Kong’s economy has demonstrated its resilience. HKSAR faced the Asian financial crisis in 1997 causing unemployment rate to increase over 5% and retail sales to decline 17% in 1998, and was further impacted by the 2001 global slowdown2. In 2003, the economy was affected by the SARS outbreak. On average, Hong Kong’s economic output growth in 2003 decreased 1.2%, representing an approximate US$ 1.9 billion loss in spending for final goods and services3. More recently, the economic recession in 2008 pushed Hong Kong’s GDP to be negative. With all the economic depression behind them, Hong Kong’s economy is now on a forward progression to recovery. During the 60s and 70s, Hong Kong economy was predominantly driven by manufacturing. In the following decades, Hong Kong moved away from its traditional roots, heavily investing in its service sectors. As Mainland China infrastructure and openness to foreign companies developed, many manufactures relocated their facilities to the Mainland. The share of GDP for


manufacturing decreased from 30% in the 70s to less than 3% in 20084. By relocating a majority of its labour intensive manufacturing to the Mainland, and diverting funding to its financial and retail sectors, Hong Kong has become one of Asia’s busiest service hubs and market places. In 1991 Hong Kong’s tertiary GDP accounted for nearly 72% of the total GDP, and by 2008, it accounted for approximately 91% of its GDP5.

Closely tied to the economic success of Mainland China, Hong Kong’s foreign trade sector has greatly benefited from this throughout the past decades. Due to the liberal state of Hong Kong, free trade, and its place in the diplomatic international affairs, Hong Kong has been the centre stage for foreign trade, particularly in and out of Mainland China. Hong Kong is Mainland China’s third largest trading partner, behind United States and Japan. The link with Mainland China’s economy has been growing significantly with Mainland China’s share of HKSAR trade increasing from 39% in 2000 to 48% in 2008. Hong Kong ranked 13th largest trading economy, handled over US$749 billion in merchandise trade in 2008 compared to US$164 billon in 1990. Hong Kong is Mainland China’s most important logistics centre since 20056. Furthermore, Hong Kong is the site of the second-largest container sea port and the second-largest freight airport in the world. Contributing significantly to Hong Kong’s economy, tourism generated over 3% of Hong Kong GDP in 20087. The World Tourism Organization ranked Hong Kong 12th in the world in terms of international traffic. Once dominated by Japan and Taiwan travellers, Mainland China now serves as the major source of inbound arrivals representing more than 50% of Hong Kong’s arrival demand. From 1981 to 2008, the number of inbound visitors from Hong Kong grew about 12-fold from 2.5 million to 29.5 million. During this period, tourist demand fell only once due to the SARS outbreak in 2003, lowering travel demand by 6.5%8.

Table 45 – Hong Kong economic drivers as a % of GPRD – 1995 to 2007

Economic driver 1995 2000 2001 2002 2003 2004 2005 2006 2007

Population 15.8% 13.4% 13.2% 13.1% 13.0% 13.0% 13.0% 12.9% 12.7%

GDP 72% 61% 58% 54% 49% 46% 43% 40% 37%

GDP per Capita (folds) 15.4 10.4 9.3 8.1 6.7 5.9 5.3 4.7 4.2

Import and Export Value 78% 69% 67% 63% 59% 57% 56% 55% 55%

Note: Greater Pearl River Delta (GPRD) includes Hong Kong SAR, Macau SAR, and nine (9) cities/municipalities of the Guangdong province of Mainland. Source: Mainland China, Hong Kong, Macau Statistical Yearbook


5.1.2 Future Trends for Economic Development

At the time of the forecast, HKSAR GDP is expected to have contracted by -3.3% in 2009, in line with the world economy. Similarly, Hong Kong imports and exports will have shrunk by about -16% as world trade falls by -9.4%9. Economic recovery has been observed for the second quarter of 2009. Fuelled by the strong growth of the Chinese economy and the rebound of the world’s economy, Hong Kong’s GDP should recover slightly in 2010, reaching +2.8% according to EIU. By 2013, Hong Kong’s GDP per capita will have reached the level of the United States. Driven by strong private consumption and flourishing financial services, GDP is forecasted to grow at an annual rate of 3.2% over the next 20 years (2010 – 2030). Hong Kong’s future economic development will depend more and more on the economic growth of Mainland China. Negotiating trade and travel policies, Hong Kong’s attractiveness for Mainlanders and foreigners will increase in the future as Mainland China allows for local and Hong Kong based companies greater privileges into Mainland China and at the same time allowing for easier access to Hong Kong for a larger number of Mainlanders. The financial sector plays a significant role in Hong Kong’s GDP and its expansion will aim to provide more services to Mainland China. Hong Kong banks will be given an broader access to the Mainland market10, taking advantage of Mainland China’s underdeveloped financial sector. In the longer term, the relaxation of Mainland China’s monetary and credit policy and connection of the Hong Kong Dollar with the Renminbi should benefit Hong Kong as a financial hub. As Mainland China’s businesses develop, competition between Hong Kong-based and Mainland based companies will become fierce. However, it is believed that the increase in opportunities will outweigh the loss associated with the increased competition. As explained in later sections, Mainland China is implementing a more proactive diplomacy allowing for greater international opportunities and therefore creating new economic development for the nation.

Table 46 – Estimated GDP and population growth rates for HKSAR – in CAGR

2001-2005 2006-2010 2011-2015 2016-2020 2021-2025 2026-2030

GDP 3.9% 1.6% 3.9% 3.6% 3.4% 3.1%

Population 0.4% 0.8% 0.7% 0.6% 0.5% 0.4%

Source: World Bank, Global Insight


5.2 Economic Development of Mainland China

5.2.1 Historical Overview

Mainland China’s GDP growth rate has seen double digits in the past decades. In 2004, Mainland China became the third-largest country in the world in terms of GDP. In 2008, Mainland China’s GDP topped US$4.4216 trillion at an average annual growth rate of 10.2% for the 2004-2008 period11. GDP per capita reached US$3,250 in 2008. Loose policies and highly competitive labour rates have resulted in an increasing share of international investments being captured by Mainland China from 8.3% in 2005 to 9.8% in 2008.

5.2.2 Outlook for Economic Development

Mainland China’s economy started slowing down in the fourth quarter of 2008. Mainland China’s US$585 billion stimulus package has stimulated Mainland China’s GDP growth that is likely to exceed 8% in 2009. However as a result of the low international demand for manufactured goods, exports were expected by EIU to contract by about -10% in 2009 and to recover slowly in 2010 (May 2009 forecast).

Over the next 5-year forecast period, real GDP growth is forecast to reach 8.4% par annum. By 2011, Mainland China is poised to be the world’s second-largest economy. Foreign direct investment should remain at a high level fuelled by the still large disparity between production costs in Mainland China and those in the Western countries. As Mainland China moves up in the value chain, the labour-intensive industries will relocate in the western provinces of the country and the eastern provinces will develop capital-intensive industries and services. This evolution is expected to stimulate new demand and imports. Import levels may be equivalent to that of export by 2020. Over the longer-term Mainland China’s economy is assumed to slow down with GDP growth down to 5.5% in 2030 from 9% in 2014. In 2030 GDP per capita is forecast to reach US$14,000. More specifically in Mainland China, two distinctive economic regions, the Pearl River Delta and the Yangtze River Delta are of the utmost importance to HKSAR and hence HKIA.


5.3 Economic Development of the Pearl River Delta Region (PRD)


The Pearl River Delta economic zone is Mainland China’s leading economic zone covering nine cities/municipalities namely Guangzhou, Shenzhen, Foshan, Zhuhai, Jiangmen, Zhongshan, Dongguan, Huizhou, and Zhaoqing. PRD is the home to 42,870 enterprises of which 42,481 are small and medium enterprises (SME), with a total surface of 42,000 sq. km and a work force of close to 12.9 million12. In 2009, the Mainland China census recorded a total PRD population of over 47 million. The PRD region is considered one of the most diverse regions in Mainland China, influenced by a large quantity of foreign firms and a growing capitalistic environment. In 2007, PRD GDP represented 10.2% of Mainland China’s GDP and its GDP per capita reached over US$7000, nearly 2.8 times greater than the national average13. Initially dominated by farmlands, the opening of the PRD economy allowed for the start to foreign investments in the region. Fuelled mainly by Hong Kong investments that relocated their manufacturing operations to the PRD, the PRD became an attractive region for cheap labour. Since then, PRD economy has grown tremendously representing nearly 20% of Mainland China’s total foreign direct investments. PRD is one of Mainland China’s most diverse manufacturing region, it is also a major export base for foreign investors from the Hong Kong SAR. Robust from the expanding manufacturing in the region, PRD infrastructures have developed quickly to support the thriving demand for trade. In 2008, the PRD region handled a total value of US$656 billion in import and export trades representing close to 30% of Mainland China’s total trade14. Growing competitive pressure between Mainland China’s manufacturing regions have led to the PRD region seeking new sources of economic growth. By providing better linkage between the Guangdong cities and Hong Kong, the two regions will be able to partner to utilize its combined vast and dynamic resources to attract for more investments. Political and economic agreements such as “Hong Kong-Guangdong Co-operation agreement” signed in August 2009 have been underway to better tie Guangdong and Hong Kong; in 2004, HK investors accounted for 68% of Shenzhen FDI.


Table 47 – PRD Economy as a % of Mainland China – 1990 to 2007

1990 1995 2000 2005 2007

Permanent Population 2.1% 2.7% 3.4% 3.5% 3.6%

GDP 5% 7% 8% 10% 10%

GDP per Capita (folds greater relative to Mainland China

GDP per Capita) 2.61 2.51 2.58 2.86 2.89

Foreign Direct Investment 35% 21% 26% 19% 20%

Total Value of Imports 37% 33% 33% 28% 27%

Total Value of Exports 36% 35% 34% 29% 29%

Note: PRD includes Guangzhou, Shenzhen, Foshan, Zhuhai, Jiangmen, Zhongshan, Dongguan, Huizhou, and Zhaoqing. Source: China Statistical Yearbook

5.3.2 Future Trends

As Mainland China’s future economy continues to grow, PRD GDP will increase at a CAGR of 6.6% (2008-2030) reaching US$1.78 trillion by 2030 and Foreign Direct Investments will keep a high profile. PRD import and export values are expected to slow down slightly as the economy grounds will shift from the industrial sector to the financial and retail ones. Electronic and IT products, automotive, petrochemical technology, energy resource, medicine industry, and household appliances represent the primary focus of China’s 11th Five-year plan for PRD. Promoting high-technology and modernization, the PRD region is restructuring to establish itself as a modern metropolis with upgraded facilities. Another objective for PRD long term industrial development is to move upstream in the value chain by building research and development capabilities especially in the pharmaceutical industry sector. Developing its service industries to better match the financial centre of Hong Kong, PRD looks to expand its position as an international centre. Shenzhen is to develop as the region’s financial centre.15 The financial industry contribution to total GDP is expected to be over 15% by 2020. Competition amongst various PRD cities will also dawn upon the region as each city has undergone fierce modernization to support and attract demand in the region. Current


competition resides between the Shenzhen and Guangzhou cities, however, as corporations invest further westward in Mainland China, competing cities such as Qingyuan and Jieyang, just outside of the PRD, will emerge. Qingyuan top industrial market includes electronic information, equipment manufacturing, and metal processing. Jieyang major industries consist of power production and supply, plastic products, textiles, and metallurgy representing 55.3% of the city’s GDP. Other areas such as Foshan and Dongguan will reinforce their position as well. In the long-term, this situation may result in an overcapacity situation in the PRD area and nearby territories. However the growing domestic demand and better linkage between PRD and the rest of Mainland China tend to reduce this risk.

Table 48 – Estimated GDP and Population Growth Rates for PRD region – in CAGR

2001-2005 2006-2010 2011-2015 2016-2020 2021-2025 2026-2030

GDP 7.6% 8.2% 7.9% 6.8% 6.3% 5.5%

Population 1.2% 1.7% 2.0% 1.5% 1.2% 1.2%

Source: World Bank, Experian, estimates based on Global Insight


5.4 Economic Development of the Yangtze River Delta Region


The Yangtze River Delta is the most populous area in Mainland China; and its economic zone is comprised of 16 cities: Shanghai, Hangzhou, Ningbo, Jiaxing, Huzhou, Shaoxing, Zhoushan, Taizhou, Nanjing, Wuxi, Changzhou, Suzhou, Nantong, Yangzhou, Zhenjiang, and Taizhou. The YRD region covers an area of 110,000 sq. km and inhabited a population of 93.9 million in 2007. The GDP of the region reached US$686 billion generating approximately 18.1% of Mainland China GDP. YRD GDP per capita is one of the highest of the nation exceeding US$6,900 per capita16. While the PRD region is the centre for light consumer goods manufacturing and assembly, the YRD region is predominately focused on heavy industrial equipment such as machinery, chemicals, and other upstream industries. Shanghai has developed its economy around financial, logistics, real estate, and automotive. Along side, Suzhou is a strong manufacturing base for foreign companies, and Nanjing is a hub for automobile industry, electronics, education and natural resources. In 2007, the YRD total industrial output valued at US$1,440 billion accounting for 24.3% of Mainland China17. Since 1990s, foreign direct investments in the Yangtze River Delta developed very rapidly. Shanghai for example in 2007 absorbed US$7.9 billion in FDI, 71 times of that in 199018. Fuelled by its geographic advantage as hub for water transportation providing ports along the costal line for over 160 countries, potential market development, and stronger cluster of higher education institutions, YRD continues to be one of the top destinations for foreign direct investments. YRD region also stands as a major logistics centre in Mainland China. In addition, its well developed aviation infrastructure handling 16.4% of the nations total cargo in 2007, allows the YRD to be the one of Mainland China’s most important distribution hubs. Exports remain one of YRD major economic driver, generating US$451 billion in exports, roughly 36.9% of Mainland China’s total, almost 72 times greater than that in 1990.

5.4.2 Future Trends

YRD industries will remain predominately focused on its existing economic sectors. While most current development will be concentrated in the major cities of the YRD, namely: Shanghai, Nanjing, Hangzhou, and Suzhou; future developments and allocation of FDI can be expected in the rest of the YRD.


Export and import trade will remain as the YRD economic driver. Current expansion of YRD major ports predominately in Shanghai will strengthen YRD shipping industries to meet trading capacity.19 However rapid growth will lead to a saturation of the port infrastructures in the future. Shanghai focus in the financial sector is anticipated to steadily grow for the next years, serving Mainland China’s growing domestic demand. Agreed by the China State Council, Mainland China will develop Shanghai into a global financial and shipping centre by 2020. Despite the slowdown caused by the financial crisis, foreign interest remains strong and will drive Shanghai to the status of “Eastern Asia Wall Street.” While there are concerns of overlapping competition between the YRD and PRD, different industry and market focus will in fact limit competition between the two. The YRD specializes mainly in raw materials, heavy industrial goods and other upstream industries. Shanghai and Jiangsu accounted for more than 70% of the national output for micro-computers, and Jiangsu and Zhejiang accounted for 69% of Mainland China’s chemical fibre in 2007. PRD specializes in consumer goods; specifically electronics and IT products in the east bank of the PRD and household appliances in the west bank. Each region has its own individual strength and uniqueness, and its own market focus.

Table 49 – Estimated GDP and Population Growth Rates for YRD region – in CAGR

2001-2005 2006-2010 2011-2015 2016-2020 2021-2025 2026-2030

GDP 11.3% 9.2% 8.8% 7.2% 6.3% 5.5%

Population 0.8% 0.8% 0.8% 1.3% 1.2% 1.2%

Note : YRD includes Shanghai, Nanjing, Suzhou, Wuxi, Changzhou, Yangzhou, Zhenjiang, Nantong, Taizhou, Hangzhou, Ningbo, Huzhou, Jiaxing, Shaoxing, Zhoushan and TaizhouSource: World Bank, Experian, estimates based on Global Insight


5.5 Economic Development of Rest of Mainland China

The rest of Mainland China, excluding the PRD and YRD makes up for roughly 85.8% of Mainland China’s population and 71% of Mainland China’s GDP.

5.5.1 Bohai

The Bohai Bay rim economic zone is made up of Beijing (municipality), Tianjin (municipality), Hebei (province), Shandong (province), and Liaoning (province), with a total area of roughly 170,000 square kilometres and a total population of over 215 million. Bohai Bay rim being one of the major economic zone of Mainland China, Bohai GDP of $USD 4,404 billion represents close to a quarter of Mainland China’s GDP in 2008. Bohai economic zone is vastly diverse and includes: agricultural and marine processing, heavy industries, modern technology including information technology services, and financial services. While the secondary sector represents 51% of its GDP; most of its GDP comes from the manufacturing industry focused in heavy industries and large enterprises, accounting for 90% of Bohai’s secondary GDP in 2007 20 . Bohai tertiary GDP represents 41% of its GDP and approximately 9% of Mainland China’s GDP and likely to grow as Bohai becomes more developed. With a total population of 16.3 million, Beijing is the heart of the Bohai region. Beijing’s service sector accounted for 72.1% of the city’s GDP in 2007. The three biggest economic sectors for Beijing includes: whole-sale and retail trade, information technology services, and financial services. Of the three, its financial service sector grew the fastest, increasing by 22.3% in 2007. For the next years, Bohai is expected to focus on high-tech electronic development. In particular, Beijing hopes to build its reputation as Mainland China’s Silicon Valley. Reinforcing its desire to become a high-tech zone, Beijing has the largest number of high level education and scientific research institutions, roughly 430 institutions employing 93,625 scientist and engineers. Housing big technological multinational corporations (MNCs) such as NEC and SUN, FDI increased by +18.7% p.a. between 2003 to 2007 to little under US$5.07 billion. Tianjin is expanding its financial services to become the regions financial center to better support Bohai’s expansion, Shandong looks to improve on software development / application and network communication & telecommunication, and Hebei and Liaoning remains focused in agricultural and natural resource industries.


Table 50 – Estimated GDP and Population Growth Rates for the Bohai region – in CAGR

2001-2005 2006-2010 2011-2015 2016-2020 2021-2025 2026-2030

GDP 10.3% 9.3% 9.1% 7.5% 6.6% 5.8%

Population 0.6% 0.6% 0.6% 0.6% 0.4% 0.4%

Note: Bohai Rim includes the two (2) municipalities: Beijing, Tianjin; and (3) provinces: Hebei, Shandong, Liaoning of Mainland China Source: World Bank, Experian , estimates based on Global Insight

5.5.2 Rest of Mainland China

Central and Western provinces of Mainland China have long suffered from a low level of investment. In order to bridge the gap between the eastern costal cities and the western cities, Mainland China launched the Go West campaign in 1999. Encouragement and incentives by the Chinese government further supports this policy. While a greater amount of funding is allocated to the rest of Mainland China, such funding will not be enough to rapidly develop the rest of Mainland China into a region of similar magnitude as that of PRD and YRD within the forecast horizon. With that said, there will be no major leap in foreign companies relocating to the rest of Mainland China resulting in a big reallocation of FDI from the coastal cities of Mainland China. Gradual improvements will aim to reduce the gap between the rest of Mainland China and the coastal cities but the gap will remain significant till the next few decades. As the second-tier regions of Mainland China develop, PRD and YRD will play a key role as logistics, service and financial hubs for these regions.

Table 51 – Estimated GDP and Population Growth Rates for the Rest of Mainland China – in CAGR

2001-2005 2006-2010 2011-2015 2016-2020 2021-2025 2026-2030

GDP 8.4% 7.0% 9.4% 7.5% 6.6% 5.8%

Population 0.5% 0.6% 0.6% 0.1% -0.1% -0.4%

Note: Rest of Mainland China includes all regions but PRD, YRD, and Bohai Source: World Bank, Experian, estimates based on Global Insight


5.6 World Economic Development

During the decade prior to the economic downturn of 2001, world GDP was growing at an annual rate of 3.1%. Following 2001, World GDP recovered and exceeded its previous decade growth rate, reaching US$60,587 billion at an average annual growth rate of 3.9% in the period of 2001-2008. Fuelled by developing countries such as Mainland China and India, world trade volume steadily increased at an average growth rate of 5.9% per year21.

In 2008, World GDP slowed down to 3.3%; and in 2009, World GDP is expected to contract by -2.9% as per World Bank projections22. During this period, weak demand for manufactured goods from developed nations, like North America and Europe, severely weakened the world trade volumes. In 2009, the world trade volume contracted by -11.1% and is projected to rebound strongly by 7% in 2010 according to the April 2010 IMF forecast23.

It appears that the global economic recovery is underway, pulled by the strong performance and stabilization of Asia’s economies. The progress of the world’s economy is driven by a rebound in manufacturing and stabilization of retail sales and commodity prices. Financial conditions are however improving slowly. Developed nation’s economies are still relatively weak suggesting that the road to full recovery is still far out of reach. Prone to a very slow global economic recovery, World GDP is expected to reach US$71,497 billion in 2014 at an average annual growth rate of 3.6%, and is to remain relatively stable for the rest of the decade24. In the long-term, world GDP will grow at a rate of 4% pa. Table 52 gives an outline of the GDP assumptions factored in the forecast.

Table 52 – GDP assumptions – 2009 to 2030 – measured in CAGR

Region 2009 2010 2011-2015 2016-2020 2021-2025 2026-2030

HKSAR -3.9% 0.9% 4.0% 3.8% 3.6% 3.2%

Mainland China 7.2% 7.6% 8.7% 7.6% 6.7% 5.8%

SE Asia -0.2% 4.2% 5.0% 4.8% 4.2% 4.0%

Taiwan -4.5% 3.2% 4.9% 3.6% 3.1% 2.8%

Japan -6.8% 0.9% 2.7% 0.8% 0.4% 0.4%

Europe -4.6% 0.1% 1.7% 1.7% 1.6% 1.5%

Nth America -3.0% 1.4% 3.1% 3.0% 2.8% 2.5%

Australasia -0.6% 0.9% 3.8% 3.0% 2.5% 2.5%

Others -0.7% 2.9% 4.8% 4.5% 4.1% 3.9%

World -0.7% 2.9% 4.8% 4.5% 4.1% 3.9%

Source: Global Insight (July 2009), EIU (July 2009)


6. Regulation and Policy: Air Service Agreements

Air Services Agreements (ASAs) are a central component of the Aviation industry. Recent years have shown a continuous liberalization of the traffic rights, not only between HKSAR and their counterparts but also between Mainland China and the major world economies. Further deregulation is expected to happen in the short, medium and long-term enabling existing markets to grow and new markets to emerge. Direct links constitute an unprecedented factor that will need to be assessed separately from the regression traffic model.

6.1 Hong Kong

The following section analyzes the recent ASAs history in HKSAR. It shows how Hong Kong’s government implemented a continuous aviation liberalization process based on a growing number of ASAs and a progressive liberalization of the existing ones. This trend as well as the introduction of 5th freedom rights will develop, further strengthening Hong Kong accessibility and competitive positioning as an aviation centre within Asia and the region.

Hong Kong has authority to sign ASAs6 with other countries. Hong Kong has been progressively liberalizing its ASA framework and it is expected that there will be a continuation of this process with a beneficial impact on HKIA as origin/destination airport and hub.

Hong Kong signed a few ASAs these last years such as with Maldives25, Laos26 and Fiji27 in 2009 reaching a total of 61 ASAs28.

Although ASAs with most of Hong Kong’s key markets have already been concluded several years ago, additional agreements with smaller countries as well as more liberalized agreements with primary countries are expected. The recent renegotiation of the ASA with Japan is a good example of the deregulation trend in place. Flights between Japan and Hong Kong were before restricted in terms of capacity from all major gateway cities such as Nagoya, Osaka, Fukuoka, Sapporo, Sendai and Okinawa. With the exception of Tokyo, all restrictions were revoked in 2008 allowing unlimited capacity between these cities and Hong Kong by airlines of both sides29.

Hong Kong has concluded air services arrangements with unlimited 3rd/4th freedom capacity with 20 aviation partners7. Fifth freedom rights are often exchanged in order to further facilitate airlines’ operations. In respect of 3rd/4th and 5th freedom, there is room for further expansion and

6 ASAs are agreements signed between two or more states (bi/multi lateral) to allow regular civil aviation between or beyond their territories. 7 Norway, Denmark, Sweden, Jordan, Iceland, the UK, the US, Spain, Malaysia, Thailand, Luxembourg, Bahrain, Brunei, Mexico, Sri Lanka, Ethiopia, UAE, Maldives, Laos and Fiji.


development. Table 53 elaborates on some of the most important agreements between Hong Kong and its aviation partners.

Table 53 – List of the main Air Service Agreements concluded by HKSAR

United Kingdom Last updated in 2009 3rd/4th freedom Unlimited frequencies

5th freedom Limited beyond rights to specific destinations

United States Last updated in 2005 3rd/4th freedom Unlimited frequency, capacity and gateway points for passenger and cargo

service.


Australia Last updated in 2005 3rd/4th freedom Limited capacity to the 4 gateway cities of Sydney, Melbourne, Brisbane and

Perth, and unlimited capacity for other Australian cities.

5th freedom Limited intermediate and beyond 5th freedom rights for passenger and all-

cargo services to specific destinations.

Malaysia Last updated in 2007 3rd/4th Unlimited Services

5th Limited beyond rights to specific destinations

Singapore Last updated in 2007 3rd/4th freedom Limited frequency and capacity


South Korea Last updated in 2008 3rd/4th freedom Limited frequency and capacity

Cargo operation at agreed frequency and capacity limit

India Last updated in 2007 3rd/4th freedom Limited frequency and capacity between Mumbai, Delhi, Kolkata, Bangalore

and Chennai.

5th freedom Limited frequency to specific destinations for intermediate and beyond

rights.

Japan Last updated in 2009 3rd/4th freedom No capacity limit to all Japanese cities except Tokyo.

5th freedom Limited beyond rights to specific destinations Recently concluded Air Service Agreements (3rd/4th freedom) Laos, Fiji and Maldives 2009


The most significant enhancement since 2000 was the expansion of some bilateral agreements to include 5th freedom rights. It allows foreign carriers (passenger and cargo) to carry passengers or freight from Hong Kong to a third country (different from the foreign carrier’s home country).

Qantas is a good example for utilizing the existing 5th freedom rights between the United Kingdom and some Asian countries, namely Thailand, Singapore and Hong Kong. The three markets from London Heathrow to Singapore, Bangkok and Hong Kong are the three largest ones for Qantas in Asia. Both Bangkok and Singapore markets lost 5th freedom traffic (16% and 19% respectively) between 2005 and 2008 after Qantas acquired 5th freedom rights between Hong Kong and London (see Table 54).

Table 54 – Evolution of Qantas 5th freedom traffic at between LHR and HKIA, SIN and BKK from 2005 to 2008 – in passengers

This example of Qantas illustrates how 5th freedom may actually bring additional traffic to HKIA. Induced traffic is variable depending on the considered route but is likely to remain small in proportion of the total segment traffic.

Traffic development comparison 2005 to 2008

Source: IATA PaxIS, 2005 and 2008

-16%

-19%

33%

-30% -20% -10% 0% 10% 20% 30% 40% 50%

SIN

BKK

HKG

2005 2008SIN BKK HKG

Shift of traffic share 2005 to 2008

14.6%

38.3%

47.0%

21.5%

34.5%

44.0%

+6.9%

3.9%

3.0%


6.2 Hong Kong and Mainland China

Between Mainland China and Hong Kong, 3rd and 4th freedom rights are available as follows:

� Restrictions on passenger capacity and carriers to 7 airports in Mainland China (Beijing, Shanghai, Guangzhou, Shenzhen, Kunming, Dalian and Chengdu);

� No restriction on 50 passenger routes;

� No restriction on 57 cargo routes.

Currently, Hong Kong carriers are not allowed to establish code-shares beyond Chinese airports or to service Mainland China domestic routes. 5th freedom rights to international destinations beyond Mainland China are possible as per the existing ASA but not implemented. The same applies for Chinese carriers beyond Hong Kong including code-sharing and 5th freedom. Therefore Hong Kong based carriers do not benefit from the liberalization of the ASAs between China and foreign countries.

IATA anticipates the implementation of more liberal rights between Mainland China and Hong Kong. This enhancement is essential to induce additional demand between the Special Administrative Region and Mainland China.


6.3 Mainland China

Mainland China has implemented a progressive approach to liberalize its air traffic rights. In 1987, a total of 40 ASA were in place between Mainland China and counterparts. Since then, Mainland China has liberalized its aviation framework and, to date, it has concluded some 96 Air Service Agreements with its partner countries30. This trend is expected to continue in the future, resulting in additional routes and services to and from the Mainland China airports and stimulating traffic growth at these airports. One of the most symbolic evolution is the implementation of the Direct Links between Mainland and Taiwan (see section 6.4). Despite the intensifying airport competition triggered by this liberalization, HKIA, as a gateway to PRD and a hub to Mainland China, remains uniquely positioned to benefit from Mainland’s growing market.

6.3.1 US – China agreement

The U.S. and China Air Service Agreement is one of the most emblematic developments of these last years in Mainland China. The two states reached an agreement to allow for a significant expansion of passenger and cargo air services.

� The agreement allows U.S. carriers to operate to the Chinese gateway cities of Beijing, Shanghai and Guangzhou over 2008-2012, with an increase air services from 7 daily in 2004 to 46 daily flights in 2012.

� The agreement entails an increase in the number of U.S. passenger carriers that may serve the Chinese market, e.g. from six in 2007 to nine in 2011.

Additionally, it allows unlimited U.S. cargo flights to any point in Mainland China and permits an unlimited number of U.S. cargo carriers to serve the market as of 2011. The Chinese central government has authorized the establishment of foreign cargo hubs in Mainland China in particular (Fedex in Hangzhou and Guangzhou, UPS in Shanghai and Shenzhen and DHL in Shanghai) granting beyond rights to the associated carriers.

� Both countries agreed to launch initial Open Skies Agreement (OSA) negotiations in 2010.

6.3.2 Regional Air Service Agreements

As part of the Aviation deregulation process, a further expansion towards some Asian countries is highly expected. A few months after Mainland China and the ASEAN member states concluded the China-ASEAN Free Trade Area (CAFTA) in 2007, a Framework Agreement on China-ASEAN Comprehensive Economic Cooperation was signed encompassing an air


transport agreement aimed at realizing a fully liberalized air services regime between the ASEAN states and Mainland China31.

The ASEAN member states and Mainland China agreed to actively expand the air services arrangements and connectivity either on a bilateral, regional or sub-regional basis, to facilitate the circulation of passengers and goods and increase the trade in the region.

ASEAN countries aim at implementing a full deregulation of international and domestic flights by 2015.

6.3.3 Open-skies

However, at this point, the implementation of passenger OSAs (such as Mainland China-U.S. or Mainland China-European Union) is not expected to be concluded soon. Chinese carriers are not prepared to compete on major long haul routes yet. Nevertheless, the initial aviation liberalization agreement and its applied measures described above will have a beneficial impact on Mainland China’s air traffic infrastructure and are expected to help support the sustainable development of Mainland China’s economy.

6.3.4 Domestic sky deregulation

Under the 11th Five-Year Plan, domestic routes will be fully opened up for all Chinese airlines by end-2010, meaning that any Chinese airline can fly any domestic route any time and at any frequency, without having to request for approval.


6.4 Cross-Strait Direct Links

Direct links constitute the most radical evolution in Air Service Agreements. The following paragraphs outline the current situation of the direct links and their likely evolution.

The implementation of passenger direct links started with 36 weekly charter passenger flights in July 2008. By September 2009 it had attained 270 scheduled passenger flights weekly32. The implementation of weekly cargo flights started a bit later, in December 2008, with 60 monthly flights and was further increased to 112 scheduled monthly flights in July 2009.

Simultaneously, the Taiwan visa policy to allow Mainlanders to visit Taiwan has been considerably relaxed allowing up to 3,000 daily visitors from Mainland China.

It is estimated by IATA that Cross-Strait flights carried about 3.5 million passengers and 54,000 tonnes in 2009, among which about 2 million are new passengers induced by the relaxed visa policy.

In the short and medium-term IATA assumes a continuous enhancement of the Air Services Agreements maintaining the principles of reciprocity and even number of flights on each side. However, it is anticipated that the development will be slowed down by the Taiwanese airlines whose capacity cannot increase as fast as the capacity of the Chinese airlines. It is anticipated that fifth freedom rights will not be granted by CAAC as the benefit to the Chinese airlines is uncertain and possibly negative33.

In terms of traffic distribution, the Direct Links are expected to address in priority the markets with no existing direct routes prior to the Direct Links such as Shanghai-Taiwan, Beijing-Taiwan, Fuzhou-Taiwan and Chengdu-Taiwan. The Guangdong to Taiwan services will be introduced more slowly as a result of the strong competition with the Hong-Kong-Taiwan and Macau-Taiwan routes.

In the long-term, it is believed that unlimited capacity arrangements will be granted.

On the passenger segment, the traffic loss resulting from the increase in direct services will be partially offset by the further opening of the Taiwanese market to Mainlanders.

The assessment of the Direct Links impact on HKIA is further developed in section 14.4.1.1 for passenger and section 15.4.1.1 for cargo.


7. Regulation and policy: Trade Agreements

Trade agreements will keep playing a growing role, fuelling both imports and exports to Mainland China as well as supporting the Mainland economy. Hong Kong will benefit from this stimulation thanks to the CEPA allowing a wide and increasing accessibility to the Mainland market. As a hub to Mainland China and a gateway to PRD, Hong Kong will also take advantage of the growing exports and imports of Mainland.

The following chart (see Table 55) summarizes some of the most significant liberalization measures of Mainland China with direct bearings on the Hong Kong economy and illustrates Mainland China’s progressive approach for liberalization of trade.

Table 55 – Mainland China Trade Agreements

7.1 WTO

Mainland China became a member of the World Trade Organization (WTO) in December 2001, and has undergone progressive liberalization and restructuring to provide open market access.

The next rounds of negotiation will further reduce tariffs and liberalize trade conditions resulting in an improved trade environment for Mainland exports from and imports. Similarly, the entrance of new WTO members (Russia, Vietnam, and Ukraine) will further fuel trade development34.

Some logistics activities (handling, freight forwarding, express mail) were subsequently liberalized allowing foreign players to operate fully-owned logistic companies in Mainland China.

7.2 CEPA

The Closer Economic Partnership Agreement (CEPA) is the first bilateral Free Trade Agreement (FTA) for both the Mainland China and Hong Kong aiming at liberalizing the trade of products, services and investment. The inception of CEPA, in 2004, has provided opportunities for HKSAR companies to export products into Mainland China free of duty. Since then, several

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

� � � � � � �

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

� � � � � � �

WTO

CEPA

I +

II

CEPA

III

CEPA

IV

CEPA

V

CAFT

AEC

FA

CEPA

VI


revisions have been implemented to better support the business needs of domestic and foreign enterprises (see Table 56). The most recent revision, CEPA Supplement VI (signed in May 2009) aims to stimulate the development of Hong Kong companies in Mainland, extending the number of free-trade services sectors and products.

On tourism, CEPA Supplement VI authorized Mainland travel agents organizing group tours to Taiwan for Mainland residents to plan a stop in Hong Kong in transit35.

Table 56 – CEPA road map

In general, CEPA I-VI have progressively opened up new markets for Hong Kong firms. It is highly expected that free trade agreements between HKSAR and Mainland China will be further enhanced allowing the Hong Kong economy to further take advantage of the Mainland growth. CEPA VII is expected in 2010.

7.3 CAFTA

China-ASEAN Free Trade Area (CAFTA) establishment in January 2010 will further drive Mainland China’s economic growth. CAFTA aims at setting a Free Trade Area to Mainland China and ASEAN members. It is expected to become the world’s third largest free trade area. No tariff treatments will be applied to 90% of products traded between Mainland China and Association of Southeast Asia Nations (ASEAN) countries36.

In addition, the ASEAN member states and Mainland China agreed to actively expand the ASAs and open-skies in the region (see 6.3.2).

This is expected to strengthen the sustainable growth of air transport in and out Mainland China and will in particular provide greater opportunities for air cargo traffic demand.

In conclusion, the trade agreements described above are expected to keep fuelling Mainland China’s sustainable economic growth.

IJan 04

IIOct 04

IIIJun 06

IVJun 07

VJul 08

VIMay 09

VII2010

• Increase of free-trade products from 300 to over 1,500• Increase of free-trade service sectors from 18 to 42

Continuous expansion of CEPA expected

…IJan 04

IIOct 04

IIIJun 06

IVJun 07

VJul 08

VIMay 09

VII2010

• Increase of free-trade products from 300 to over 1,500• Increase of free-trade service sectors from 18 to 42

Continuous expansion of CEPA expected

…


7.4 EFCA

The Economic Cooperation Framework Agreement (EFCA) is a trade agreement, signed on June 29th, 2010, between the Mainland China and Taiwan that aims to reduce tariffs and commercial barriers between the two sides. The agreement covers 539 Taiwanese products and 267 mainland Chinese goods. Mainland China will also open markets in 11 service sectors such as banking, securities, insurance, hospitals and accounting, while Taiwan agreed to offer wider access in seven areas, including banking and movies. It also aims to boost investments between the two sides.

Further discussions will focus on cutting and removing restrictive measures gradually, enlarging the service sectors covered, and enhancing cross-Strait cooperation.

7.5 Shenzhen Special Economic Zone (SEZ) expansion

In the 80’s, the Chinese government established several Special Economic Zones (Xiamen, Shantou, Zhuhai, Hainan and Shenzhen) providing more relaxed economic policies. Among others, the SEZ’s are given special tax incentives for foreign investments in the SEZ’s as well as greater independence on international trade activities. On July 1st, 2010, Bao'an and Longgang districts have entered the SEZ, whose area has increased five-fold from 396 sq km to 1,948 sq km (see Table 57). The extension further aims at developing the two cities of Shenzhen and Hong Kong to become a global centre for finance, trade, logistics, innovations and cultural industries37.

Table 57 – Former and recently extended perimeter of the Shenzhen Special Economic Zone38

Recently extended

SEZ border

Former SEZ border

Recently extended

SEZ border

Former SEZ border


8. Regulation and policy: Travel policy

This section identifies the recent and future changes in the travel policy with a sizeable impact on air traffic. Further liberalization is to happen, extending the past trends.

8.1 Hong Kong

The Hong Kong travel policy is already very liberal. Nationals from some 170 countries can visit Hong Kong visa free for period from seven days to 180 days. No significant change is expected on that front39.

8.2 Mainland China

Mainland China has progressively liberalized its travel policy to enhance freedom for outbound tourism. It is expected that more steps will be taken to reduce travel restrictions for Mainlanders. These measures aimed at improving outbound tourism from Mainland China will benefit tourism to HKSAR as well as increasing the number of travellers potentially connecting through HKIA.

8.2.1 ADS

During recent years, Mainland China developed the “Approved Destination Status”. As of early 2009, 127 countries had been given the Approved Destinations Status40 (ADS) whereas only 15 fell in that category in 200041. A further expansion of the list of countries is naturally expected. However, its impact on the outbound tourism volume from Mainland China will be minimal as the destinations already approved cover the vast majority of potential tourism destinations. In late 2009, the major holdout from the ADS list was Taiwan.

8.2.2 IVS

Introduced in 2003, the “Individual Visit Scheme” (IVS) allows for Mainlanders to travel to Hong Kong and Macao on an individual basis. Prior to IVS, Mainlanders were required to travel with business visas or in group tours.

The IVS currently covers 49 municipalities in Mainland China and 270 million inhabitants42. Since its introduction, the IVS has resulted in a massive surge in outbound tourism to Hong Kong from 6.8 million in 2002 to 16.9 million in 2008 (see Table 58)43. In 2008, the number of


travellers entering Hong Kong under the IVS was 8.9 million representing 52.7% of the total44. It is anticipated that the impact of the IVS will further increase.

� Only 6.2% of the population eligible to the IVS travelled to Hong Kong. This share is likely to grow as the Chinese economy further flourishes.

� Accessible to 270 million inhabitants, the IVS scheme only includes around 20% of the entire Chinese population. The IVS scheme is progressively being expanded to new municipalities stimulating travel to Hong Kong. Only 0.7% of the non-IVS eligible mainlanders travel to Hong Kong in comparison to 6.2% of the eligible ones.

Table 58 – Number of mainland visitors* to Hong Kong – 1994 to 2008 – in millions visitors

Although a big proportion of the Mainlanders making use of the IVS are from Guangdong, air traffic also strongly benefited from the IVS with the number of visitors arriving by air growing by almost 9% p.a. since the implementation of the IVS (see Table 58).

8.2.3 Multiple-entry Visa for Shenzhen hukou-residents

In April 2009, the Hong Kong multiple-entry visa policy for 2.2 million Shenzhen permanent residents was introduced. It is a further step in the relaxation of immigration policies in Mainland China. It will further drive the economic growth of Hong Kong and ease the use of HKIA for PRD residents45.

The programme is reportedly considered for extension next year to the 6.5 million non- household registered residents of Shenzhen. IATA anticipates a further increase to the PRD inhabitants within the coming years.

Source: Government of HKSAR, Hong Kong Tourism Board, *includes sameday and overnight visitors

2.0 2.3 2.4 2.4 2.7 3.2 3.8 4.5

6.88.5

12.2 12.513.6

15.516.9

1.3 1.0 1.5 1.6 1.9 2.1 2.1

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Total Air

CAGR 1994 2002: 16.6%

No IVS IVS introduced

Air CAGR: 8.9%

Total CAGR: 19.8%

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9. Tourism development

Tourism to and from HKSAR and Mainland China has been a major growth driver of international air traffic. Hong Kong is strengthening its attractiveness with new projects for the decade 2010-2020 to maintain its attractiveness. Loosening travel policy, economic growth and air service agreements liberalization will drive further the buoyant increase of inbound and outbound tourists to and from Mainland China.

9.1 Tourism to and from HKSAR

9.1.1 Outbound tourism from HKSAR

Outgoing tourism grew 4.3% p.a. over the last 7 years, almost in line with the national GDP (see Table 59) and can therefore be considered a mature market.

Table 59 – Evolution of outbound tourism in Hong Kong – 2001 to 2008 – in million tourists46

Source: Hong Kong Tourism Board * sameday + overnight tourists

61.164.5

60.968.9

72.375.8

80.7 81.9

2001 2002 2003 2004 2005 2006 2007 2008

CAGR: 4.3%

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9.1.2 Inbound tourism to HKSAR

Hong Kong’s incoming tourism market is fed by several very dynamic factors and made up of two distinct segments: Foreign tourists and Mainland tourists. Visitors to Hong Kong recorded a dynamic 10% annual growth between 2001 and 2008 (see Table 60).

Table 60 – Evolution of inbound tourism in Hong Kong – 2001 to 2008 – in million visitors47

Source: Hong Kong Tourism Board * overnight tourists only

8.9

10.79.7

13.715.0

15.817.2 17.3

2001 2002 2003 2004 2005 2006 2007 2008

CAGR: 10.0%

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Major tourism projects

Several tourism and hospitality projects were developed over the last years improving the attractiveness of Hong Kong (see Table 61). These projects are detailed in the appendices (see section 19.4.3)

Table 61 - Tourism and Hospitality projects in Hong Kong

Each of these projects contributed to the growing attractiveness of Hong Kong as a tourism place. In the coming years, the extension of Hong Kong Disneyland and the transformation of Hong Kong as a regional cruise hub will further nurture this attractiveness.

� Hong Kong Disneyland

The theme park opened in 2005 with about 70 attractions on 311 acres of land and 1,000 hotel rooms. The park recorded 4.5 million entrances in 2008, far below its theoretical capacity of 12.4 million visitors48. It ranked 7th in Asia and 18th worldwide among theme parks (see Table 62) behind Ocean Park49,50.

In November 2009, the Walt Disney Company announced that the Project Application Report (PAR) for a 1,000 acres Disney theme park in the Pudong district of Shanghai had received approval from the relevant authorities of the central Government of China51.

Simultaneously, Hong Kong Disneyland will be expanded to reach 457 acres by 2012 (+47%, same as Tokyo52. Based on benchmarks and depending on the occupancy ratio and adverse effect of the competing Shanghai Disneyland project, the expansion project could generate between 1.7 million and 8.5 million additional visitors.

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Ocean Park expansion


Table 62 – Top 10 Theme Parks in Asia 53– 2008 – in million visitors

The expansion of the Disney Park will keep developing the attractiveness of Hong Kong as a major destination in Asia. With about 50% of foreign visitors the park is a solid driver to inbound tourism and to air traffic54.

� Hong Kong as a regional cruise hub

The Government aims at developing Hong Kong into a leading regional cruise hub and plans to expand the current harbour facilities55.

Cruise tourism is growing globally and Hong Kong as a cruise holiday hub is poised for becoming more significant. It is expected that the cruise harbour development will have a positive impact on the already staggering trend in the cruise tourism at Hong Kong. With increasing attractiveness of Hong Kong as a cruise hub, international cruise tourists, in particular from Asia Pacific, will be likely to use HKIA as a means to access Kai Tak cruise terminal and will have a beneficial impact on HKIA air passenger traffic.

14.3

12.5

8.3

6.6

5.0 4.6 4.5 4.3 3.8 3.2

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9.2 Tourism to and from Mainland China

Since the beginning of the 21st century, Mainland China has experienced a rapid and steady growth of its tourism activity. On the outbound side, the importance of Hong Kong as a destination has been highlighted.

9.2.1 Outbound tourism from Mainland China

From 12 million in 2001, the total number of Chinese outbound tourists reached 46 million in 2008, recording an almost 21% p.a. increase (see Table 63).

Table 63 – Evolution of outbound tourism** in Mainland China56,57,58– 2001 to 2008 – in million tourists**

According to the World Tourism Organization, Mainland China is likely to become the fourth largest source of outbound tourists by 2020 reaching over 100 million travellers per year. This increase is to be supported by several key factors including:

� Economic growth and increasing disposable income of Mainlanders;

� Relaxation of travel policy (ADS and IVS policy, simplification of the visa application process, alleviation of the restrictions on foreign currencies);

� Increase in leisure time (paid holiday policy and change in the statutory holiday system);

� Change in consumption habits;

� Improved international relationships.

1217

20

2931

34

41

46

2001 2002 2003 2004 2005 2006 2007 2008 2020F*

Source: CNTA* WTO forecast , ** overnight tourists only

CAGR 2001 2008: 20.9%

CAGR 2001 2002: 11.8%

100

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9.2.1.1 Holiday System

Particularly the implementation of a new holiday system in 2008 will stimulate the outbound tourism in the coming years:

Mainland government has recently modified the holiday system including a rearrangement of the statutory holidays and the introduction of a paid holiday system.

The previous system in place was based on two fixed holiday weeks in May and October. In 2007, the May Golden Week holiday was replaced by 5 flexible paid holidays and the number of statutory holidays was increased by 1 day to 1159,60.

As of January 2008, all employees of government agencies, enterprises and public-service institutions were entitled to take paid holidays after serving the same employer for one year. Employees who have worked less than ten years are eligible for five paid days off a year, those who have worked for ten to 19 years are eligible for ten days and those who have worked for 20 years and above would have 15 days. National holidays and weekends were not included as paid holidays61.

9.2.1.2 Outbound tourism to Hong Kong

HKSAR ranks on top of foreign destinations for mainlanders (see Table 64).

Table 64 – Split of mainland outbound tourists into country of destinations – 2005

In the future, as Mainland China’s economy develops, travel propensity will rise and a growing number of mainland tourists is expected to fly abroad. A large number of them will elect Hong

Source: Tianjin University of Finance and Economics

49%

31%

4%3%

3%6%

3%

Hong Kong Macao Japan VietnamROK Russia Others


Kong, replacing those experienced travellers whose increase in standard of living will allow to fly further to South East Asia, Australia or even to a long-haul destinations. It is to be noted that despite the significant interest of mainlanders in Taiwan, Hong Kong remains the preferred destination for international travel (see Table 65).

Table 65 – Preferred international destinations by mainland tourists62 - 2008

9.2.2 Inbound tourism to Mainland China

The inbound tourism market to Mainland China is growing rapidly. The total number of inbound tourists grew from 91.7 million in 2003 to 131.9 million in 2007. In 2008, inbound tourism decreased to 130 million due to visa restriction and the crisis63.

Inbound tourism is expected to keep increasing as Mainland China modernizes its tourism and hospitality infrastructures.

Source: Visa and PATA, Asia Pacific Travel Intentions Survey 2009

16%

13%

13%

58%

Hong Kong Australia Taiwan Others


9.2.3 Passenger travelling preferences

Travellers prefer direct flight services. On a given route with competing direct and indirect services, direct services tend to catch 70% to 85% of the market despite the premium on price that needs to be paid to fly direct. However direct air services are conditioned by traffic volume and unit revenue. The share of direct services usually increases as the economy flourishes.

In 2008, about 63% of the international market to and from Mainland China flew on direct services. This proportion was very high in comparison of more mature aviation markets such as Europe (56%), North America (53%) and Australasia (51%). The concentration of the international demand in the key areas of Beijing, YRD and PRD explains the gap. Over the forecast period, it is estimated that the proportion of direct traffic to Mainland China will remain quite stable as the result of opposite forces:

� As Mainland China further develops, other provinces will generate a higher share of the international demand resulting in an increase in indirect traffic to these provinces;

� As Mainland China further develops, some indirect markets will become big enough to be serviced with direct flights. Additionally the implementation of the direct links will also contribute to the increase in direct flights.


10. Modal competition: Air – Sea competition

For the past decades, air freight has been the preferred vehicle within the shipment industry because of advancement in technological products (high value items) and time definite shipping.

Table 66 – Air freight as a ratio to world trade – 1996 to 2009

Source: IATA

For the last 15 years a declining correlation has been observed between the air cargo demand and world trade (shown in Table 66). Two reasons mostly contribute to this decline64:

� The competition with containerized shipping is increasing due to technology advances, increased speed, improved reliability and cheaper costs of sea transportation.

� Transportation mode is adjusted to the product life cycle: � As products mature and demand is stable or declines, unit values decline as well and

inventory carrying cost decreases. This results in a shift from air to sea transportation in order to keep costs down.


� As a new generation replaces the ageing products, product unit value is high resulting in a high inventory carrying cost necessitating speedy/reliable shipping and hence air shipment is preferred.

� Each new generation comes with lighter products slowing down the growth if the air shipping market.

Table 67 - Air Freight Share Trend of Video projectors/monitors commodity: Asia to United States – 2002 to 2007 - in thousands metric tonnes

Source: MergeGlobal

� Video monitors and projectors are examples of commodities with declining unit values (see Table 67).

As a result of these two trends, the world air freight measured in tonnes-km grew on average 2% points below world trade growth between 1997 and 2008.

In the base case, it is anticipated that this trend will continue at the same pace for the next years. Therefore the traffic regressions already factor in this trend that has been there for years. Even if the shift from air to sea trend will continue at the same pace, air shipping still provides one major advantage, time of delivery. Based on Airbus’ research, general air cargo is roughly a week quicker than containerised sea shipment on the North Pacific, and close to a week and a half quicker than bulk sea shipment. Hence the speediness of air cargo is still its core advantage and will remain an essential for manufacturers and businesses.

75.8% 75.9% 80.3% 88.1% 90.4% 87.5%

24.2% 24.1% 19.7% 11.9% 9.6% 12.5%

2002 2003 2004 2005 2006 2007

Ocean Share Air Share

35.9 56.8 80.1 101.7 124.6 77.8

Thou

sand

tonn

es

75.8% 75.9% 80.3% 88.1% 90.4% 87.5%

24.2% 24.1% 19.7% 11.9% 9.6% 12.5%

2002 2003 2004 2005 2006 2007

Ocean Share Air Share

35.9 56.8 80.1 101.7 124.6 77.8

Thou

sand

tonn

es


11. Cross-Boundary Infrastructure Development

Many infrastructure improvement projects around the GPRD have been either approved or examined recently. Several of these projects will improve the accessibility to the GPRD airports. Enhanced accessibility usually strengthens the leading role of an airport on a specific market segment. These infrastructure developments represent unprecedented factors whose specific impact on traffic will be assessed.

The most sizeable projects about to be implemented are:

� TM-CLK Link and TM Western Bypass (TMCLKL/TMWB)

� Hong Kong-Zuhai-Macau Bridge (HZMB)

� Express Rail Link (XRL)

11.1 TM-CLK Link and TM Western Bypass

With all major cross border roads from the PRD, by 2016, the Tuen Mun Road, Ting Kau Bridge, and Lantau link will be operating beyond capacity. The Link and Bypass, scheduled to be completed by 2016, will allow growing ground traffic to access the airport. This situation is already factored in the model.

Saving about 15-20 minutes between the NWNT, Western Shenzhen, and East Bank PRD to HKIA, they may provide greater accessibility to the logistic industry currently setup in Hong Kong. Overall the small time saving (15 minutes, 20 minutes at best) is expected to have a marginal influence on the distribution of the GPRD passengers and cargo traffic among the GPRD airports.

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11.2 The Hong Kong Zhuhai Macau Bridge (HZMB)

The HZMB, to be opened in 2016, will provide another transportation mode in addition to the ferry from Macau / Zhuhai to Hong Kong. IATA has investigated the possible benefits and impacts of the bridge to HKIA passenger traffic. The bridge is acknowledged for its potential impacts on HKSAR and western-PRD economy and therefore will boost travel propensity in the Greater-PRD. However changes in accessibility will be limited to a small number of markets.

11.2.1 Impact on the economy

Several economic studies have characterized the role that played connectivity in the development of the Eastern PRD. Some of these studies describe the scope of HKSAR-based investors as a 3-hr area around Hong Kong65.

With a current road transportation time of about 5 hours between Hong Kong and Macau, few HKSAR-based investors have moved across the delta to develop their business.

Over 20 years between 1980 and 2000, Dongguan and Shenzhen, benefiting from the massive investment led by HKSAR investors, have developed three times faster than Zhuhai and Zhongshan in the western PRD66.

Table 70 – Comparison of the eastern and western banks of the PRD in terms of international travel propensity and GDP – 2008

Source: China Bureau Statistics and MVA/IATA analysis

The bridge linking Hong Kong and Zhuhai is likely to stimulate flows of capital and expertise across the delta. Overall it will contribute to the further development of the GPRD economy, increasing the economic development and wealth of the western municipalities of Macau, Zhuhai, Zhongshan and Jiangmen.


On one side, the bridge is poised for boosting the economy of the western shore of the Delta. However on the other side, one must acknowledge that GPRD is a system and increased focus on the western areas will be in part detrimental to other areas of GPRD, limiting the potential additional impact on the economy.

It is estimated that the GDP forecasts used for PRD and HKSAR already include the long-term impact of the bridge on the economy. Therefore the likely industrial development of the western-GPRD is already factored in the model.

11.2.2 Impact on connectivity within the GPRD

By creating a road link between Zhuhai / Macau and Hong Kong, the bridge will change transportation use and habits around the GPRD. However, detailed analysis show that only HKIA and Macau airport will experience a limited change in their accessibility.

From Hong Kong

HKSAR-related passengers see the best access time to MFM cut by about 40 minutes from 150 minutes to 110 minutes. However HKIA remains much closer with 40 minutes between Hong Kong Island and the airport. Although there is no existing record of HKSAR-related passengers flying via Macau airport, it is estimated that the number of these passengers who are cost sensitive and willing to travel to MFM for lower fares, is currently very small.

The extent of this potential diversion should remain limited as low-cost services will be further developed in HKIA.

Should Macau airport implement a more aggressive orientation towards low-cost carriers, the airport could be preferred in the future by HKSAR-related cost sensitive travellers. However, as the time value of the cost-sensitive travellers is low, a 40-minute reduction in the access time to Macau airport is not likely to make a sizeable difference on the number of HKSAR-related passengers electing to use Macau airport.

From Macau

Macau-related passengers see the best access time to HKIA reduced by about 30 minutes from 90 minutes to 60 minutes. Some Macau travellers may choose HKIA instead of MFM as access time is reduced; however, Macau airport remains, the closest airport for Macau travellers with a 30-minute access time. In addition to the decrease in access time, the bridge will probably increase the connection frequency between Macau and HKIA. However with one rotation every hour, the ferry service already offers a high level of service. Even with increased coach frequencies, the theoretical access time to HKIA airport would remain higher than the access time to Macau airport.


From Zhuhai

Travellers to and from Zhuhai will also benefit from a 30-minute shortest access time to HKIA. Similarly to Macau, access time to HKIA will go down from 90 minutes to 60 minutes.

From other GPRD locations

As illustrated in Table 71, the bridge does not reduce the access time from any other locations of GPRD to any of the GPRD airports. In particular

� HZMB does not improve the 2-hour ferry access time to SZX from Macau and Zhuhai cities.

� HZMB does not improve the access time to any PRD airports from Jiangmen, Zhongshan and Foshan municipalities.

Table 71 – Change in the best access time from GPRD municipalities to the GRPD international airports further to the construction of the HZMB – in minutes

Municipality HKIA SZX CAN MFM

Hong Kong n/a 0 0 -40

Shenzhen 0 n/a 0 0

Dongguan 0 0 0 0

Guangzhou 0 0 n/a 0

Foshan 0 0 0 0

Jiangmen 0 0 0 0

Zhongshan 0 0 0 0

Zhuhai -30 0 0 0

Macau -30 0 0 n/a Source: MVA, IATA analysis


11.3 Express Rail Link (XRL)

By 2016, XRL, a 26-kilometre railway, will provide connection between Guangzhou-Shenzhen-Hong Kong and interconnect with the Mainland China HST network.

This drastic improvement in the service quality is expected to raise train transportation to a competitive level although travel times will remain overall more advantageous for air. Therefore a possible diversion from the air to the rail transportation modes is investigated in further sections of this report (see 14.4.1.3).

Table 72 - Chinese railway infrastructure development map67

As part of a major trillion US$ infrastructure investment plan, Mainland China has embarked in a large railway infrastructure development project connecting its main cities with high-speed trains capable of speeds of up to 300-350km/h. Mainland China’s ambitious plans to expand its railway network includes a US$4 billion contract for 80 high speed rail trains as well as 42 high speed rail lines by 2012; and with 16,000 kilometres of high speed tracks by 202068. The main corridors take course from Guangzhou to Beijing, Shanghai to Kunming, Beijing to Shanghai, Xuzhou to Lanzhou and Shenzhen to Hangzhou (see Table 72).

Hong Kong’s Kowloon station (KOW) will be connected to Mainland China’s high speed train system through the Guangzhou-Shenzhen-Hong Kong Line (XRL) in 2015.

Linking its main cities (Beijing to Guangzhou, Shanghai to Kunming, Shanghai to Shenzhen), the high-speed train is expected to cut rail travel times by two to five times. Trips from HKSAR

Pan Pearl River DeltaRegion

Beijing Guangzhou and HangzhouFozhou Shenzhen LineGuangzhou Shenzhen Hong Kong Line (XRL)Other Lines

Guiyang (5H)

SHIBI

KOW


to the cities of Xiamen, Shantou, Changsha and Fuzhou will be reduced to 2 hours, 4 hours, 4 hours, and 5 hours respectively (see Table 73). In addition, Nanning Wuhan, Nanchang and Fuzhou will be reachable within 5 hours. Trips to Zhengzhou and Hangzhou are expected to take around 7 hours from Hong Kong by high-speed train. Trips to Shanghai, Xian, Kunming, Beijing, Nanjing, Chongqing and Chengdu are expected to exceed 8 hours.

Depending on demand, Chinese HST will be made of 8 cars (600 seats) or 16 cars (1200 seats). This configuration is very similar to the one observed in Europe where single trains usually offer between 350 and 550 seats and double trains 700 to 1100 seats.

Table 73 – Evolution of the shortest rail travel time from Hong Kong between 2008 and 2020 – in hours

10 11

16 1713

15

24

1820 19

28 2724

2724

33

24 4 4 5 5 5

7 7 8 9 9 10 10 1012

0

10

20

30

40

Shanto

u

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ha

Nanning

Xiamen

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Nanchan

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Fuzho

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Zhengz

hou

Hangzh

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Shang

hai

Xian

Kunming

Beijing

Nanjing

Chongq

ing

Chengd

u

2008 2020

Rai

l tra

vel t

ime

(hou

rs)

Rail faster than air Air faster than rail

Source: Hong Kong Transport and Housing Bureau, IATA estimates

10 11

16 1713

15

24

1820 19

28 2724

2724

33

24 4 4 5 5 5

7 7 8 9 9 10 10 1012

0

10

20

30

40

Shanto

u

Changs

ha

Nanning

Xiamen

Wuhan

Nanchan

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Xian

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Beijing

Nanjing

Chongq

ing

Chengd

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2008 2020

Rai

l tra

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ime

(hou

rs)

Rail faster than air Air faster than rail

Source: Hong Kong Transport and Housing Bureau, IATA estimates


12. Airport Development Strategies

IATA expects the competition amongst airports to intensify on both the passenger and cargo segments. On the passenger segment, no break with the past is anticipated; all future trends on pursue strategies and developments that started years ago. On the cargo segment, more radical changes are expected.

Section 3.3.3 provides complementary information and data about the international and domestic connectivity (route network) from the GPRD airports.

12.1 Guangzhou Airport

The following paragraphs highlight the key elements of Guangzhou airport’s future strategy. In particular, CAN will improve accessibility and capacity to the benefit of domestic and regional traffic. Growth on the passenger long-haul routes will remain small. On the cargo segment, the management of Guangzhou airport aims at “developing the airport into a logistic business for the Asia-Pacific region and also as a global air freight hub”.

12.1.1 Situation

Guangzhou Baiyun International Airport opened on August 5, 2004 and was designed to replace its 72-year-old predecessor. Covering an area of 15 km², the new airport is nearly 5 times larger than the previous one and was the first airport in Mainland China designed and built on the hub concept.

The two parallel runways in the first phase of the construction were built to be capable of the 4E aircraft category (up to B747). The terminal area was designed to accommodate up to 25 million passengers per year. Covering an area of 350,000 sqm, the first phase of the terminal complex was the biggest one of its kind in Mainland China with all its equipment and facilities up to international standard69.

Recently, Guangzhou airport launched an off-airport check-in strategy to better catch the demand from the catchment area; several check-in have been opened at key locations such as Shenzhen, Zhuhai, Dongguan. However this strategy is not expected to give a clear advantage to CAN as SZX and HKG have implemented a similar approach.


12.1.2 Infrastructure and passenger terminal development

CAN has steadily developed over the past, more than doubling its capacity over the last nine years. Guangzhou airport has just completed the construction of the last two concourses of terminal 1, raising the airport capacity to 45 million passengers.

Furthermore, CAN is likely to benefit from a very aggressive investment plan. The National Development and Reform Commission of China recently approved the airport's new expansion plan including a third runway with a capacity of 120 movements per hour as well as a new passenger terminal 2 and the related facilities. Terminal 2 is planned to be operational in 2015 bringing airport capacity to 75 million passengers. IATA estimates a potential of 85 million passengers by 2025. However airspace capacity is expected to be the major bottleneck for CAN as the airport is reportedly short of 200 movements per day due to airspace constraints.

12.1.3 Air service development

Most of the development is sourced from domestic operations growing much faster than international capacity (see table below).

Table 74 – Traffic evolution at CAN – in thousands passengers

Source: SRS Analyzer

Although CAN is expected to improve accessibility and capacity, competition with HKIA should focus mostly on the regional routes in particular to South East Asia (taking advantage of CAN’s geographical position).

0

50

100

150

200

250

300

350

400

450

500

Domestic destinations


2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

0

50

100

150

200

250

300

350

400

450

500

Domestic destinations


2000 2001 2002 2003 2004 2005 2006 2007 2008 20092000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Thou

sand

s P

asse

nger

s


Major players such as CA and CZ do not envisage important developments at CAN in particular for long-haul operations and have initiated relocation to alternative markets (see section 13.1.1). The weaker market in Guangzhou and HKIA’s supremacy on GPRD make long-haul development from CAN risky and challenging for airlines. The CAN market is much smaller and actually less affordable than the Hong Kong or Shenzhen market (see sub-section 3.3.3.1).

HKIA’s supremacy on the long-haul market which is reflected in more destinations, larger choice of carriers and more frequencies structurally affects the performance of any long-haul development from CAN. It is also anticipated that this will keep affecting CAN’s development in the long-term.

12.1.4 Accessibility and exposure on the catchment area

CAN has embarked on several strategies to better attract local demand. One of them is the launch of the Metro line which is a positive step for its accessibility. However, impact on HKIA is expected to remain marginal.

Guangzhou airport has launched an off-airport check-in strategy to better capture the demand from the catchment area. Several remote check-in points have been opened at key locations in Shenzhen, Zhuhai and Dongguan70. However, this strategy does not give a clear advantage to CAN as SZX and HKG have implemented a similar approach.

The Metro line to Guangzhou downtown is going to open by 2010; connection to Guangdong train services will be offered at Guangzhou East railway station. The new Metro line will give an advantage to Guangzhou airport on the immediate catchment area and will help the airport to face the increasing competition, especially from SZX71.

12.1.5 Cargo Development

The recent investments conducted and development implemented by Guangzhou airport (relocation of the FedEx hub from the Philippines, building of a neutral cargo terminal) illustrate Guangzhou airport’s ambition to “develop the airport into a logistic business for the Asia-Pacific region and also as a global air freight hub”. Elements below are likely to support further this strategic orientation.

� With the support of the CAAC and China’s “Eleventh Five-Year Development Plan,” Guangzhou is planning to build three new logistics park72.

� The implementation of a bonded logistics park (Type B) and Free Trade Zone is part of this plan. It is to be built North of the FedEx hub in CAN, will possibly serve the ASEAN free


trade agreement negotiated between Mainland China and the South East Asia countries. Incentives and benefits provided by the municipal and central governments to attract additional cargo operators includes: a streamlined process, greater efficient transshipment process, potential VAT and customs duty exempt, and reduced tax rates as well as financial subsidy of up to RMB10 million per cargo freighter on an international cargo route73. While new operators will provide service to CAN in order to acquire market share, it is suggested that FedEx’s intra-Asia hub will be one of the beneficiary of the free trade zone74.

� Airport facilities will be extended to meet the growing demand. Already the FedEx terminal has been built with a dedicated ramp control tower, which enables FedEx to control aircraft movements on the ground, aircraft parking plans as well as loading and unloading priorities. Also included at the hub is a state-of-art sorting equipment delivering a capacity of up to 24,000 packages an hour. The hub has 30 parking positions to be expanded to 50 and is expected to run 136 weekly cargo flights mostly to Asian destinations (BKK, CEB, CRK, DEL, HAN, ICN, KIX, KUL, MNL, NRT, PVG, SIN, BOM, SGN, and PEK) as well as CDG and SYD outside of Asia. Section 15.4.1.2 describes the impact on HKIA of FedEx settlement in CAN.

� By 2015 cargo capacity will exceed 2 million tonnes. Current Master Plan of Guangzhou airport calls for the cargo capacity to reach 3.5 million tonnes in 202075.

� The third runway, to be built by 2011, is reportedly to be dedicated to cargo operations76.

� The airport is also expected to pursue a strategy to better serve its catchment area and plans are underway to open a second off-airport cargo station in Zhuhai.


12.2 Shenzhen airport

The following paragraphs highlight the key elements of Shenzhen airport’s future strategy. One element that stands out is that Shenzhen airport (SZX) will significantly increase its passenger and cargo capacity in the medium-term and develop its regional network.

12.2.1 Situation

Opened on October 12, 1991, SZX traffic increased to almost 19 million passengers in 2008.

SZX provides operation service of 24 hours and is the first modern international airport realizing the combined transportation by sea, land and air, and adopting transit transportation in Mainland China. Ground transportation provides an easy access to Hong Kong, Macau, Guangzhou, Dongguan, Huizhou, Zhongshan and Zhuhai. In terms of marine transportation, a hovercraft service was put in place to connect SZX with Hong Kong, Macau and Zhuhai.

Shenzhen Airport completed the reconstruction and expansion of Terminal B in January 2004. In addition, Shenzhen Aviation Logistics Park allows SZX to handle 700,000 tonnes/year77.

12.2.2 Infrastructure and terminal development

SZX airport has embarked on a major infrastructure development program including a second runway to be opened in 2011 and a third terminal boosting capacity for international and domestic operations up to 45 million passengers in 2015 from 15 million passengers78.

Efficiency will be improved as well with a targeted minimum connecting time of one hour.

The ultimate capacity is to be reached by 2035 with up to 60 million passengers per year.


Benefiting from its catchment area and accessibility, SZX aims at developing its international network with the support of the based carrier Shenzhen Airlines (ZH) and foreign LCCs.

As commented in sub-section 13.1.1, ZH has adopted an aggressive strategy based on the development of both domestic and international services. Prior to the 2008 / 2009 financial crisis, the airline announced 16 new regional routes to be introduced before 2011.

Furthermore, CA has identified SZX as a focus market at the expense of CAN. Foreign low-cost carriers such as Air Asia have announced their plans to intensify their operations to SZX.



SZX and ZH have implemented a strategy to better address the catchment area by introducing off-airport check-in and “One through ticket” connecting 57 Mainland China cities to HKG via SZX (with a seamless connection).

Addressing the issue of accessibility to the airport, Shenzhen Metro is expanding its existing rail line to connect, in 2011, the western section of Shenzhen (actually where the airport resides) with the east79.

12.2.5 Cargo development

It is expected that Shenzhen Airport will also leverage and rely on the Shenzhen municipal government’s focus on cargo and logistics to develop a major air cargo base targeting 1.8 million tonnes in 2015.

� Totalling six (6) logistics parks, Shenzhen has no plans to develop any more logistic facilities; however, it intends to position itself as an integrator of services for industries

� Reliability is being addressed in SZX 2015 airport expansion plans by providing better air traffic infrastructure, relaxed and faster customs processing procedures and enhanced cargo sorting technology to meet international standards.

� UPS has chosen Shenzhen airport to relocate its intra-Asia air hub operations from the Philippines. The UPS facility is built on a land area of 89,000 sqm and include a dedicated 150,000 sqm cargo apron provided by Shenzhen Airport, an express Customs handling unit, sorting facilities and cargo handling areas. UPS expects that the new hub location and facilities will help them to cut at least one day off shipment times-in-transit for Asian customers. Shenzhen airport has also launched an express Cross-Border Customs Clearance service for cargo80.

The hub operates with an initial sorting capacity of 18,000 items per hour, which is expandable to 36,000 items (ultimate) per hour.81

84 weekly flights will be serviced at the beginning to Asian destinations (ICN, KIX, NRT, CRK, SIN, KUL). UPS’ European hub in Köln is bound to be served once a week.

� A second runway is scheduled to open in 201182.

� An incentive scheme has been put in place by the Shenzhen municipal government to foster the development of cargo airlines at SZX. These incentives consist in a 3-year subsidy based on the cargo volume handled for the launch of a new route83.


12.3 Macau Airport

The following paragraphs highlight the key elements of Macau airport (MFM)’s strategy. MFM may increase its capacity in the medium-term and will try to attract low-cost carriers. Although the government and the airport authority try to revive the cargo segment that has been strongly hit by the crisis and the Direct Links, MFM will likely remain a marginal player on that market.

12.3.1 Situation

MFM commenced operation in November 1995.. It is a fully functional 24-hour airport. An 11,000-foot ILS CAT II equipped runway, constructed in compliance with ICAO standards, is capable of handling long haul flights. The current facilities are designed to handle 6 million passengers and 165,000 metric tonnes of freight a year. The airport is not congested and has ample excess capacity for future expansion84.

12.3.2 Infrastructure and terminal development

MFM may embark on a major infrastructure development program including terminal and apron expansion set to be completed by 2015. It would boost capacity for international and domestic operations up to 10/12 million passengers and 500,000 tonnes in 2015 projected by NACO85.


Strained by the direct links and a weakening tourism demand into Macau, MFM will rely on developing regional and long haul low cost carriers (LCC). MFM’s relaxed aviation standards, incentives, and airport capacity availability compared to the other GPRD airports may attract LCCs. In particular the airport has implemented an incentive scheme for additional flights and new routes. Discounts are offered for two years and cover up to 50% of the landing and passenger charges. Already, foreign low-cost carriers such as Air Asia and Jin Air announced plans to intensify their operations in MFM86.

Air Macau (NX), Macau national air carrier, has been severely weakened by the crisis. The airline is likely to focus on domestic and regional traffic in/from Mainland China, competing against Macau based low cost carrier (Viva Macau) on its regional and domestic network87.

The success of Macau airport’s strategy focusing on low-cost carriers will primarily depend on HKIA’s success on that specific segment. If Asian low-cost carriers can address the Hong Kong market –and by extension the eastern GPRD region- by serving HKIA, then Macau airport’s role


will be restricted to the Macau market only. Under the base case, Macau airport low-cost strategy is intended to address the western-GPRD market and primarily Macau.


To better address the catchment area of those outside of Macau arriving by maritime travel, MFM has introduced “Express Link Check-in Counter” to allow for remote check in services at the ferry terminals of HKSAR. Similar services will be implemented for Shenzhen travellers wishing to travel via MFM in the upcoming years.

Addressing the issue of accessibility to the airport (only road transport), the construction of Macau Light Transit System scheduled to operate in 2013, will connect Macau with Taipa, where the airport resides. Addressing only the western banks of Taipa and southern banks of Cotai, road transit will still be the best mode of accessibility to the airport as no direct link to the airport is provided by the light transit system88.

12.3.5 Cargo development

Macau International Airport’s performance is the worst among the PRD airports in terms of cargo. Hard hit by the economic crisis, the establishment of a direct air cargo link from Mainland China to Taiwan, and a conservative airport strategic plan over the years, MFM has experienced a decrease in cargo volume of nearly 40% in 2008 compared to previous years.

� A continued decline in cargo volume has caused the Macau government to take a proactive strategy. Similar to PRD airports, MFM is relaxing its custom procedures to provide quicker transport time. In order to make their airport more attractive, cargo agents are providing a one stop, door to door service through the utilization of truck to air and air to truck transport without custom clearance.

� Cargo facilities in MFM are being expanded to accommodate for a larger fleet. With an ambitious strategic plan to develop the airport, MFM may regain its ground in GPRD cargo traffic89.

� MFM has an incentive scheme to develop cargo flights on both existing and new routes. The incentives are offered for one year and consist in a discount on landing and parking charges.

� However the absence of strong based carriers and the relative distance to the manufacturing areas are structural handicaps that will make it difficult for MFM to catch up with the other GPRD airports.


12.4 Zhuhai airport

Zhuhai airport started commercial operations in 1995 and was taken over in 2006 by a management company jointly owned by AAHK. Zhuhai airport offers domestic flights to the main Chinese cities operated by Mainland China network and low-cost carriers.

The airport handled 1.1 million passengers and 11,000 tons in 2008. Based on the rapid development of traffic these last years, the airport management aims at addressing the growing demand in and out GPRD, targeting 2 million passengers and 50,000 tons of cargo in 2011. The airport is fully equipped to accommodate any kinds of flights (13,500ft runway capable of Cat 4E or B747-like aircraft ) and has enough capacity to keep developing its traffic.

12.5 Airports outside of GPRD

IATA led a review of the airports that are currently competing with HKIA on the passenger TT and cargo Transshipment markets or could be competing in the future due to the developments underway.

12.5.1 Taoyuan airport

On the passenger segment, Taoyuan and the Taiwanese carriers are not expected to drastically change their strategy. The expected surge in traffic from Mainland China is very likely to saturate the capacities of most Taiwanese airports including Taoyuan. The Civil Aeronautics Administration of Taiwan is reportedly working on the revision of the national airport plan. It is estimated that the influx of Mainlanders will keep the Taiwanese carriers busy for years, trying to match capacity and an inadequate fleet with this new demand.

On the cargo segment, the airport aims to create an Airport City and become a global logistic hub in East Asia. 1250 hectares will be dedicated to the development of logistic and office activities, including an extension of the current Free Trade Zone. Direct cargo links will ease the development of TPE as a regional hub and even a long haul hub between Asia and the United States.

Additionally Taoyuan would certainly benefit from 5th freedom rights, should such rights be granted to the Taiwanese cargo carriers.

If required in the long-term, the construction of a 3rd runway is envisaged.


12.5.2 Shanghai-Pudong

The airport has just increased its capacity to 60 million passengers and 4.2 million tonnes90. Airport development plans on a new terminal and two additional runways by 2015 increasing capacity up to 80 million passengers and 5.7 million tons91. Shanghai will be the home of China Southern’s A380s.

Although Shanghai-Pudong has been mostly a point-to-point airport for the recent years, it is expected to develop its transfer market. In particular, modern terminal facilities, enhanced traffic rights including 5th freedom and airline strategies will push Shanghai-Pudong into becoming a strong hub on the domestic - international flows. On the international – international, many structural limitations prevent PVG from rising its competitiveness. In particular Mainland China immigration requirements keep connecting time high (100-120 minutes) and dissuasive in comparison to HKIA, ICN, TYO (Tokyo airports: HND and NRT) or SIN (whose minimum connecting times are below 60 minutes)92.

The cargo activity at PVG will benefit from the following factors:

� Opening of a bonded logistics park (Type B);

� Development at PVG of several major cargo carriers, such as Air China Cargo (11 jumbo freighters by 2011, most of them to be based in PVG), DHL (55,000 square meter facility to open in late 2010), UPS (fleet upgrade from MD-11F to B747F) and China Cargo Airlines (freighters fleet upgrade and development with 10 B777F to replace its 6 MD11F);

� Moreover, the expansion of the international passenger networks from Pudong will bring additional long-haul aircraft and extra belly capacity to handle cargo. China Southern’s decision to base its A380 at PVG illustrates this potential93;

These factors are expected to support the development of PVG as a regional cargo hub in the short/medium-term and a global hub in the medium/long-term. Considering its geographical position, a development on North and Central Asian routes is likely as well as to North America.

12.5.3 Beijing Capital International Airport

Beijing Capital International Airport is located in northeast of Beijing, capital of Mainland China and 25 kilometres from the centre of Beijing city.

Beijing Capital International Airport, under the administrative control of Civil Aviation Administration of China (CAAC), officially opened on March 02nd, 1958. The Passenger Terminal 1, covering an area of 60,000 sqm, and auxiliary facilities, including parking apron and


car parks, officially put into service on January 1st, 1980. Terminal 1 was designed to serve 60 flights daily and 1,500 passengers at peak hours.

With the continuous growth of international airlines to Beijing and the density of international flights, the Terminal was enlarged again in 1999. Terminal 2, covering an area of 336,000 sqm and equipped with state-of-the-art facilities, officially went into operation on November 1st, 1999. Terminal 2 is able to handle 26,500,000 passengers yearly and 9,210 passengers at peak hours.

Terminal 3 became fully operational on 2008. Currently, it houses, among other carriers, Air China, Oneworld and Star Alliance airlines. it was the largest airport terminal-building complex built in a single phase with 986,000 sqm in total floor area at its opening. It features a main passenger terminal and two satellite concourses. It increases BCIA's total capacity up 50 million passengers per year to a total of approximately 82 million. One of the main innovations at terminal 3 is the baggage handling system that actually allows simplification and shortening of the transfer process.

In order to accommodate future demand, a second airport should be built in the southern part of the Beijing Territory (Daxing District). Construction is reportedly expected to start in 2010 with an announced capacity of 60 million passengers94 and 1.8 million tons. The airport is expected to open in 2015. Based on preliminary statements, ultimate capacity would reach 85 million passengers with three passenger terminals. Although the plan is to start construction in 2010, the final approval from the State Council is still awaited as this report is being printed.

12.5.4 Chengdu

Chengdu Shuangliu International Airport is an important aviation hub and distribution centre of passengers and cargo in the south western region.

Large-scale expansion of the airport was conducted in 2001 to accommodate larger aircraft. The runway was extended to 3,600m. The airport invested RMB 3.8 billion to build the international passenger terminal of 39,000 sqm in 2004.

A second runway was opened in 2009, allowing the airport to handle the largest A380 aircraft. A second passenger terminal has started construction in 2009 and is expected to be in service in 2011. The new terminal is twice the size of the current T1, which will increase the airport design capacity to 35 million passengers by the time of completion.


12.5.5 Chongqing

Chongqing Jiangbei International Airport operates two terminal for domestic and international traffic. The domestic terminal has a design capacity of 7 million passengers while its international terminal is able to handle more than 1 million passengers annually.

The airport is undergoing a major expansion which includes a new terminal of 80,000sqm and a new runway. When the expansion project is completed next year, Chongqing Airport will have a capacity of 30 million passengers and 260,000 air traffic movement.

A third terminal and third runway are in the planning stage. The ultimate capacity of the airport is 70 million passengers in 204095.

In parallel, an ambitious logistics plan is being developed (Chongqing Airtransport Logistic System) to support the industrial development in the Cheng-Yu region.

12.5.6 Seoul-Incheon

The Ministry of Land, Transport, and Maritime Affairs stated the government would invest US$3.13 billion by 2015 as an effort to develop Korea into Asia’s transportation hub to attract more business. With the expansion plans completed, Incheon International Airport will be capable of handling 62 million passengers and 5.8 million tons of cargo a year up from the current 44 million passengers and 4.5 million tons of cargo.

On the passenger market, the Korean hub will maintain its status of hub to Asia and Mainland China for traffic from North America. However Incheon will face an intensifying competition from Pudong.

The cargo activity at ICN will benefit from the following factors, supporting the development of ICN as a global hub:

� Attractive geographic location on the route between Asia and North America;

� Freighters fleet development with Korean Air investing in 7 B747-8F and 5 B777F to replace its old 747-4F96 complemented by a significant fleet expansion in the passenger segment;

� Korea’s Ministry of Land, Transport, and Maritime policy to promote Korea as Asia’s leading transport hub97


12.5.7 Kuala Lumpur

Kuala Lumpur airport development plan is about to enter in its final phase in 2010. It includes a new low cost terminal, the expansion of the existing terminal and the construction of the third runway.

Capacity will increase to 100 million passengers from 45 million in 2008. Cargo capacity is likely to remain at 1 million tonnes.

The following factors are expected to support the development of KUL cargo operation as one of Asia’s regional hub in the long-term:

� Construction of third runway;

� Land acquisition for future cargo terminal facility, likely to increase cargo capacity to 3 million tonnes98. However no immediate plan is defined;

� Cargo operation investment by MASkargo, the major market share holder of KUL cargo tonnage99;

12.5.8 Singapore-Changi

The airport has just increased its capacity to 68.7 million passengers and 3.2 million tonnes with the opening of Terminal 3. With the planning of Terminal 4 in discussion, airport capacity is projected to increase by an additional 20 million passengers in 2015.

On the passenger segment, it is anticipated that the airport will pursue its aviation hub strategy for both legacy and low-cost carriers.

SIN has no immediate cargo expansion plans.

12.5.9 Other airports

Other airports have been considered and discounted as they were assessed not to be in competing with HKIA or present a too weak competitive position on HKIA’s key TT markets.


13. Airline Development Strategies

IATA considered all possible changes in the strategies of the airlines serving HKIA and its competitors. No disrupting change is anticipated on the passenger market. However, on the cargo market IATA expects an intensifying competition between airports resulting from the cargo airline strategies. Airline and airport strategies are often interrelated.

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Chapter 5 – Demand and Movements Forecasts In line with the forecasting approach described in section 2.3, the following chapter successively presents the base case forecasts for passengers, cargo and movements, the high / low cases and the sensitivity analysis.

14. Passenger Forecast

This chapter presents the forecast for passenger demand at Mainland China airports, GPRD (excluding HKIA) and HKIA. Under the base case, HKIA is forecast to reach 97 million passengers in 2030, recording a growth of 3.2% p.a. between 2008 and 2030.

14.1 Passenger traffic forecast for Mainland China

In 2008, Mainland China airports (excluding HKIA and MFM) totalled 406 million passengers, split into 357 million domestic passengers and 49 million international passengers.

IATA forecast an unconstrained yearly 7.7% baseline growth for Mainland China leading to 2.1 billion passengers at Mainland airports in 2030 (see Table 79).

� 232 million passengers on international routes (+7.4% p.a. over the forecast period).

� 1,858 million passengers on domestic routes8 (+7.8% p.a.).

Table 79 – Mainland China passenger traffic (excluding HKIA and MFM) – 2008 to 2030 – in passengers

Market 2008 2015 2020 2025 203008-15CAGR

(%)

08-30CAGR

(%) Mainland China1 357,070,560 662,298,763 983,371,875 1,383,955,557 1,857,672,409 9.2% 7.8%

Int’l 48,691,440 82,817,450 122,966,183 173,057,352 232,293,491 7.9% 7.4%

Total 405,762,000 745,116,212 1,106,338,058 1,557,012,909 2,089,965,900 9.1% 7.7%

Note: (1) Forecast for domestic traffic does not factor in the potential impact of HST


8 Not taking into account the potential impact of HST on the domestic traffic of Mainland China airports


14.2 Passenger traffic forecast for GPRD

In 2008, GPRD airports handled 110 million passengers, split into 64 million domestic passengers and 46 million international passengers; of which 48.6 million passengers at HKIA.

GPRD traffic is expected to reach 387 million passengers in 2030 (+5.9% CAGR, see Table 80):

� 101 million passengers on international routes (+3.6% p.a. over the forecast period).

� 286 million passengers on routes to Mainland China9 (+7.1% p.a.).

Table 80 – GPRD passenger traffic – 2008 to 2030 – in passengers

Market 2008 2015 2020 2025 203008-15CAGR

(%)

08-30CAGR

(%)

Domestic 1, 2 63,804,940 116,281,653 163,762,790 229,742,957 286,515,292 9.0% 7.1%

International 45,835,674 56,669,819 68,998,773 83,897,845 100,612,943 3.1% 3.6%

Total 109,640,614 172,951,472 232,761,563 313,640,802 387,128,235 6.7% 5.9%

Note: (1) Domestic encompasses Mainland China, Hong Kong and Macau. Traffic between GPRD airports is counted as domestic (2) Forecast for domestic traffic from PRD airports does not factor in the potential impact of HST


In 2008, GPRD airports accounted for 24% and 53% of Mainland total traffic and international traffic respectively. These shares are expected to reduce to 18% and 34% in 2030. This reflects the growing importance of the second-tier provinces in Mainland China’s total traffic and the most significant role to be played by YRD on the international demand.

Table 81 – GPRD share of Total China passenger traffic – 2008 to 2030

Traffic segment 2008 2015 2020 2025 2030

International 53% 45% 40% 36% 34%

Total 24% 22% 20% 19% 18%

Note: China passenger traffic designates traffic at Mainland China, Macau and HKIA airports

Source: CAAC, Airport Authorities, IATA analysis and estimates

9 Not taking into account the potential impact of HST on the domestic traffic of PRD airports


14.3 Future HKIA competitive position

The following section projects HKIA’s competitive position within GPRD. HKIA will face a decrease in its market share but will remain the dominant airport in GPRD. Additionally IATA notes that the current PRD airports will not be able to accommodate the booming demand to GPRD. This will participate to sustain HKIA’s market share at a reasonable level.

14.3.1 HKIA Competitive position within GPRD

14.3.1.1 HKIA market share on GPRD traffic

Definition of GPRD traffic

This refers to the GPRD airports total passenger traffic and compares the relative market size of each GPRD airport from a total airport throughput perspective.

When putting together the passenger forecasts for GPRD airports and HKIA (see section 14.4), the conclusion is that HKIA market share on GPRD airports international passenger traffic will drop from 84% in 2008 to 78% in 2015 and to 66% in 2030 whereas HKIA market share on domestic traffic will reduce from 16% in 2008 to 11% in 2030. Overall HKIA markets share on GPRD airports total traffic is estimated to reach 25% in 2030 down from 44% in 2008 (see Table 82).

Table 82 – HKIA market share on GPRD traffic – 1993 to 2030

Traffic segment 1993 1997 2000 2004 2008 2015 2020 2025 2030

Domestic1 n/a n/a n/a 19% 16% 11% 11% 10% 11%

International n/a n/a n/a 82% 84% 78% 74% 70% 66%

Total 69% 64% 60% 49% 44% 33% 29% 26% 25%

Note: (1) Domestic encompasses Mainland China, Hong Kong and Macau. Traffic between GPRD airports is counted as domestic Source: CAAC, Airport Authorities, IATA analysis and estimates

The following sections (14.3.1.2 to 14.3.1.4) refer to the OD traffic segment only.


14.3.1.2 HKIA market share on Guangdong international traffic

Definition of Guangdong international traffic

These are international OD air passengers travelling between the Guangdong Province and international cities (as a final destination) via one of the four international airports in the GPRD (HKIA, CAN, SZX or MFM). Passengers whose final origin or destination is in the HKSAR are specifically excluded.

Importance of the Guangdong international traffic to HKIA

This refers to the intermodal passengers who travel by surface transit from/to the Guangdong Province who then fly via HKIA to/from international cities. This Guangdong generated OD passenger demand represents a sizeable share of HKIA traffic, accounting for about 40% of the total international OD traffic (excluding Mainland) at HKIA (or 33% of the total OD traffic) in 2007.

As outlined in the previous sections, the international demand to and from GPRD is forecast to grow faster than the HKSAR market itself. In terms of market maturity and travel propensity, PRD is still far behind HKSAR and therefore appears as potential growth engine to Hong Kong carriers.

Evolution of HKIA market share on Guangdong international traffic

In 2007, HKIA was found to hold 64% of the international demand to/from Guangdong.

Based on a study commissioned by AAHK to IATA and an approach developed by MVA, the international demand to/from Guangdong was projected and split into the various GPRD airports. Passenger’s choice between the various airports was modelled using three indices:

� Air service index – a measure of the range of destinations and frequency of flights relevant to the air passenger group in question.

� Airfare index – a measure of the relative level of airfares from an airport, based on collected airfare data.

� Surface access index – a measure of the relative accessibility of each airport from each area under consideration.

Based on this projection, HKIA share is projected to reach 41% in 2030. Guangzhou airport will see its share increase from 22% to 34% and Shenzhen from 3% to 15% (see Table 83).


Table 83 - Guangdong International OD market at the GPRD airports – 2030 – in million passengers

Note: shares don’t add to 100% due to rounding Source: IATA analysis and estimates, MVA analysis and estimates

These evolutions reflect the growing role of Guangzhou and Shenzhen airports on the GPRD international demand market. As per the forecast, it is expected that HKIA will keep a dominant market share in 2030 which also reflects well the consideration that HKIA would remain the undisputed gateway for GPRD long-haul traffic, the airport competition clearly focusing on regional routes.

14.3.1.3 HKIA market share on HKSAR domestic traffic

Definition of HKSAR domestic traffic

These are OD air passengers travelling between HKSAR and Mainland cities (as final destinations) via either HKIA or SZX.

Importance of the HKSAR domestic traffic to HKIA

This refers to those HKSAR air passengers (mix of HK residents and visitors) who fly via HKIA to/from Mainland cities which accounted for over 20% of HKIA OD traffic in 2008. Through surveys, we found that some of the passengers who should have used HKIA, used Shenzhen airport instead (mainly to/from Mainland cities). These are defined as “leaked” HKSAR air passengers. As the service offer from Shenzhen airport is numerous and the ground access to Shenzhen airport is improving, it was important to assess HKIA’s market share evolution on this specific market.

Shenzhen, 8.5m 15%Macau, 6.5m

11%

HKIA, 23.6m 41%

Guangzhou 19.5m 34%

TOTAL58.1m

Mll

on P

asse

nger

s


Evolution of HKIA market share on the HKSAR domestic traffic

Similarly to the approach developed for Guangdong international traffic, MVA and IATA modelled the market share of HKIA on this specific traffic segment using the same model based on the air service index, the airfare index and the surface access index.

HKIA share is projected to decrease from 74% in 2007 to 65% in 2030 as the “leaked” HKSAR air passengers is expected to increase during the forecast period.

14.3.1.4 Implications on HKIA OD passengers

As the result of the forecast, IATA anticipates the following distribution and evolution of HKIA OD passengers (see Error! Reference source not found.).

Table 84 - Distribution of HKIA OD passengers – 2030 – in million passengers

Source: IATA analysis and estimates, MVA analysis and estimates

� The share of PRD international passengers (those passengers travelling between PRD and a place outside of Mainland China i.e. intermodal passengers defined in 14.3.1.2 or non-HKSAR related passengers) is expected to reach 37% in 2030, slightly increasing from 33% in 2007;

� Consequently the share of HKSAR related passengers (either HKSAR residents or foreigners and Mainlanders travelling to HKSAR) is anticipated to decrease. However HKSAR related passengers are expected to remain the main market segment for HKIA and its airlines;

HKSAR Residents & Vistors <-> Int'l, 18.4m

29%HKSAR Residents & Vistors

<-> M ainland, 21.2m 34%

PRD <-> Int'l, 23.6m

37%

TOTAL63.2m

Mll

on P

asse

nger

s


� Among the HKSAR related passengers, the traffic between Mainland China and HKSAR (i.e. those HKSAR domestic traffic via HKIA after taking into account the expected ‘leaked’ HKSAR air passengers to SZX as defined in 14.3.1.3) is expected to grow faster than the international traffic to / from HKSAR. Therefore the passengers travelling between Mainland China and HKSAR are forecast to increase their share of HKIA OD traffic from 20% in 2007 to 34% in 2030 and the ones travelling between HKSAR and international destinations will see their share decrease from 47% in 2007 to 29% in 2030.

In sum, the growth of HKIA OD passengers is expected to be driven by Mainland related traffic, which consists of intermodal passengers to/from the PRD and the HKSAR passengers to/from Mainland cities. However, this growth is undermined by the increasing competition from GPRD airports as reflected by the decreasing market shares of HKIA in both segments as mentioned in the previous sections.

14.3.2 Synthesis on the traffic lost due to competition

As a result of the above sections, the OD passenger traffic lost due to GPRD competition sum up to almost 17 million passengers10.

� The increasing competition with the other GPRD airports on the international traffic will result in loss of 13.4 million passengers on Guangdong international traffic in 2030;

� On the domestic segment, the increasing attractiveness of SZX will divert 3.2 million passengers from HKIA in 2030.

This represents for HKIA an hypothetical loss of 21% on its OD traffic.

14.3.3 Capacity considerations at GPRD airports (excluding HKIA)

Based on the above market projections, GPRD airports (excluding HKIA) should handle 165 million passengers in 2020 and 290 million passengers in 2030. Considering the current airport development plans in the region, capacity shortage at GPRD airports (excluding HKIA) will total 15 to 25 million passengers in 2020 and exceed 100 million passengers in 2030 (see Table 85).

Capacity is an indicator based on certain assumptions such as level of service, traffic mix and aircraft size. Therefore facilities could handle more passengers than the design capacity. However, the saturation of the GPRD airports (excluding HKIA) is likely at the horizon 2030. It will be a strong support for HKIA to maintain its market share on GPRD-related passengers.


Table 85 – GPRD airports (excluding HKIA) capacity and unconstrained demand – 2008 to 2030 – in million passengers

Airport Capacity 2020 Demand 2020 Capacity

2030 Demand 2030

Guangzhou 75 / 85 90

Shenzhen 45 60

Macau 15 20

Zhuhai 5 10

Total 140 / 150 165 180 290

Note: capacity assessment excludes HKIA

Source: CAAC, IATA analysis and estimates

10 Estimation made by comparison of the forecasted traffic against an hypothetical baseline assuming a constant market share for HKIA


14.4 Passenger traffic forecast for HKIA

The following section presents the individual assessment of the adjustment factors and the forecast outputs for HKIA.

14.4.1 Assessment of the adjustment factors

The analysis of the passenger demand growth drivers led to identify 3 unprecedented factors, each of them requiring an individual assessment to be added to the traffic baseline. These factors are:

� The implementation of the direct links;

� The construction of the Hong Kong-Zhuhai-Macau Bridge;

� The implementation of the high speed train link between HKSAR and Mainland China (XRL).

14.4.1.1 Impact of the direct links on HKIA traffic

The following section details the implications of the Cross-Strait direct links on HKIA passenger traffic and explains the rationale and assumptions of the modelling approach. It shows in particular that the direct links and the rapprochement policy between Mainland China and Taiwan are expected to have a positive impact on HKIA OD traffic while a significant part of HKIA TT traffic will be diverted to the direct air services. Overall IATA forecasts that 1.2 million passengers will be lost in 2015 and 1.3 million in 203011. More than ten years will be necessary for the Taiwan traffic to break the 2007 record traffic. The very long recovery reflects the severe impact of the Direct Links and the crisis as well as the small market growth.

IATA estimated that the Cross-Strait flights carried about 3.5 million passengers in 2009 among which about 2 million were new passengers induced by the relaxed visa policy.

It is estimated that the total peaked at 1.4 million lost passengers in 2009. Most of the direct flights being operated from Shanghai, IATA estimates that HKIA TT traffic would be hit the most:

� HKIA market share on traffic between GPRD and Taiwan would decrease from 75% in 2008 to 62% in 2009;

� HKIA market share on traffic between Mainland China excluding PRD and Taiwan would decrease from 70% in 2008 to 37% in 2009;

11 Measured against a hypothetical projection assuming there is no “direct link”


For future years, IATA assumes that the direct links will only affect the traffic flows between Mainland China and Taiwan.

From a 1.4 million loss in 2009, it is assessed that the loss would reduce to -1 million in 2013. Beyond 2013 the number of lost passengers is expected to increase and peak at -2.1 million passengers in 2022. After 2022, the loss should narrow down. On the OD segment (traffic related to GPRD), it is estimated that the induced traffic will offset the diversion to Guangzhou and Shenzhen airports. Positive impact will be observed for HKIA (+250,000 passengers in 2015 and +729,000 passengers in 2030). On the TT segment (traffic related to Mainland China excluding PRD), the incremental traffic will not compensate the increasing competition and the resulting loss in TT passengers totals 1.5 million passengers in 2015 and 2.1 million passengers in 2030.

The above projections are based on a comprehensive analysis of the following factors:

� Induction of a new demand between Mainland China and Taiwan;

� Decrease in HKIA market share on the traffic between GPRD and Taiwan;

� Decrease in HKIA market share on the indirect traffic between Mainland China and Taiwan;

� Increase in the share of direct traffic between Mainland China and Taiwan.

Justifications for the above are presented in the following paragraphs.

Table 86 – Impact of Direct Links on HKIA passenger traffic – 2009 to 2030 – in thousand passengers

Impact on OD traffic to Taiwan1 Impact on TT traffic to Taiwan1 Impact on

Total traffic2 Year

‘000 Pax As % of OD traffic

btw HKIA and Taiwan ‘000 Pax

As % of TT traffic btw HKIA and Taiwan

‘000 Pax

2009 -137 -3% -633 -20% -1,4022010 -81 -2% -576 -18% -1,2342011 +35 +1% -607 -18% -1,1792012 +126 +3% -581 -17% -1,0372013 +173 +4% -595 -17% -1,0172014 +218 +5% -649 -18% -1,0802015 +249 +6% -742 -21% -1,2352020 +298 +6% -1,127 -29% -1,9562025 +452 +8% -1,178 -28% -1,9042030 +729 +12% -1,033 -24% -1,338

(1) The impact is assessed against a theoretical baseline with no direct links in force (2) The impact on total traffic is the sum of the impact on OD traffic and twice the impact on TT traffic (as diverted TT passengers impact both TT traffic to Taiwan and to Mainland China).



Induction in a new demand between Mainland China and Taiwan

Generally speaking, the conjoint relaxation of the policy for Mainlanders to visit Taiwan and increased cross strait activities stimulating overall GDP growth in Taiwan will induce a new demand for cross-strait passengers.

The first 2008 meeting between the leaders of Mainland China and Taiwan resulted in the opening of Taiwan to mainland Chinese tourist travelling in groups. The maximum quota of tourists was set at 3,000 persons per day in 2009.

Based on recent public statements made by President Ma, IATA expects the quota will increase progressively to reach 10,000 per day in the medium-term:

� The 3,000 cap on the daily arrivals of Mainland tourists was defined by Taiwan for several reasons including shortage of hotels and extra work on immigration clearance procedures. These bottlenecks can be waived in the short/medium-term.

� President Ma’s strategy highlights tourism as one of the six sectors to be further developed in Taiwan. Tourism is an opportunity for the Taiwan economy that ran out fo steam over the last years and was furthermore deeply affected by the 2008/2009 crisis.

� When President Ma approved letting Chinese tourists visit Taiwan, he indicated the 10,000 daily quota as an achievable target in the medium-term.

� Already the average number of mainland Chinese tourists was raised to over 5,000 during the 2009 Golden Week to accommodate the peak demand

On the long-term, we assume that the visa policy will be enhanced not to constrain the demand. IATA assumes that Taiwan can be on the long-term as attractive as Beijing is right now generating a tourism demand of about 12 million mainland visitors a year. In the absence of any long-term forecast, IATA considered the following:

� Initial surveys conducted in Mainland China and reported by the China National Tourism Bureau revealed that the potential demand to Taiwan exceeds 50 million persons114.

� The travel agents interviewed in Mainland China confirmed that Taiwan has the potential to be, on the long-term, as popular as Hong Kong for mainlanders.

� Taiwan actually matches well with mainland tourists expectations with much sightseeing, potential shopping activities and very easy and secure travel conditions.

� A guesstimate of mainland outbound tourists in 2030 between 100 and 200 million would imply Taiwan to account for 6% to 12% of Mainland China’s outbound tourism while Hong Kong represented about 36% of Mainland China’s outbound tourism in 2008.

Based on the current regional distribution of the traffic between Mainland and Taiwan, IATA estimates that about 30% of these mainland tourists to Taiwan will originate in Guangdong.


On the economy side, it is expected that the direct links and the overall loosening policy between Taiwan and Mainland China, including the signature of the Economic Cooperation Framework Agreement (see section 7.4), will stimulate the economy of Taiwan. In particular, tourism, retail and trade, construction and logistics should be the primary beneficiaries of this policy. Considering the elasticity of traffic to GDP, the policy is estimated to increase the travel demand of Taiwanese to Mainland China by up to 10%.

Decrease in HKIA market share on the traffic between PRD and Taiwan

IATA assumes that HKIA market share on the traffic between PRD and Taiwan will evolve as presented in Table 87.

Table 87 – HKIA market share on traffic between PRD and Taiwan

2008A 2009E 2015F 2020F 2025F 2030F

HKIA market share on traffic between PRD and Taiwan 75% 62% 47% 40% 36% 33%

Note: Traffic between PRD and Taiwan refers to HKIA OD traffic


These assumptions are based on the following considerations:

� OD demand between PRD and Taiwan will be subject to the increasing competition with CAN and SZX as 70% of them originated from the Guangzhou, Dongguan and Shenzhen municipalities in 2009 (see Table 88, based on MVA survey conducted at HKIA airport).

Table 88 – Distribution within PRD of demand to/from Taiwan and other international destinations - 2009

32%

22%

16%

8%6% 6%

4%3% 2% 2%

0%

29%

13%

19%

10% 10%8%

2%4%

1% 2% 1%

ShenzhenArea

Dongguan Guangzhou Macau Zhuhai Zhongshan Huizhou Foshan OutlyingAreas of GD

Others Jiangmen

Taiw an Other Int'l. Dest

Source: MVA Passenger Survey (2009) for AAHK


� South East Asia is representative of the competition that could develop on the Taiwan market with 500 and 344 weekly flights from HKIA and the GPRD airports respectively in 2008. Despite a fierce competition, HKIA manages to capture 44% of the PRD passengers.

� In the medium-term, competition from PRD to Taiwan is not expected to be as intense for the reasons mentioned before: slow down of the Taiwanese carriers on the development of the direct links and primary focus on markets that are less competitive than GPRD.

� In the long-term, the 33% market share reflects an even distribution of the traffic between the main GPRD airports

Increase in the share of direct traffic between Mainland China and Taiwan.

IATA assumes that almost all the demand between Mainland China and Taiwan will switch to direct flights, only leaving a small share of traffic to HKIA and its competitors (see Table 89).

Table 89 – Share of direct traffic between Mainland China excluding PRD and Taiwan

2008A 2009E 2015F 2020F 2025F 2030F

Share of direct traffic on Mainland China to Taiwan 0% 45% 63% 69% 72% 74%



� For the travellers between Beijing or Shanghai and Taiwan, the direct links result in a significant cut in the travel time of up to 5 hours. Considering the passengers traveling preferences (see sub-section 9.2), passengers will prefer flying direct.

� Pursuing the South East Asia benchmark, 79% of the traffic between Mainland China and South East Asia flew direct in 2008; the highest connecting rate being from second-tier cities (34%) due to the absence of direct flights in some areas (see Table 90). Assuming that the rate of direct traffic from the various Chinese regions is representative of the future situation to Taiwan and considering the future distribution of traffic into the various regions, IATA estimates that about 74% of the traffic to Taiwan will be direct in the long-term.

� The rapid decline in the indirect traffic is justified by the observation made on 2009 traffic and the assumption that direct links will primarily focus on the non-PRD markets.


� The current share of indirect international traffic to and from Mainland China is about 37%. It is forecast to be stable over the forecast period. The lower rate to Taiwan (26%) is explained by the high density of air services that is expected between Mainland China and Taiwan.

Table 90 – Breakdown of traffic between Mainland China and South East Asia into Chinese regions and direct / indirect routes – in % to the total traffic of each region to South East Asia

Decrease in HKIA market share on the indirect traffic between Mainland China and Taiwan

IATA assumes that HKIA market share on the indirect traffic between Mainland China and Taiwan will evolve as presented in Table 91.

Table 91 – HKIA market share on indirect traffic between Taiwan and Mainland China excluding PRD

2008A 2009E 2015F 2020F 2025F 2030F

HKIA market share on indirect traffic between Mainland China

excluding PRD and Taiwan 70% 67% 52% 42% 41% 40%



� HKIA is a very efficient and strong hub between Mainland China and Taiwan.

� Part of the traffic that will connect will choose HKIA to take advantage of the multi-destination travel package. In particular the Chinese tour-operators that were interviewed reported that connecting in HKIA is as cheap as connecting through a Chinese hub (as

79%92%

81%66%

79%

21%8%

19%34%

21%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

PEK PRD YRD Rest of PRC PRC

Source: IATA AirportIS data

Dire

ctIn

dire

ct

Note: Above figures have been adjusted to take into account the measured gap between AAHK actual traffic figures and IATA AirportIS database

79%92%

81%66%

79%

21%8%

19%34%

21%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

PEK PRD YRD Rest of PRC PRC

Source: IATA AirportIS data

Dire

ctIn

dire

ct

Note: Above figures have been adjusted to take into account the measured gap between AAHK actual traffic figures and IATA AirportIS database


group fares through were reportedly competitive in 2008) and adds significantly to the attractiveness of the tourism experience (when combined with a short stay in Hong Kong).

� Airlines are expected to keep offering a high quality of service between Mainland China, HKIA and Taiwan.

14.4.1.2 Impact of the HZMB

As mentioned in section 11.2, it was assessed that:

� Although the HZMB is expected to have a very positive impact on the economy of the GPRD and in particular the western shore of the Delta, it is estimated that the GDP forecast used for PRD and HKSAR already include this impact.

� The bridge will have a limited impact on the access time from the Macau and Zhuhai markets to HKIA as well as from HKSAR to MFM.

� The TM-CLK Link and TM Western Bypass will handle the additional ground traffic generated by the HZMB.

IATA examined the potential maximum impact of the bridge on the markets identified above. As a preliminary assessment, it is estimated that the net impact on HKIA would be negligible as a result of the following:

� Gain of up to 315,000 passengers (2007 value) from the Macau and Zhuhai markets;

� Diversion of up to 300,000 low-cost passengers (2007 value) from HKSAR market to MFM.

Macau market

In 2007, Macau accounted for 1.6 million international passengers among which 66% travelled via HKIA. The remainder used MFM. Improved accessibility to HKIA could in the future years divert some of these passengers to HKIA. Macau-related passengers using MFM represented 530,000 passengers in 2007. As access time remains much shorter to MFM than to HKIA, it is expected that a majority of the Macau-related travellers using MFM will keep using MFM after the bridge opening. Diversion to HKIA is assumed to reach 50%, ie 265,000 passengers (2007 value)

Zhuhai market

In 2007, Zhuhai represented less than one million international passengers, of which almost 70% used HKIA. The remainder used either CAN (2/3) or MFM (1/3). Further analysis reveals that the number of passengers that may be diverted to HKIA is minimal:

� Considering the much longer access time from Zhuhai to Guangzhou airport (210 minutes) than to HKIA (90 minutes), accessibility did not seem to be a criterion of choice for the


206,000 passengers related to Zhuhai and using CAN115. Those passengers certainly had a specific reason (ie. cheaper fares, tourism package requiring usage of CAN, meeting friends and families) that the bridge is not likely to change.

� Those passengers, representing roughly 106,000 passengers in 2007, who used MFM, may be diverted as access time to HKIA is reduced. However, as access remains faster to MFM than to HKIA despite the bridge, it is expected that a majority of the Zhuhai-related travellers using MFM will continue using MFM.

For all the above reasons, it is estimated that HKIA could divert up to 50,000 passengers (in 2007 traffic value).

Hong Kong market

In 2007, international demand to/from HKSAR totalled 14.2 million international passengers.

A benchmark with major European metropolitan areas shows that on average low-cost airports account for 14% of the total passenger traffic in these metropolitan areas (see Table 151). Assuming that HKSAR market may further become cost sensitive and that Low-Cost Carriers develop in the GPRD in priority on “low-cost” airports (similarly to what is observed in Europe), cost sensitive travellers may elect using low cost carriers and airports. Applying the result of this benchmark to the number of HKSAR-related passengers gives a rough estimate of 2 million passengers that could fly on low-cost carriers and in particular from an airport such as Macau.

The leakage of low cost travellers through Macau airport due to the bridge is estimated to reach 300,000 passengers:

� Low-cost services will be further developed from HKIA reducing the potential number of passengers leaking through Macau airport. Under the base case scenario, it has been assumed that the number of those HKSAR-related passengers flying from Macau airport would grow as traffic.

� The specific impact of the bridge is small as the time value of the cost-sensitive travellers is very low and a 40-minute reduction in the access time to Macau airport will not likely make a sizeable difference for these passengers. As an example, it has been observed in Europe, that low-cost passengers typically drive up to 3 hours to catch a low-cost flight, twice as much as the standard 90-minute drive catchment area for a traditional airport. Considering the limited influence of the bridge on the low-cost passengers, it has been further assumed that less than 15% of the 2 million passenger-base could be diverted to Macau.


14.4.1.3 Impact of the Express Rail Link (XRL)

XRL enables a significant decrease in ground transportation times between HKSAR and the main Chinese cities.

As observed in European and Japanese benchmarks, High Speed Train (HST) implementation generally results in rail traffic being diverted from other modes (including air) and a new demand being induced. This new demand usually benefits to both the rail and air transportation modes.

In the specific analysis conducted for Hong Kong International Airport, it was established that the diversion and induction would net out to be zero impact on the HKIA traffic baseline.

The following section details the analysis.

Methodology used to assess the impact of XRL on HKIA air traffic

The impact of the HST was assessed by IATA for each city pair individually. The total impact is the sum of the individual impact.

Each individual impact has been assessed, following the methodology outlined in Table 92 and using benchmarking with the HST systems in Europe and Japan.

Table 92 – Model used to assess the HST impact on the relevant city pairs between HKSAR and ML China

Source: IATA methodology

Traf

fic p

roje

ctio

n be

fore

HST

Traf

fic p

roje

ctio

n af

ter H

ST

HS

T Im

pact

OD traffic 2008

Forecast for OD traffic between HKIA and ML

China

Forecast for OD traffic before HST impact

Forecast for OD traffic after HST impact

Air traffic diversionHST travel times

Benchmark with EU and Japan HST systems

Air traffic induction

HST impact on air traffic


Lessons learnt from existing High Speed Train systems

A benchmark including Japan and Europe, both having a long history of high-speed train operations, indicates that the modal split between air and rail is very well linked to the rail travel time (see Table 93).

Those HST systems have been in place for a long time, providing a long-term perspective on the impacts of HST to aviation. Although these systems serve very different markets in various countries with diverse competitive situations, very similar observations are being made about the competition between HST and Aviation. Consequently it has been estimated that these observations are relevant to qualify and quantify the impact of HST between Mainland China and Hong Kong.

High-speed train transportation dominates air transportation when train trip times do not exceed 3.5 hours. A 3.5 hours train trip corresponds to 1,000 km. For shorter distances, HST benefits from a ~1.5 hour advantage against air travel: Rail station is closer to the town than airport; Air travel requires longer processing time for departure and arrival.

So far there has been no study investigating the train capture rates beyond 4.5 hours (which corresponds to about 1,300 km).

Table 93 - Current observation of the correlation of rail travel time and rail market share on OD traffic European and Japanese routes – 2008 – in hours and per cent of OD traffic

0%

25%

50%

75%

100%

1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0

Tokyo-Nagoya

Pars

-Bru

sse

s

Par

s-Ly

ons

Mad

rd-S

eve

Rom

e-B

oog

na

Tokyo-Okayama

Pars

-Lon

don

(bef

ore

2007

)

Paris-London (after 2007)

Tokyo-Hiroshima

Rom

e-M

an

Pars

-Am

ster

dam

Stoc

kho

m-G

oteb

org

HST

mar

ket s

hare

of t

ota

(Ra

+Ar)

traf

fc (

n %

)

Source: Railway operators, UIC HST travel time (in hours)

0%

25%

50%

75%

100%

1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0

Tokyo-Nagoya

Pars

-Bru

sse

s

Par

s-Ly

ons

Mad

rd-S

eve

Rom

e-B

oog

na

Tokyo-Okayama

Pars

-Lon

don

(bef

ore

2007

)

Paris-London (after 2007)

Tokyo-Hiroshima

Rom

e-M

an

Pars

-Am

ster

dam

Stoc

kho

m-G

oteb

org

HST

mar

ket s

hare

of t

ota

(Ra

+Ar)

traf

fc (

n %

)

Source: Railway operators, UIC HST travel time (in hours)


An extrapolation of these observations reveal that train trips longer than 8 hours are not likely to divert traffic from air.

Recent surveys confirm the empirical observation, revealing that travel time is the most influential element when choosing high-speed trains as mode of transport116. Money saving does not appear as a key decision criterion when it comes to choose between air and rail.

A new demand is generally induced further to the HST implementation, benefiting to both rail and air. Induction rate are quite variable from 8% to over 100%. Examples taken from European and Japanese environments suggest that +10% is a conservative assumption for the induction:

� France: � Overall HST network +10% � Paris-Lyon (2hr HST) +25% � Paris-Marseille (3hr HST) +45%

� Japan: � Shinkansen +8%-150%

� Spain � Madrid-Seville (2hr30 HST) +15%

Additionally, rail and air transportation modes can combine into air-rail intermodal services. Major hubs like Frankfurt airport, Paris-Charles de Gaulle or Amsterdam-Schiphol benefit from rail intermodality that significantly enlarge their catchment area and divert long-haul and medium-haul air passengers from competing hubs. The convenient connection of these airport to the HST network seems to be a key requirement.

Estimated impact of High Speed Train to HKIA

Traffic diversion

Extrapolating the previous benchmark to Mainland China and considering the targeted rail travel times, it is estimated that HST will capture 90% of the OD traffic to Shantou. Changsha, Nanning and Xiamen will be within a radius of 4 hours and are expected to record a diversion of nearly 50% of travellers to the train. To the cities of Wuhan, Nanchang and Fuzhou (5 hours from Hong Kong) and Zhengzhou or Hangzhou (7 hours from Hong Kong), the diversion is expected by IATA to reach 32% and 6% respectively.

The other mainland cities with a longer train travel time are outside of the range of the HST competitiveness. No diversion is anticipated.

Assuming no induction, the high-speed train could divert up to 0.8 million passengers annually by 2020 and up to 1.4 million by 2030 from HKIA.


Table 94 - HST market share from Hong Kong to the main cities served in Mainland China – OD traffic

The largest losses are expected to be recorded on the routes to Xiamen (405,000 passengers lost in 2030), Shantou (231,000 passengers lost in 2030) and Fuzhou (203,000 passengers lost). HST to Wuhan, Nanning, Hangzhou, Nanchang, and Zhengzhou is expected to divert around a cumulative 650,000 annual passengers from air transportation in 2030.

Table 95 - Passengers diversion from air to rail – from Hong Kong – 2020/2030 - in thousands OD both way passengers

0%

25%

50%

75%

100%

1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 5.5 6.0 6.5 7.0 7.5 8.0

Shantou

Wuhan, Nanchang, Fuzhou

Shan

ghai

Changsha, Nanning, Xiamen

Zhengzhou, Hangzhou

Rail travel time (hours)

HST

mar

ket s

hare

of t

otal

(Rai

l+A

ir) t

raffi

c (in

%)

Source: IATA estimates, Hong KongTransport and Housing Bureau,

Beijing, Kunming, Chengdu, Xian, Chongqing, Nanjing >8H

� No rail market share (over 7.5 hours rail does not compete any more with air; the air and rail markets are

dissociated)

8951

32 20 5

405

231203

185159

9157

37

104113129

227

9

Xia

men

Sha

ntou

Fuzh

ou

Cha

ngsh

a

Wuh

an

Nan

ning

Han

gzho

u

Nan

chan

g

Zhen

gzho

u

Sha

ngha

i

Bei

jing

Che

ngdu

Xia

n

Cho

ngqi

ng

Nan

jing

Kun

min

g

2020: 0.8 Mpax

2030: 1.4 Mpax

Source: IATA PaxIS, IATA estimates, Hong KongTransport and Housing Bureau


Traffic induction

All High-Speed Train projects analyzed induced additional OD demand that benefited the rail transportation mode and also the air transportation one.

European HST projects have shown 10% to 50% induction on total demand (rail + air). Considering the condition of domestic infrastructure in Mainland China and the booming demand for domestic transportation, we can expect the induction factors in Mainland China to reach at least those of Europe. A 10% induction (on air traffic) has been assumed.

In addition, XRL could help HKIA to enlarge its catchment area over Guangdong and close provinces. Considering the current uncertainty about the connection between HKIA and the HST network, this potential upside was not been taken into account.

Net impact on traffic

The impact of diversion and induction factors are estimated to net out to be zero impact on the HKIA traffic baseline.

On top of the above, the following considerations reinforce the competitiveness of the air transportation mode against the train:

� Contrary to Europe, number of stations seems to be located quite outside of the city centers increasing the total travel time by rail what could lead to a lower diversion from the air transportation mode.

� The Japanese and European examples are based on very high frequency train services even on long distances (between the main city pairs, about 15 to 20 services are offered every day). So far in Mainland China, the high frequency services are limited to short distances (less than 400 km). A lower frequency, as it seems to be planned on Mainland China longest and busiest routes, would certainly reduce the diversion (S-curve concept).


14.4.2 HKIA Base Case Passenger Traffic

14.4.2.1 Total passenger traffic

As HKSAR and major economies progressively recovers during the period 2010-2015, HKIA total traffic is expected to bounce back (+3.9% CAGR from 2009 to 2015) reaching 56.6 million passengers in 2015. As most economies are assumed to slightly slow down after 2015 and the negative impact of the direct links will reach its maximum in 2022, the passenger demand will slacken a little (+3.7% CAGR over the period 2015-2025) exceeding 81.8 million passengers in 2025. Growth demand will further reduce in the last 5 years of the forecast period (+3.5% CAGR over the period 2025-2030) following the economy. Traffic is forecast to reach 97 million passengers in 2030 (see Table 96).

Between 2008 and 2030, traffic is estimated to increase by an annual average of 3.2%, down from the 4.3% p.a. growth rate recorded between 1993 and 2008.

14.4.2.2 Passenger OD and TT traffic

OD traffic is expected to bounce back achieving a 4% p.a. growth between 2009 and 2015 and exceeding the 3.4% annual increase recorded between 1993 and 2008. Growth will slow down a bit in the further years reaching 3.3% over the period 2008-2030.

TT share will remain almost stable as the result of diverging trends:

� Transfer rate on the long-haul destinations12 is forecast to increase from 44% in 2008 to 46% in 2030, following the past growing trend but at a slower rate as the competition on the TT market intensifies and more secondary routes will be served by the new long-haul aircraft;

� Transfer rate on the Asian routes will remain around 30% pursuing the trend observed in the recent years;

� On the market to Mainland China, the continuous decrease in transfer traffic since 2002 (44%) will soften with the transfer rate reaching on the long-term the level of the Asia one.

12 See appendix 19.8 for a list of the long-haul and Asian destinations


Table 96 – HKIA traffic forecast – Total, OD and TT traffic – 2008 to 2030 – in passengers

Market 2008 2015 2020 2025 2030 08-15CAGR (%)

08-30CAGR (%)

Total 48,585,000 56,621,225 68,037,114 81,788,796 97,014,944 2.2% 3.2%

OD 31,168,000 37,129,967 44,539,823 53,712,789 63,205,476 2.5% 3.3%

TT 17,417,000 19,491,258 23,497,291 28,076,007 33,809,467 1.6% 3.1%

Transfer rate 36% 34% 34% 34% 35%


IATA expects the OD traffic to increase faster than TT traffic, diverging from the previous historical trend which saw TT traffic growing twice as fast as OD traffic.

14.4.2.3 Passenger regional traffic

On a regional basis, the IATA forecast indicates a steady annual growth in nearly all market segments with the exception of Taiwan and Japan (see Table 97).

With 5.2% p.a. over the forecast period, Mainland China is expected to record the highest growth. Japan will be the worst performing market with +0.1% p.a. Taiwan is expected to lose traffic by 2015 and after 2020 resulting in an almost stable traffic between 2008 and 2030.

� Mainland China market will benefit from more relaxed travel policies and growing wealth of the Chinese population allowing a greater number of mainlanders to visit Hong Kong. Accounting for 10.1 million passengers in 2008, Mainland traffic is expected to grow by 5.2% p.a. between 2008 and 2030, generating a total traffic of 30.6 million in the long term.

� Taiwan will decline by -1.3% p.a. by 2015 but is expected to revert to the positives in the long-term as the direct links impact fades and the new demand offsets the diverted traffic. Taiwan is projected to grow from 8.3 million in 2008 to 10.2 million passengers in 2030.

� Japan will increase from 3.5 to almost 4 million passengers in 2015 (+1.7% p.a).. In the long-term, Japan’s traffic will decrease to 3.6 million passengers showing a slight increase of only 0.1% p.a. between 2008 and 2030. Stagnating economy, very mature traffic demand and excessive competition on the Japan outbound market explains the absence of growth.

� USA/Canada, accounting for 3.7 million passengers in 2008, is expected to grow by 2.6% p.a. between 2008 and 2030; generating a total traffic of 6.5 million in 2030. Demand is expected to be supported by the strong flow of business and ethnic traffic.


� Traffic to South East Asia will benefit from closer relations with Mainland China and hence Hong Kong, increasing by 3.0% p.a. between 2008 and 2030. In total, South East Asia is projected to grow from 11.3 million to 21.9 million passengers in 2030.

Table 97 – HKIA total traffic by region and share of total – 2008 to 2030 – in passengers

Market 2008 2015 2020 2025 2030 08-15CAGR (%)

08-30CAGR (%)

Mainland China

10,076,000 21%

12,456,00522%

17,279,49225%

23,399,90229%

30,578,698 32% 3.1% 5.2%

Taiwan 8,289,000 17%

7,565,84913%

8,165,41612%

9,133,56411%

10,212,126 11% -1.3% 1.0%

Japan 3,532,000 7%

3,979,0107%

3,671,0905%

3,584,8564%

3,585,276 4% 1.7% 0.1%

USA & Canada

3,710,000 8%

4,413,4988%

5,077,0297%

5,766,2627%

6,479,601 7% 2.5% 2.6%

SE Asia 11,337,000 23%

13,576,97524%

15,972,57523%

18,844,19323%

21,916,249 23% 2.6% 3.0%

Europe 4,451,000 9%

5,023,8549%

6,343,3929%

7,577,5039%

8,845,904 9% 1.7% 3.2%

Australasia 2,807,000 6%

3,544,3546%

4,501,3737%

5,386,5757%

6,270,593 6% 3.4% 3.7%

Others 4,383,000 9%

6,061,68211%

7,026,74710%

8,095,94110%

9,126,496 9% 4.7% 3.4%

Total 48,585,000 100%

56,621,225100%

68,037,114100%

81,788,796100%

97,014,944 100% 2.2% 3.2%


� IATA further projects that Europe is to increase from 4.5 to 8.9 million passengers in the long-term representing a growth of 3.2% p.a. until 2030. Strong business and leisure flows are expected to keep supporting the demand to Hong Kong and Asia in general.

� Australasia, accounting for 2.8 million passengers in 2008, is expected to grow by 3.7% p.a. between 2008 and 2030; generating a total traffic of 6.3 million passengers in 2030. Australasia will be the second fastest growing market, driven by the dynamic TT market.

� Other regions will increase by 3.4% p.a. between 2008 and 2030, driven by a strong OD demand to market such as India and Middle East and a boosting TT demand to markets such as Africa. SE Asia is projected to grow from 4.4 million to 9.2 million passengers.


14.4.2.4 Passenger regional OD traffic

As for OD traffic, IATA expects an average growth of 3.3% p.a. over the forecast period. Regional OD traffic numbers are provided in Table 98.

Table 98 – HKIA OD passenger traffic by region – 2008 to 2030 – in passengers

Market 2008 2015 2020 2025 2030 08-15CAGR (%)

08-30CAGR (%)

Mainland China 6,360,000 8,311,974 11,872,912 16,275,403 21,212,321 3.9% 5.6%

Taiwan 4,972,000 4,735,012 5,367,877 6,131,119 6,887,066 -0.7% 1.5%

Japan 3,062,000 3,510,286 3,175,507 3,073,866 3,055,339 2.0% 0.0%

USA & Canada 2,066,000 2,494,312 2,745,659 3,061,257 3,339,164 2.7% 2.2%

SE Asia 8,022,000 9,599,828 11,154,886 13,187,089 15,231,879 2.6% 3.0%

Europe 2,613,000 2,852,966 3,704,455 4,485,348 5,217,851 1.3% 3.2%

Australasia 1,366,000 1,685,180 2,165,438 2,607,124 2,965,787 3.0% 3.6%

Others 2,707,000 3,940,409 4,353,088 4,891,582 5,296,070 5.5% 3.1%

Total 31,168,000 37,129,967 44,539,823 53,712,789 63,205,476 2.5% 3.3%


� Mainland China is expected to record the highest increase in OD traffic (+5.6% p.a.) supported by a very strong tourism demand to Hong Kong.

� OD traffic to Australia is expected to increase by 3.6% p.a. over the forecast period stimulated in particular by strong tourism demand.

� Japan will be stagnating over the forecast period as a result of the weak economy, the maturing demand, the stagnating population, and the intense competition on the Japan outbound market with emerging tourism destinations. This continues an historical trend. Hong Kong as destination for Japanese slightly decreased (from 8.7% in 1998 to 7.7% in


2007) in an overall stable market (about 17 million Japanese overseas travellers each year for the last 10 years).

14.4.2.5 Passenger regional TT traffic

As for TT traffic, IATA forecasts a 3.1% annual increase between 2008 and 2030. Regional TT traffic numbers are provided in Table 99.

Table 99 – HKIA TT passenger traffic by region at HKIA – 2008 to 2030 – in passengers

Market 2008 2015 2020 2025 2030 08-15CAGR (%)

08-30CAGR (%)

Mainland China 3,716,000 4,144,031 5,406,580 7,124,499 9,366,377 1.6% 4.3%

Taiwan 3,317,000 2,830,836 2,797,538 3,002,445 3,325,060 -2.2% 0.0%

Japan 470,000 468,724 495,583 510,991 529,937 0.0% 0.5%

USA & Canada 1,644,000 1,919,186 2,331,370 2,705,004 3,140,438 2.2% 3.0%

SE Asia 3,315,000 3,977,147 4,817,689 5,657,104 6,684,369 2.6% 3.2%

Europe 1,838,000 2,170,888 2,638,937 3,092,155 3,628,054 2.4% 3.1%

Australasia 1,441,000 1,859,174 2,335,935 2,779,450 3,304,806 3.7% 3.8%

Others 1,676,000 2,121,272 2,673,659 3,204,359 3,830,426 3.4% 3.8%

Total 17,417,000 19,491,258 23,497,291 28,076,007 33,809,467 1.6% 3.1%


� With 4.3% p.a. Mainland China will be the fastest growing TT market. However TT growth will be significantly down compared to the OD growth as a result of the raising competition with the Mainland China’s hubs.

� Others is the second fastest growing market with 3.8% p.a. The fast growing traffic between Asia and Africa as well as between India and North America will benefit HKIA.

� Taiwan is expected to barely maintain its TT traffic as a result of the direct links.


15. Cargo Forecast

This chapter presents the forecast for cargo demand at Mainland China airports, GPRD (excluding HKIA) and HKIA. Under the base case, a 4.2% annual growth is forecast for HKIA cargo traffic driving cargo volume to 8.9 million tons in 2030.

15.1 Cargo traffic forecast for Mainland China

IATA has forecast the cargo demand for Mainland China airports based on the strong correlation of their traffic to Mainland China GDP over the last 15 years

In 2008, Mainland China airports totalled 8.6 million tonnes (cargo freight only). An unconstrained yearly 7.7% baseline growth for Mainland China is expected, leading to 44 million tonnes at Mainland airports in 2030.

Table 100 – Cargo traffic at mainland airports – 2008 to 2030 – in tonnes

2008 2015 2020 2025 203008-15CAGR

(%)

08-30CAGR

(%)

Total 8,833,590 16,543,852 23,914,560 33,110,550 43,985,421 9.8% 7.7%

Note: Mainland airports handled 9,455,645 tons of cargo in 2009. Source: IATA estimates, Actual traffic from CAAC for 2008 and 2009117


15.2 Cargo traffic forecast for GPRD

IATA has forecast the cargo demand for GPRD (excluding HKIA) airports, namely CAN, SZX, MFM and ZUH.

In 2008, GPRD airports handled 5.0 million tonnes (of which 3.6 million tonnes at HKIA), split into 2.1 million domestic tonnes and 2.9 million international tonnes (of which 2.7 million at HKIA). Over the period 1997-2008, traffic at GPRD (excluding HKIA) airports was found to be highly correlated to Guangdong real GDP.

Considering the growth drivers described in chapter 4, GPRD traffic is expected to reach 17.8 million cargo tonnes in 2030 (+5.9% CAGR measured on total traffic).

Table 101 – Cargo traffic at GPRD airports – 2008 to 2030 – in tonnes

2008 2015 2020 2025 203008-15CAGR

(%)

08-30CAGR

(%)

Total 5,011,921 7,860,525 10,587,890 13,969,303 17,833,302 6.6% 5.9%


This forecast includes the impact of the following unprecedented factors on GPRD (excluding HKIA) airport traffic:

� Implementation of the Cross-Strait direct links: +244,000 tonnes at the horizon 2030;

Assessment has been derived from the OD traffic lost by HKIA at the horizon 2030 due to the direct links assuming that all OD traffic diverted from HKIA would be caught by GPRD (excluding HKIA) airports (see Table 105).

� Intensification of the competition on the transshipment market: +65,000 tonnes at the horizon 2030;

Assessment has been derived from the Transshipment traffic lost by HKIA at the horizon 2030 (265,000 tonnes). Airports benefiting from the diversion are primarily PVG, TPE and CAN. It has been assumed that Guangzhou airport would catch about 25% of the diverted traffic, resulting in an additional 65,000 tonnes for the GPRD (excluding HKIA) airports .

� Relocation of UPS and FedEx hubs to PRD from the Philippines: +1.2 million tonnes.

UPS and FedEx have a dual effect on the traffic of the GPRD (excluding HKIA) airports : diversion of OD traffic form HKIA and increase in Transshipment traffic.


Diversion of OD traffic from HKIA

Assessment has been derived from the assumptions made in section 15.4.1.2. About 240,000 tonnes of OD traffic will be diverted from HKIA to CAN and SZX.

Increase in Transshipment traffic

Based on a regression of the intra-Asia cargo traffic to Asia GDP, IATA forecasts this market to grow by 5.3% p.a. over the next 20 years, reaching 21.7 million tonnes in 2030. It is assumed that express cargo will account for 13.8% of the intra-Asia flows. This was the share of express cargo in 2007 global traffic. Therefore it is deducted that Intra-Asia express cargo traffic will total 3 million tonnes in 2030.

GPRD within Mainland China

When putting together the cargo forecasts for GPRD and Mainland China airports, a decrease in the share of GPRD is anticipated. In 2008, GPRD airports accounted for 41% of Total China cargo traffic. This share is expected to be reduced to 34% in 2030 (see Table 102). This reflects the empowerment of the Chinese cargo hubs and the fast development of manufacturing activities in YRD and Bohai.

Table 102 – GPRD (including HKIA) share of Total China cargo traffic – 2008 to 2030

Traffic segment 2008 2015 2020 2025 2030

GPRD 41% 38% 36% 35% 34%

(1) MFM and ZUH are negligible (2) Total China regroups Mainland China, HKSAR and Macau




15.3 Future HKIA competitive position

The following section projects in 2030 HKIA’s competitive position within GPRD . In line with the past observations, it is anticipated that HKIA will face a decrease in its market share of GPRD.

15.3.1 HKIA market share on GPRD traffic

Considering the forecasts for GPRD and HKIA cargo traffic (see further section), HKIA’s market share of GPRD airports traffic will drop from 72% in 2008 to 50% in 2030 (see Table 103). The biggest drop is expected to happen in the medium-term as HKIA’s share of total GPRD traffic is forecast to be as low as 56% in 2015.

The main reasons explaining the sharpest decrease between 2008 and 2015 are the following:

� GPRD (excluding HKIA) airports traffic is barely affected by the 2008-2009 crisis, benefiting from the dynamic Mainland China domestic market whereas HKIA is strongly hit.

� Some traffic is diverted from HKIA to GPRD (excluding HKIA) airports increasing GPRD (excluding HKIA) airports traffic at the expense of HKIA. A part of this diversion tends to concentrate over the period 2010-2015.

Table 103 – HKIA market share to GPRD total cargo traffic – 1997 to 2030

Traffic segment 1997 2000 2004 2008 2015 2020 2025 2030

Total 78% 75% 73% 72% 56% 53% 51% 50%


15.3.2 HKIA market share on GPRD international traffic

Additionally, for the OD international traffic to and from GPRD, HKIA’s market share is forecast to be reduced from 89% in 2008 to 61% in 2030. It is estimated that the OD international cargo traffic of GPRD (excluding HKIA) airports will reach 4.1 million tonnes in 2030 from 319,000 tonnes in 2008 (see Table 104). HKIA is forecast to experience a slow decrease in its market share of the total GPRD OD international traffic. The period 2008-2015 should record the highest decrease from 89% to 79%.


�

�

�



15.4 Cargo traffic forecast for HKIA

The following section presents the individual assessment of the adjustment factors and the cargo forecast outputs.

15.4.1 Assessment of the adjustment factors

The analysis of the cargo demand growth drivers led to identify 4 unprecedented factors, each of them requiring an individual assessment to be factored in the baseline traffic projection. These factors are:

� The implementation of the direct links;

� The intensification of the competition on GPRD with the settlement of UPS and FedEx at SZX and CAN;

� The intensification of the competition on the Transshipment market;

� The construction of the Hong Kong-Zhuhai-Macau Bridge.

15.4.1.1 Impact of the direct links on HKIA traffic

The following section details the implications of the Cross-Strait direct links on HKIA cargo traffic and explains the rationale and assumptions of the modelling approach. It shows in particular that the direct links are expected to have a negative impact on HKIA OD and Transshipment cargo traffic totalling 232,000 tonnes in 2015 and 669,000 tonnes in 203014. About 4 years will be necessary for the Taiwan cargo traffic to reach the 2008 traffic level.

Current situation

The implementation of weekly cargo flights started in December 2008 with 60 monthly flights and further increased to 112 scheduled monthly flights in July 2009.

Based on actual traffic volumes at the end of September, it was modelled that cross-strait flights would carry about 54,000 tonnes in 2009. It is estimated that 56% of the traffic is diverted from HKIA and the remainder from MFM. The weak competitive position of the cargo airlines based in Macau explains why MFM is losing proportionally more traffic than its market share to the total Cross-Strait cargo volume. Given that most of the direct flights are being operated from

14 Measured against a hypothetical projection assuming there is no “direct link”


Shanghai (almost 90% in 2009), IATA expects that most of the impact of the diversion would be on HKIA transshipment traffic:

� Between GPRD and Taiwan, HKIA market share on traffic would decrease slightly from 86% in 2008 to 85% in 2009. It results from the limited number of cross-strait cargo services from between Taiwan and PRD airports. From January to September 2009, between 10%-15% of the air cargo services were serving PRD airports representing a potential diversion of less than 5,500 tons from HKIA and MFM in total for 2009.

� Between Mainland China excluding PRD15 and Taiwan, HKIA market share on cargo traffic would decrease from 61% in 2008 to 43% in 2009. Based on September 2009 year-to-date traffic, it was estimated that cargo cross-strait flights handled about 54,000 tons in 2009, 86% of them being transported between Taiwan and non-PRD airports. Considering that 56% of this traffic was diverted from HKIA (and the remainder from MFM), HKIA lost about 52,000 tons of transshipment traffic16.

The combined impact on HKIA OD and Transshipment traffic should total 55,306 tonnes in 2009, of which 52,239 tonnes are Transshipment traffic.

Future Years Forecast

In the short and medium-term IATA assumes a continuous enhancement of the Air Services Agreements maintaining the principles of reciprocity and even number of flights on each side.

IATA assumes that the direct links will only affect the traffic flows between Mainland China and Taiwan. This is justified by the absence of traffic rights beyond Taiwan and Mainland China.

It is estimated that the loss would continue to steadily increase throughout the forecasting period (see Table 105). The loss is increasing as it is measured against an hypothetical growing baseline with no direct links in place. Additionally, unlike the passenger market, there is not a sufficient increase in the demand to offset the negative impact of the direct links.

For the OD segment (GPRD related), the negative impact of direct links will remain small in the next years and will become more significant during the period 2015-2020. Unlike the OD segment, the traffic diverted from the transshipment segment (traffic related to Mainland China excluding PRD) will be significant as early as 2009 and until 2020.

Like the passenger segment, cargo traffic will have an induction factor resulting from a relaxation in trade policies between Taiwan and Mainland China. However this will remain marginal.

15 It refers to the cargo traffic between non-PRD airports in Mainland China and Taiwan. Prior to the direct links, this traffic was entirely indirect, HKIA and MFM being at that time the main transshipment airports. 16 Transshipment traffic counted twice for HKIA (52,000=2*54000*86%*56%).


Table 105 – Impact of Direct Links on HKIA cargo traffic – 2009 to 2030 - tonnes

Impact on OD traffic to Taiwan1 Impact on Transshipment traffic to

Taiwan1 Impact on

Total traffic2 Year

‘000 Tonnes As % of OD traffic

btw HKIA and Taiwan ‘000 Tonnes

As % of Trans. traffic btw HKIA and Taiwan

‘000 Tonnes

2009 -3 -1% -26 -21% -56

2010 -10 -3% -39 -27% -88

2011 -18 -6% -47 -32% -112

2012 -25 -7% -57 -37% -138

2013 -33 -9% -66 -41% -165

2014 -43 -10% -75 -46% -193

2015 -63 -14% -85 -50% -232

2020 -169 -30% -143 -74% -454

2025 -206 -30% -177 -74% -560

2030 -244 -30% -213 -74% -669(1) The impact is assessed against a theoretical baseline with no direct links in force (2) The impact on total traffic is the sum of the impact on OD traffic and twice the impact on TT traffic (as diverted TT cargo impacts both TT traffic to Taiwan and to Mainland China).


The above results are based on consideration of the following factors:

� Induction of a new demand between Mainland China and Taiwan;

� Decrease in HKIA market share of the traffic between PRD and Taiwan;

� Increase in the share of direct traffic between Mainland China and Taiwan.

� Decrease in HKIA market share of the indirect traffic between Mainland China and Taiwan;

Justifications of the above factors and assumptions made over the forecast period are presented in the following paragraphs. Detailed results are provided in the appendices (Table 199 and Table 200).


Induction of a new demand between Mainland China and Taiwan;

On the economic side, it is expected that the direct links and the overall loosening policy between Taiwan and Mainland China, including the signature of the Economic Cooperation Framework Agreement (see section 7.4), will stimulate the economy of Taiwan. In particular, tourism, retail and trade, construction and logistics should be the primary beneficiaries of this policy. Considering the elasticity of traffic to GDP, the policy is estimated to increase the air cargo traffic between Taiwan and Mainland China by up to 10% in 2015.

Decrease in HKIA market share of the traffic between PRD and Taiwan

IATA assumes that HKIA market share on the traffic between GPRD and Taiwan will evolve as presented in Table 106.

Table 106 – HKIA market share of traffic between PRD and Taiwan

2008A 2009E 2015F 2020F 2025F 2030F

HKIA market share of traffic between PRD and Taiwan 86% 85% 65% 50% 50% 50%



� OD demand between PRD and Taiwan will be subject to the increasing competition with CAN and SZX as about two-thirds of industrial value output originated in 2008 from areas nearby Guangzhou and Shenzhen airports (see Table 107).

� With a large and diverse offer already in place between GPRD and Taiwan, it is expected that the direct links will be primarily serving other provinces of Mainland China than PRD. In 2009, only 11% of the Cross-Strait cargo flights actually serve the PRD.

� On the long-term, the 50% market share reflects HKIA’s strong competitive position thanks to the strength of its base carriers, the priority focus of Chinese and Taiwanese carriers on Mainland airports outside of PRD and the excellence of the services provided at HKIA. Besides, the significant inertia in logistics will keep a majority of the flows through HKIA118.


Table 107 – Distribution of Gross Industrial Output Value in Guangdong – 2008 – in %

Source: China Statistical Yearbook

Increase in the share of direct traffic between Mainland China and Taiwan.

IATA assumes a majority of the demand between Mainland China and Taiwan will switch to direct flights, leaving only a small portion of cargo to transship through HKIA or competing airports. The share of direct traffic between Mainland China (excluding PRD) and Taiwan is presented in Table 108.

Table 108 – Share of direct traffic between Mainland China (excluding PRD) and Taiwan

2008A 2009E 2015F 2020F 2025F 2030F

Share of direct traffic of Mainland China (excluding

PRD) to Taiwan 0% 30% 52% 65% 65% 65%



� For cargo travelling between Beijing or Shanghai and Taiwan, traveling time will be cut and handling costs will be saved. Therefore more suppliers will elect to fly direct.


� However, it is assumed that cargo traffic from the second-tier cities of Mainland China will have to keep connecting anyway as the demand is not sufficient to justify frequent direct flights.

� It is assumed that the traffic flows between these second-tier cities and Taiwan will represent in the long-term about one-third of the cargo traffic between Mainland China excluding PRD and Taiwan. The pursuit of the Go-West campaign is a strong driver for the development of traffic flows between second-tier cities of Mainland China and Taiwan.

Decrease in HKIA market share of the indirect traffic between Mainland China and Taiwan

IATA assumes that HKIA market share of the indirect traffic between Mainland China and Taiwan will evolve as presented in Table 109.

Table 109 – HKIA market share of indirect traffic between Taiwan and Mainland China

2008A 2009E 2015F 2020F 2025F 2030F

HKIA market share of indirect traffic between Mainland China

excluding PRD and Taiwan 61% 62% 46% 33% 33% 33%



� HKIA is a very efficient and strong hub between Mainland China and Taiwan with a long history in this specific market.

� There are few serious competitors to HKIA on the transshipment market between Mainland China and Taiwan. Shanghai-Pudong will be the biggest competitor. To a lesser extent, Guangzhou airport (CAN), Beijing airport (PEK) or Chengdu airport (CTU) could also play this role. It is foreseen that Pudong airport (PVG) and HKIA will be rivals for the top position.

� Carriers which have facilities and assets in HKIA will continue to transship through HKIA benefiting from agreed contract terms, customs process familiarity and an extensive medium and long-haul air service network. Other foreign carriers will also benefit going through HKIA due to the accessibility to other international networks and processing reliability. However it is anticipated that HKIA competitive advantage will decrease as Mainland China airports improve their cargo processes, develop their cargo capacity, extend their network and benefit from loosening regulations (in particular on customs clearance).


�

�

�

�

�

�

�



Table 110 – Impact to HKIA OD traffic of UPS and FedEx settlement in SZX and CAN – 2008 to 2030 – in tonnes

Base Case 2008 2015 2020 2025 2030

Total 0 -110,000 -148,000 -193,000 -243,000


15.4.1.3 Impact of airport competition on HKIA Transshipment traffic

On the Transshipment cargo segment, an unprecedented development is projected with several airports entering the Mainland China transshipment market, in particular Shanghai Pudong, Taipei Taoyuan and to a lesser extent Guangzhou Baiyun. As it is assumed that this development is not already included in the cargo traffic regression models, we made a manual adjustment to factor it in (see Table 111). By 2030, the increasing competition on the Transshipment market will have diverted 255,000 tonnes from HKIA, mostly from the Asian markets. A detailed breakdown of the impact is provided in the appendices (see Table 203).

Table 111 - Impact to HKIA Transshipment traffic of the competition – 2008 to 2030 – in tonnes

Base Case 2008 2015 2020 2025 2030

Total 0 -70,000 -153,000 -202,000 -255,000



15.4.1.4 Impact of HZMB

Under the base case, the impact of the HZMB is considered as negligible.

It is estimated that the GDP forecast used for PRD and HKSAR include the long-term impact of the bridge on the economy (see section 14.4.1.2). Therefore the industrial development of the western-GPRD is already factored in the model. Furthermore this development is to focus on the lower value-added industries that needs the lowest production costs. These industries are not air cargo clients.

� The contribution of Zhuhai, Zhongshan and Jiangmen to the air cargo market is very limited as illustrated in Table 112. Eastern-PRD accounts for over 70% of the manufacturing of computers and communication equipment in Guangdong whereas western-PRD represents less than 12% of this activity.

� As western-PRD develops, Eastern-PRD will retain the highest value-added industries and in particular high-tech and IT manufacturers that requires skilled staff.

� Therefore we don’t anticipate a massive shift of the air cargo origin from EPRD to WPRD.

Table 112 – Distribution of the manufacturing activities of computers and communication equipment around PRD – 2008 – in number of firms and market share

Source: China Bureau Statistics

� HZMB is a toll-bridge. Freight forwarders will use the bridge only if the transportation cost is not increased. The toll cost and the waiting time at HKBCF are major uncertainties at this stage.


15.4.2 Base case forecast for HKIA cargo demand

15.4.2.1 Total cargo traffic

Air cargo traffic reached about 3.4 million tons in 2009, backtracking by 4 years. As world trade recovers in 2010 and more liberal trade policies are implemented in the following years, HKIA total traffic is expected to bounce back reaching 4.4 million tonnes in 2015. The overall increase between 2008 and 2015 represents +2.9% p.a. The slower growth rate over the period 2008-2015 results from the severe crisis that affected the global economy in 2009 and subsequently air cargo transportation.

Traffic is expected to slightly slow down between 2015 and 2025 with a +4.9% annual growth; rising competition and direct cargo links being the main reasons. HKIA cargo traffic is forecast to reach 5.6 million tonnes in 2020 and 7.2 million tonnes in 2025. Growth demand will further reduce in the last 5 years of the forecast period (+3.9% p.a. over the period 2025-2030) following the economy. Traffic is forecast to reach 8.9 million tonnes in 2030 (see Table 113).

15.4.2.2 Cargo OD and Transshipment traffic

Between 2008 and 2030, traffic is estimated to increase by 4.2%, significantly down from the 8% growth rate recorded between 1993 and 2008. Slowing down economies and intensifying competition on both PRD and Transshipment markets explain the lower traffic growth rate.

OD traffic is expected to bounce back aggressively achieving a 6% p.a. growth between 2009 and 2015. Growth will slow down in the further years. Over the 2008-2030 period, a growth of 4.4% will be reached.

Transshipment share will slightly decrease as the result of the intensifying competition on the transshipment including the direct links:

� Transfer rate on the long-haul destination is expected to slightly decrease from 16% to 14% between 2008 and 2030 as the competition on the Transshipment market and in particular with PVG and TPE intensifies (see section 12.4);

� Transfer rate on the Asian routes will decline from 21% to 16% mostly because of the direct links. In particular the transfer rate of the Taiwan market are expected to decrease from 42% in 2008 to 29% in 2030;

� For the Mainland China market, the continuous increase in transfer traffic in the last decade, up to 50% in 2008, will be turned into a decrease, mostly because of the Direct Links. The


transfer rate is expected to decrease to 38% in 2020 and stabilize around 39% in the long-term.

Table 113 – HKIA cargo traffic forecast – Total, OD and Transshipment traffic – 2008 to 2030 – in tonnes

Market 2008 2015 2020 2025 2030 08-15CAGR (%)

08-30CAGR (%)

Total 3,627,249 4,442,104 5,646,071 7,194,808 8,892,124 2.9% 4.2%

OD 2,813,317 3,523,771 4,570,767 5,837,324 7,234,123 3.3% 4.4%

Transshipment 813,932 918,333 1,075,304 1,357,484 1,658,001 1.7% 3.3%

Transfer rate 22.4% 20.7% 19% 18.9% 18.6%


15.4.2.3 Cargo regional traffic

On a regional basis, all market segments will record a steady growth in their total cargo traffic. With 5.1% p.a. over the forecast period, Mainland China is expected to record the highest growth followed by the ‘Others’ segment. The lowest performing market is expected to be Taiwan with +2.4% p.a. Regional traffic numbers are provided in Table 114 and detailed below:

� Mainland China market will benefit from a growing economy and world trade as well as more liberal trade agreements, especially between Mainland China and Hong Kong. Accounting for 435,000 tonnes in 2008, Mainland traffic is expected to grow by 5.1% p.a. between 2008 and 2030, growing 3-fold to a total traffic of 1.3 million tonnes in 2030.

� Taiwan will increase by 2.4% p.a. by 2030. As the result of the implementation of the direct links, the medium-term growth will be lower at 1.5% p.a. between 2008 and 2015 due to a severe decrease in 2009 and 2010. Over the forecast period, Taiwan is projected to grow from 455,000 tonnes to 765,000 tonnes.

� Japan is expected to increase from 325,000 tonnes to 654,000 tonnes representing a growth of 3.2% p.a. until 2030. The stagnating economy of Japan explains the weak increase in the cargo demand.

� USA/Canada, accounting for 530,000 tonnes in 2008, is expected to grow by 3.8% p.a. between 2008 and 2030; generating a total traffic of 1.2 million tonnes in the long term. Down from a yearly 7.4% increase in the period 1993-2008, the market is expected to face a


growing competition with PVG and TPE as the China-US air service agreements are further implemented and enhanced.

� Traffic to South East Asia will be one of the most dynamic segments benefiting from the positive China-Asean Free Trade Agreements. Traffic will increase by 4.6% p.a. between 2008 and 2030. In total, South East Asia is projected to grow from 594,000 tonnes to 1.6 million tonnes in the long term.

� IATA further projects that the European market is to increase from 679,000 tonnes to 1.7 million tonnes in the long-term representing growth of 4.3% p.a. until 2030. Europe will remain the busiest market for HKIA driven in particular by the continuing outsourcing / relocation trend of European companies in Mainland China and South East Asia. Developing competition with Mainland hubs and additional direct flights explain the market slow down in comparison to the 1993-2008 period.

� Australasia, accounting for 115,000 tonnes in 2008, is expected to grow by 3.0% p.a. between 2008 and 2030; generating a total traffic of 221,000 tonnes in the long-term. Unlike the passenger market, Australasia remains a cargo market of smaller importance for HKIA.

� Other regions will record a dynamic 5% p.a. increase between 2008 and 2030, driven by a strong OD demand to market such as India, Middle East and Africa. In total, the other regions market is projected to grow from 495,000 tonnes to 1.4 million tonnes.

Table 114 – HKIA total cargo traffic by region and share of total – 2008 to 2030 – in tonnes

Market 2008 2015 2020 2025 2030 08-15CAGR (%)

08-30CAGR (%)

Mainland China

435,055 12%

557,252 13%

738,499 13%

1,009,445 14%

1,308,969 15% 3.6% 5.1%

Taiwan 454,854 13%

504,482 11%

526,798 9%

643,433 9%

764,880 9% 1.5% 2.4%

Japan 324,875 9%

376,689 8%

470,2128%

561,285 8%

653,758 7% 2.1% 3.2%

USA & Canada

530,411 15%

634,209 14%

806,310 14%

1,001,510 14%

1,208,644 14% 2.6% 3.8%

SE Asia 593,956 16%

747,953 17%

980,878 17%

1,269,621 18%

1,606,247 18% 3.3% 4.6%

Europe 678,769 19%

866,668 20%

1,114,042 20%

1,396,884 19%

1,696,741 19% 3.6% 4.3%

Australasia 114,762 3%

136,326 3%

158,970 3%

188,334 3%

220,814 2% 2.5% 3.0%

Others 494,568 14%

618,525 14%

850,362 15%

1,124,29616%

1,432,071 16% 3.2% 5.0%

Total 3,627,249 100%

4,442,104 100%

5,646,071 100%

7,194,808 100%

8,892,124 100% 2.9% 4.2%



15.4.2.4 Cargo regional OD traffic

As for OD traffic, IATA expects an average growth of 4.4% p.a. over the forecast period. Regional OD traffic numbers are provided in Table 115.

� Mainland China is expected to record the highest increase in OD traffic (+6.1% p.a.) supported by the increased liberalism between HKSAR and Mainland China and the economic development of Hong Kong.

� The ‘Others’ segment is the second fastest growing market benefiting from the GPRD exports to high profile developing areas such as India and Middle East.

� Taiwan is expected to increase by 2.9% p.a. despite the negative impact of the direct links.

Table 115 – HKIA OD cargo traffic by region – 2008 to 2030 – in tonnes

Market 2008 2015 2020 2025 2030 08-15CAGR (%)

08-30CAGR (%)

Mainland China 216,832 318,350 454,317 616,037 794,677 5.6% 6.1%

Taiwan 319,228 389,082 411,895 501,230 594,263 2.9% 2.9%

Japan 269,740 320,688 407,757 485,607 566,010 2.5% 3.4%

USA & Canada 426,832 515,804 648,442 799,940 961,936 2.7% 3.8%

SE Asia 482,919 608,324 813,763 1,064,894 1,362,660 3.4% 4.8%

Europe 601,318 761,195 995,898 1,264,139 1,548,947 3.4% 4.4%

Australasia 75,602 89,892 108,773 131,490 156,192 2.5% 3.4%

Others 420,846 520,437 729,923 973,988 1,249,438 3.1% 5.1%

Total 2,813,317 3,523,771 4,570,767 5,837,324 7,234,123 3.3% 4.4%



15.4.2.5 Cargo regional Transshipment traffic

As for Transshipment traffic, IATA forecasts a 3.3% annual increase between 2008 and 2030. Regional Transshipment traffic numbers are provided in Table 116.

� The ‘Others’ segment is the top-growing market with 4.2% p.a. HKIA will take advantage of the rapid development of the demand and the still small number of cargo flights.

� USA/Canada is the second fastest market with 4.0% p.a. growth. HKIA will keep playing a key role between South Asia / South East Asia and North America although facing the intensifying competition from Shenzhen and Guangzhou.

� Taiwan is expected to slightly increase its Transshipment traffic over the forecast period as a result of the direct links (+1% p.a.) after a sharp decrease (-2.3% p.a.) between 2008 and 2015.

Table 116 – HKIA Transshipment cargo traffic by region at HKIA – 2008 to 2030 – in tonnes

Market 2008 2015 2020 2025 2030 08-15CAGR (%)

08-30CAGR (%)

Mainland China 218,224 238,902 284,182 393,408 514,291 1.3% 4.0%

Taiwan 135,625 115,401 114,903 142,203 170,617 -2.3% 1.0%

Japan 55,134 56,001 62,456 75,679 87,748 0.2% 2.1%

USA & Canada 103,579 118,405 157,867 201,570 246,708 1.9% 4.0%

SE Asia 111,037 139,629 167,115 204,728 243,587 3.3% 3.6%

Europe 77,451 105,473 118,144 132,745 147,795 4.5% 3.0%

Australasia 39,160 46,434 50,197 56,844 64,622 2.5% 2.3%

Others 73,722 98,088 120,440 150,308 182,632 4.2% 4.2%

Total 813,932 918,333 1,075,304 1,357,484 1,658,001 1.7% 3.3%



15.4.2.6 Tarmac transshipment traffic

Transshipment Tarmac designates the payload that is transferred from one flight to another without being handled at the cargo terminals at the airport.

From 331,000 tonnes in 2008, the transshipment tarmac market is expected to grow 4.3% annually up to 837,000 tonnes.

Its share of transshipment is expected to slightly increase from 43% in 2008 to 51% in 2030 as total transportation time and cost emerge as the main industry key success factors. Therefore the share to total traffic is slightly increasing as well. It pursues the trend observed in recent years. Between 2000 and 2008, Tarmac increased its share of HKIA transshipment traffic from 38% to 43%.

Table 117 - Tarmac Transshipment cargo – 2008 to 2030 - in tonnes

2008 2015 2020 2025 203008-15CAGR

(%)

08-30CAGR

(%) Tarmac Transshipment 330,901 408,658 510,769 658,380 837,291 3.1% 4.3%

% of transshipment 41% 45% 48% 49% 51%

% of total cargo 9.1% 9.2% 9.0% 9.2% 9.4%



16. Movement Forecast

This chapter presents the movement forecast and outlines the methodology and the assumptions underlying the forecast. Specific analysis and forecasts were carried out for each type of movements (passenger aircraft, cargo aircraft and non-revenue).

16.1 Passenger Aircraft Movements

16.1.1 Overall Trend

About 250,000 passenger aircraft movements were recorded in 2008 up from about 124,000 movements in 1993 (+4.8% p.a. over the period 1993-2008) and 148,000 movements in 1998 (+5.4% p.a. between 1998 and 2008) when Chek Lap Kok airport opened.

Over the last ten years (from 1998 to 2008), passenger and movement numbers increased at the same pace.

A year-by-year analysis reveals that movement number generally grows more slowly than passenger traffic. Exceptions were observed during the crisis periods (such as 1998, 2001, 2003 and to a lower extent 2008) as the airlines adjusted down their capacity with delay to the fast decreasing demand (see Table 118).

Table 118 – Difference between movement and passenger growth at HKIA – 1998 to 2008

2.0%

4.9%

2.4%

9.4%

0.6%

7.4%

7.9%

0.2%

3.2%2.4%

0.7%

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Source: AAHK data, IATA analysis

Passenger demand grows faster than

movement number

Movement number grows faster than

traffic

9/11 crisisSARS

Global Financial crisis

AsianFinancial crisis

Catch up2.0%

4.9%

2.4%

9.4%

0.6%

7.4%

7.9%

0.2%

3.2%2.4%

0.7%

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Source: AAHK data, IATA analysis

Passenger demand grows faster than

movement number

Movement number grows faster than

traffic

9/11 crisisSARS

Global Financial crisis

AsianFinancial crisis

Catch up


Airlines respond to demand shocks by trying to bring capacity into line. During downturns, demand usually falls faster than capacity in the first year of recession particularly. Afterwards the industry usually reduces capacity in line with demand.

16.1.2 Market Trends

At a market level, one may observe much contrasted trends depending on the maturity of the given market and the strategies of the airlines operating in that market.

� As a market grows, level of service is essential to catch addition passengers. An increase in the level of service (additional services to existing and new destinations) comes with a reduction in the average aircraft size.

� As a market becomes more mature, the key success factors for switch from the level of service to the cost advantage. Therefore airlines use bigger aircraft to lower their costs. It results in the number of passengers increasing faster than the number of movements.

As illustrated in Table 119, network development actually sees a series of these adjustments as the market develops and become more mature. Airlines’ objective is to achieve a compromise between the number of frequencies and the cost per seat. In the long-term, this objective drives up the average aircraft size and the number of passengers per movement.

Table 119 – Long-haul sector planning and average cost curve

Table 120 actually shows the evolution in the number of passengers per movement between 1998 and 2008. Most markets recorded an increase in the pax/movement ratio despite the financial crisis beginning in 2008.

Source: IATA analysis

Increasing ratio pax / movement

Source: IATA analysis

Increasing ratio pax / movement


Table 120 – Passengers per movement in 1998 and 2008 and annual evolution over the period

Market 1998(pax/mvt)

2008(pax/mvt)

Evolution (% CAGR)

Mainland 118 126 0.7%

Taiwan 238 232 -0.3%

Japan 184 197 0.6%

USA & Canada 238 272 1.3%

SE Asia 219 227 0.4%

Europe 256 268 0.5%

Australasia 194 231 1.8%

Others 197 180 -0.9%

Total 194 194 0 %

Source: AAHK

16.1.3 Assumptions by market

This section presents the assumptions on passengers per movement that were made for each geographical market. A summary of these assumptions is presented in Table 121. Rationale for each market is detailed in the next paragraphs.

Table 121 – Passengers per movement assumptions from 2008 to 2030 and annual evolution over the period

Market 2008(pax/mvt)

2015(pax/mvt)

2020(pax/mvt)

2025(pax/mvt)

2030(pax/mvt)

08-30CAGR (%)

Mainland China 126 147 154 162 170 1.4%

Taiwan 232 201 184 175 166 -1.5%

Japan 197 214 204 194 184 -0.3%

USA & Canada 272 291 306 322 338 1.0%

SE Asia 227 216 216 216 216 -0.2%

Europe 268 287 302 318 334 1.0%

Australasia 231 247 260 273 287 1.0%

Others 180 180 180 180 180 0.0%

Total 194 199 199 200 202 0.2%



Overall IATA forecasts a slight increase in the average ratio of passengers per movement from 194 in 2008 to 202 in 2030 (+0.2% CAGR over the period 2008-2030).

� Mainland China

Mainland China accounted for 32%, the largest part, of the passenger aircraft movements at HKIA in 2008. The average number of passengers per movement has increased by about 3% p.a. from a low of 108 passengers in 2003.

In 2008, the fleet serving the mainland market was made up of a mix of narrow and wide-body aircraft (B737, A320/A321 and A330 mostly). IATA estimated the load factor to be around 67% in 2008, with an average of 126 passengers per movement.

From 126 in 2008 IATA estimates that the number of passengers per movement will reach 147 in 2015 (+2.1% p.a. between 2008 and 2015), 154 in 2020 (+1% p.a. between 2015 and 2020) and 170 in 2030 (+1% p.a. between 2020 and 2030). This increase is driven by the following considerations: � The passenger demand is expected to increase quickly, especially the transfer demand

that should drive up aircraft size. � The number of routes to Mainland China from Hong Kong is supposedly stable in the

coming years. � Mainland airlines need to improve drastically their profitability driving up the load factor. � On the medium and long-term the current fleet mix (70% B737 and A320 and 23%

A330/A340) allows an increase in the number of seats per flight.

� Taiwan

In 2008, Taiwan represented 14% of the passenger aircraft movements at HKIA, ranking third among the geographical markets. The average number of passengers per movement slightly decreased from 238 in 1998 to 232 in 2008 (-0.3% p.a.). The average number of passengers per movement has been decreasing continuously during most of the last decade. Only exception was the 2001-2003 crisis period when an accelerated decrease was experienced, ranging between -1% and -3% p.a.

In 2008, the fleet serving the Taiwan market was mostly made up of wide-body aircraft (A330/A340, B777 and B747). The larger aircraft such as B777 and B747 accounted for 25% of the movements. Over the recent years, the load factor has been high, between 80% and 85% according to IATA’ s estimates.

From 232 in 2008, IATA estimates that the number of passengers per movement will accelerate its decrease, reaching 201 in 2015 (-2% p.a. between 2008 and 2015), 184 in 2020 (-1.8% p.a. between 2015 and 2020) and 166 in 2030 (-1% p.a. between 2020 and 2030). This decrease is driven by the following considerations:


� The number of Mainland China – Taiwan passenger connecting via HKIA is forecast to decrease significantly due to the direct links.

� Airlines servicing the routes between HKIA and Taiwan will adapt their offer to meet the declining demand while maintaining a sufficient number of frequencies to feed the HKIA hub. Therefore frequencies and aircraft size will be simultaneously reduced.

� The current fleet mix (84% of category E aircraft) actually offers enough room for a decrease in aircraft size.

� Japan

Japan represented about 7% of the passenger aircraft movements at HKIA in 2008, ranking fifth among the geographical markets. The average number of passengers per movement slightly increased by 1.2% during the last two highest years from 205 to 224 passengers per movement in 2000 and 2007 respectively.

In 2008, two thirds of the fleet serving the Japanese market was made up of the larger wide-body aircraft (A330/A340, B777 and B747). The load factor as estimated by IATA was 67% in 2008 recovering from a low 54% reached in 2003 during the SARS crisis.

From 197 in 2008, IATA estimates that the number of passengers per movement will pursue the past trend until 2015 increasing up to 214 (+1.2% p.a. between 2008 and 2015) and then will start decreasing, as demand is declining, to reach 204 in 2020 (-1% p.a. between 2015 and 2020) and to 184 in 2030 (-1% p.a. between 2020 and 2030). This evolution is driven by the following considerations: � As the demand is growing (2009-2015), airlines will aim at improving the load factor from

a low 67% in 2008. � Airlines will start modernizing their fleet at the same time phasing out the old B767 and

replacing them by bigger B787. � After 2015 demand is expected to stagnate and slightly decrease. Aircraft size will be

adjusted to match the declining demand while maintaining a decent load factor. In particular B747 and B777 will be progressively phased out (from 48% of the movements in 2015 to 37% in 2030) and replaced by smaller aircraft such as B787 and A350 (from 5% of the movements in 2015 to 36% in 2030).

� USA and Canada

North America represented about 5.5% of the passenger aircraft movements at HKIA in 2008. The average number of passengers per movement increased from 238 in 1998 to 272 in 2008 (+1.3% p.a.). In 2008 USA and Canada recorded the highest ratio of passengers per movement of all the geographical markets.

The average number of passengers per movement has been continuously increasing most part of this last decade with the exception of 2001 and 2003.


In 2008, the fleet serving the North American market was mostly made up of B777 and B747. The load factor as estimated by IATA was 79% in 2008, close to its historical high of 82% reached in 2007.

IATA estimates that the North American market will keep on its historical trend, increasing by 1% p.a. From 272 in 2008 the number of passengers per movement is forecast to reach 291 in 2015 (+1% p.a. between 2008 and 2015), 306 in 2020 (+1% p.a. between 2015 and 2020) and 338 in 2030 (+1% p.a. between 2020 and 2030). This increase is driven by the following considerations: � Competition is expected to rise as several direct routes should be opened between

Mainland China and the United States of America as a result of the Air Service Agreement signed in 2007. Airports such as CAN and PVG will benefit from these developments while TPE will aim at developing its 5th freedom traffic between Mainland China and North America.

� As competition intensifies, the market to North America will keep developing as a commodity market with airfare as one of the main key buying criteria.

� In order to follow the market demand for lower airfare and face the intensifying competition, more modern and bigger aircraft will be used such as A350 (up to 412 seats in bi-class) and B777 (up to 450 seats in bi-class) whereas older aircraft like A340 and B747 will be phased out.

� South East Asia

South East Asia represented about 20% of the passenger aircraft movements at HKIA in 2008, ranking second among the geographical markets. The average number of passengers per movement showed a contrasted evolution from 219 in 1998 to 227 in 2008 (+0.4% p.a.). The highest points were reached in 2000 and 2006 with respectively 239 and 233 passengers per movement. The 2001-2003 crisis had a very negative impact on the ratio reaching its lowest in 2001 and 2003 with 206 and 211 passengers per movement. The ratio declined again in 2007 and 2008 (-1.7% p.a.) as competition to South East Asia intensified. Between the two peaks (2000 and 2006), the ratio decreased by -0.4% p.a.

In 2008, the fleet serving the South East Asia market was made up of narrow-body aircraft (A320 and B737 mostly) for 1/3 of the movements and of wide-body aircraft (A330/A340, B777 and B747) for the other 2/3 of the movements. The load factor estimated by IATA was quite stable over the period of analysis reaching a high of 82% in 2008.

From 227 in 2008 IATA estimates that the number of passengers per movement will pursue the recent decreasing trend down to 216 in 2015 (-0.7% p.a. between 2008 and 2015) and then will stabilize at around 216. This evolution is driven by the following considerations:


� As competition to South East Asia will keep intensifying within the GPRD, airlines will slightly increase their frequencies and still keep a high load factor to maintain low costs at the expense of aircraft size.

� Smaller aircraft will also better fit the growing competition on the transfer market (from North Asia and Mainland China to South East Asia). The share of the larger wide-body aircraft (B777 and B747) will shrink by 2030.

� New generation aircraft will be massively introduced (B787, A350 and replacement of the A320) to keep the costs down and compete with the fast developing Low-Costs and Chinese carriers.

� Europe

Europe represented close to 7% of the passenger aircraft movements at HKIA in 2008. The average number of passengers per movement slightly increased from 256 in 1998 to 268 in 2008 (+0.5% p.a.). In 2008, Europe recorded the second highest ratio of passengers per movement and was almost at the level of North America. The crises in 2001 and 2003 severely affected the ratio that shrank to 247 passengers in 2001 and 239 passengers in 2003.

In 2008, the fleet serving the North American market was mostly made up of B747 and A340. The load factor, as estimated by IATA, was 85% in 2008 at its peak over the recent years.

IATA estimates that the European market will keep on its historical trend, increasing by 1% p.a. From 268 in 2008, the number of passengers per movement is forecast to reach 287 in 2015 (+1% p.a. between 2008 and 2015), 302 in 2020 (+1% p.a. between 2015 and 2020) and 334 in 2030 (+1% p.a. between 2020 and 2030). This increase is driven by the following considerations: � On trunk routes to Europe, competition is expected to intensify on the GPRD with CAN

strengthening its presence. Increasing the size of the aircraft will be an efficient strategy to lower the cost while maintaining a high level of service. A380 will represent about 6% of the movements to Europe in 2030.

� As demand grows to Europe, new destinations will be opened to second tier cities; adequate aircraft such as B787 or A350 will be introduced to serve these thinner markets.

� Australasia

Australasia totalled 12,000 movements in 2008 representing about 5% of the passenger aircraft movements at HKIA. The average number of passengers per movement was very stable back in the first half of the decade (around 200). It started to increase in 2005 and reached 231 in 2008.


In 2008, the fleet serving the Australasian market was mostly made up of A330/A340 (80%). The load factor as estimated by IATA was 73% in 2008, increasing from a low 68% earlier in the decade.

IATA estimates that the Australian market will keep on its recent upward trend, increasing by 1% p.a. From 231 in 2008, the number of passengers per movement is forecast to reach 247 in 2015 (+1% p.a. between 2008 and 2015), 260 in 2020 (+1% p.a. between 2015 and 2020) and 287 in 2030 (+1% p.a. between 2020 and 2030). This increase is driven by the following considerations: � Routes to Australasia have a strong proportion of leisure passengers hence putting

significant pressure on airfares. � Australasia is the fastest growing TT market over the forecast period in addition to be

one of the fastest growing on the OD segment. � New aircraft (B787 and A350) will be introduced and recent ones (B777) will be further

introduced to achieve unit cost reduction and address the opportunities on the TT market.

� Others

Others markets represented less than 10% of the movements in 2008. Several markets are covered from medium haul ones (such as South Korea and India) to long haul ones (Africa).

It has been assumed that the number of passengers per movement related to these other markets would remain constant over the forecast period.

16.1.4 Forecast for Passenger Aircraft Movements

The above assumptions lead to a 3% increase in the number of passenger aircraft movements, from 250,000 movements in 2008 up to 480,000 movement in 2030 (see Table 122).

Table 122 – Passenger aircraft movement and ratio passengers per movement – HKIA - 2008 to 2030

2008 2015 2020 2025 2030 08-30CAGR (%)

Passenger Aircraft Movements (in mvt) 250,091 284,607 342,456 408,950 480,195 3.0%

Ratio Passenger per Movement (in pax/mvt) 194 199 199 200 202 0.2%



16.1.5 Passenger Aircraft Movements by Region

Passenger aircraft movements per region are derived from the regional passenger demand and the regional assumptions for passenger per movement.

Table 123 – Passenger Aircraft Movements by Region at HKIA – 2008 to 2030 – in movements

Market 2008 2015 2020 2025 2030 08-30CAGR (%)

Mainland China 79,661 84,914 112,080 144,412 179,557 3.8%

Taiwan 35,712 37,548 44,378 52,198 61,370 2.5%

Japan 17,953 18,553 17,999 18,483 19,437 0.4%

USA & Canada 13,654 15,150 16,582 17,919 19,159 1.6%

SE Asia 49,975 62,933 74,038 87,349 101,589 3.3%

Europe 16,601 17,477 20,996 23,864 26,506 2.1%

Australasia 12,163 14,325 17,310 19,708 21,829 2.7%

Others 24,372 33,706 39,073 45,018 50,749 3.4%

Total 250,091 284,607 342,456 408,950 480,195 3.0%


It is to be noted that, despite a decreasing demand, the Taiwanese and Japanese markets will see an increase in their number of movements. This will be the result of an adjustment of the airlines’ fleet strategy (use of smaller aircraft) to the declining demand.


16.1.6 Passenger Aircraft Movements by Aircraft Type

16.1.6.1 Current situation In 2008, passenger aircraft movements divided up into 34% of code C aircraft, 4% of code D aircraft and 62% of code E. As highlighted in Table 124, the recent years saw the further decline in code D aircraft movements (-19% p.a. over the period 2004-2008). Code C aircraft movements increased by 10% on a yearly base benefiting from the rapid development of the regional market and the phasing out of code D aircraft. Code E aircraft movements grew by 7% p.a.

Table 124 – Passenger aircraft movement split into aircraft code – 2004 and 2008 – in % of total passenger aircraft movements

2004 2008

Code C (A320, B737, MD80/90,

CRJ…) 29% 34%

Code D (B757, B767, MD11,

DC10, A300, A310 …) 13% 4%

Code E (A330, A340, B777,

B747…) 58% 62%

Code F (A380, B747-8) 0% 0%

Source: AAHK

16.1.6.2 Assumptions For the purpose of runway demand projection, the future passenger aircraft fleet mix was derived from assumptions on aircraft models and regional market considerations. These assumptions were based on the best available information at the moment of the forecast. In particular, assumptions were made about fleet renewal plans and the introduction of new generation aircraft. Airlines’ feedback indicate that higher environmental standards may accelerate the replacement of the current fleets by new generation aircraft of similar seat capacity. It is estimated that such an accelerated renewal would not affect the split of movements into ICAO aircraft segments. This split includes the following assumptions:


� Code C aircraft: � New aircraft will be developed to replace the current 130/190-seater families. Both

Airbus and Boeing have indicated that new short range aircraft (Y1 for Boeing and NSR for Airbus) could be ready by 2018-2020. Bombardier has also launched a new C Series aircraft (up to 130 seats) to be rolled out in 2013-2014.

� The market shares of the A319/320/321 and B737 families are assumed to decline slowly as of 2020 as they are progressively replaced by the new generation..

� Code D aircraft: � A310, DC10, B767 and B757 will be almost phased out at the end of the forecast period. � No new code D aircraft is expected to replace these models.

� Code E aircraft: � The first half of 2008 surge in oil price (in mid-2008) and the financial crisis have

triggered the early retirement of several B747. IATA anticipates that 747 will be progressively reintroduced. The market share of the 747 is going to keep decreasing all along the forecast period with an acceleration after 2020.

� B787 is planned for roll-out in the near future. The base model of the 787 family (B787-8) will be launched in late 2010 / early 2011. It is assumed that it will start serving HKIA in 2011. The longer range version (B787-9) is scheduled for delivery in late 2013.

� A330 and B777 should stabilize in 2020 (in movement number). Both aircraft have been developed in the late 80's and rolled-out in the mid 90's. Their market share will be declining after 2020.

� A340 is expected to phase out sooner than the A330. Globally the aircraft has been ousted by the B777. From 10% in 2004 its share at HKIA declined to 7.2% in 2008.

� A350 will be introduced after 2015 taking advantage of the decline in A330 and B777.

� Code F aircraft: � A380 has been introduced in 2009 in the South East Asia market. Singapore Airlines

currently offers a daily service between HKIA and SIN with this type of aircraft. � Further A380 utilization is expected to South East Asia, Middle East and Europe in the

next years as British Airways, Virgin and Emirates roll-out the aircraft. � The B747-8I is not expected to be a commercial success and is not likely to be

introduced on routes to HKIA.

16.1.6.3 Future Split of Passenger Aircraft Movements into Aircraft Type

Based on the above assumptions, Table 125 provides a breakdown of passenger aircraft movements for the various types of aircraft.


Narrow-body aircraft are expected to increase their market share from about 34% in 2008 to over 38% in 2030 pursuing the trend observed over the last years. As mentioned earlier, code D aircraft are phasing out and will represent a negligible part of the traffic after 2015. Overall wide-body aircraft (codes D, E and F) will see their market share decrease from 66% in 2008 down to about 61% in 2030. Code E will remain the dominating category with an almost stable 60% market share all along the forecast period.

Table 125 – Split of Passenger Aircraft Movement into Aircraft Type at HKIA – 2008 to 2030 – in % of Passenger Aircraft Movements

2008 2015 2020 2025 2030

Code C 34.1% 33.9% 35.6% 37.3% 38.6%

B737 12.6% 11.5% 11.6% 10.0% 8.6%

A320 19.8% 21.6% 21.8% 19.2% 17.0%

MD80/90 0.7% 0.0% 0.0% 0.0% 0.0%

Other C aircraft 1.0% 0.8% 2.2% 8.0% 13.0%

Code D 4.2% 1.2% 0.6% 0.4% 0.2%

MD11/DC10 0.1% 0.0% 0.0% 0.0% 0.0%

B757/B767 3.1% 1.2% 0.6% 0.4% 0.2%

A300/A310 0.9% 0.0% 0.0% 0.0% 0.0%

Other D aircraft 0.0% 0.0% 0.0% 0.0% 0.0%

Code E 61.7% 63.9% 62.5% 60.8% 59.6%

B747 15.3% 12.2% 10.9% 8.9% 6.3%

B777 12.0% 16.1% 16.7% 15.3% 12.9%

B787 0.0% 3.9% 6.3% 8.7% 10.9%

A330 27.3% 27.4% 25.3% 21.8% 18.4%

A340 7.2% 4.3% 3.3% 2.5% 1.9%

A350 0.0% 0.0% 0.0% 3.7% 9.2%

Other E aircraft 0.0% 0.0% 0.0% 0.0% 0.0%

Code F 0.0% 1.0% 1.3% 1.6% 1.6%

A380 0.0% 1.0% 1.3% 1.6% 1.6%

B747-8 0.0% 0.0% 0.0% 0.0% 0.0%



16.2 Cargo Aircraft Movements

16.2.1 Historical Trend

Over 45,000 cargo aircraft movements were recorded in 2008 growing five-fold from about 9,000 movements in 1993 (+11.4% p.a. over the period 1993-2008) and about 13,000 movements in 1998 (+13.5% p.a. between 1998 and 2008) when Chek Lap Kok airport opened. In 2008 all cargo flights accounted for 61% of the cargo throughput handled at HKIA.

Over the last ten years (from 1998 to 2008), the number of cargo movements increased 1.6 times faster than the cargo payload. The surge in cargo traffic (+8.4% p.a. or almost +2 million tonnes over the same period) outpacing the growing passenger demand (+5.4% p.a.) explained the rapid increase in all cargo flights. The share of cargo in all cargo flights grew from 43% in 1998 to 61% in 2008. All cargo flights accounted for 75% of the surge in cargo traffic over the last decade.

During this period the payload per cargo flight decreased from 54.3 tonnes in 1998 to 48.7 tonnes in 2008 (-1% p.a.). Similarly the belly freight (carried on-board passenger aircraft) decreased from 6.3 tonnes to 5.7 tonnes. It has been observed that the trend in belly freight amplifies the trend measured on cargo flight, belly cargo increasing or decreasing about 1.7 times faster than average payload per cargo flight (see Table 126). The strategy of the cargo players operating a passenger fleet is to fill in the freighters first leaving the remainder of the goods to the passenger flights hence the higher variations in the passenger flights payload.

Table 126 – Compared year-on-year evolution in payloads per cargo and passenger flights at HKIA – 1998 to 2008 – in %

Source: AAHK, IATA analysis

20%

15%

10%

5%

0%

5%

10%

15%

20%

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Payload per Pax f light

Payload per Cargo f light

Payload per pax flights tends to increase or decrease about 1.7 times faster than payload per cargo flight


Most of the trends characterized above were actually observed at a global scale. The main difference was actually the -1% annual decrease in payload per cargo movement recorded at HKIA by opposition to the 0.9% yearly increase observed at the 12 biggest global cargo hubs (measured on 2003-2007, excluding HKIA). It is to be noted that both Airbus and Boeing mention a similar 1% annual increase in freighter tonnage over the recent years.

At HKIA, IATA estimates that this downwards trend resulted in a 5% decrease in the freight load factor over the period 2003-2007.

16.2.2 Future Trend

IATA expects the next two decades to record a 4.2% p.a. growth of cargo demand, slowing down from 8% p.a. for the 1993-2008 period.

IATA estimates that the following factors will underlie the evolution of cargo movements at HKIA:

� Low costs will emerge as one of the dominant success factors of the air cargo transportation industry � Air cargo yields have been decreasing continuously over the last two decades

(-3% p.a.); � The recent crisis has intensified the trend with a 40% decrease of the air cargo yield on

a yearly base; � Although a bounce back in yields is anticipated as air freight volumes catch up,

competition with containerized sea transportation will maintain a downward pressure on prices as new ships enter the fleets and the average ship size continues to increase;

� Upward oil costs will further intensify the air cargo carriers’ focus on non-oil operational costs.

� Average cargo aircraft payload at HKIA will catch up with the global upward trend, increasing by 0.4% annually. � Global pressure on costs will drive aircraft size and load factors up. At HKIA, the load

factor has been declining since 2003, creating the circumstances for an increase in aircraft size;

� As the air cargo industry is under cost pressure, the cargo demand will keep concentrating in key hubs supporting the need for bigger aircraft as these hubs become more saturated;

� Cost concern and saturation will push further the “fly less but carry more” operational strategy;

� At HKIA in particular the roll-out of the 747-8F under the banner of Cathay Pacific will contribute to this trend adding up to 30 tonnes of payload to the oldest B747.


� Airbus’ forecast is that average aircraft payload increasing 21% from 52.9 tonnes to 64.1 tonnes over the next two decades (+1% p.a.), in line with the +0.9% annual increase observed in the last years;

� Considering the CX/CA alliance and the possible relocation of CX freighters to Shanghai, it has been assumed the tonnage per freighter will grow by 0.45% as of 2011, (only half of the expected trend at a global level).

� Average belly payload will keep amplifying the evolutions in cargo aircraft payload resulting in a 0.7% p.a. increase � Over the last years belly cargo increased or decreased about 1.7 times faster than

average freighter payload; � The most recent and next generation twin-aisle passenger aircraft (such as B777)

possess freight capability greater than that of the aircraft they replace.

16.2.3 Forecast for Cargo Aircraft Movements

The above assumptions lead to a 4% increase in the number of cargo aircraft movements, from about 45,500 movements in 2008 up to 108,000 n 2030 (see Table 127). The proportion of freight transported in cargo aircraft will slightly increase from 61% in 2008 to 64.5% in 2030, slowing down from the previous decades as the gap between passenger and cargo growth will be closing.

Table 127 – Forecast for Cargo Aircraft Movement at HKIA and related data – 2008 to 2030

2008 2015 2020 2025 2030 08-30CAGR (%)

Cargo aircraft payload (in tonnes) 48.7 49.8 50.9 52.1 53.2 0.4%

Passenger aircraft payload (in tonnes) 5.7 5.9 6.1 6.3 6.6 0.7%

Cargo movements (in mvt) 45,463 55,629 69,833 88,403 107,689 4.0%

Freight in cargo flights as % of total freight 61% 62.3% 63% 64% 64.5% 0.3%



16.2.4 Cargo Aircraft Movements by Region

The approach to forecast cargo movements on a regional base is detailed in section 2.3.5.2.

Table 128 presents the split of air cargo movements by region.

Table 128 - Cargo Aircraft Movements by Region at HKIA – 2008 to 2030 – in movements

Market 2008 2015 2020 2025 2030 08-30CAGR (%)

Mainland China 5,779 8,219 10,241 13,717 17,249 5.1%

Taiwan 3,736 4,188 3,412 3,961 4,291 0.6%

Japan 5,426 6,384 8,314 9,964 11,490 3.5%

USA & Canada 10,679 12,535 15,718 19,253 22,864 3.5%

SE Asia 5,192 6,150 8,647 11,598 15,012 4.9%

Europe 9,206 11,987 15,070 18,646 22,312 4.1%

Australasia 383 415 178 143 183 -3.3%

Others 5,062 5,750 8,254 11,120 14,289 4.8%

Total 45,463 55,629 69,833 88,403 107,689 4.0%


Australasia is the only regional market that is expected to see a decrease in its number of cargo movements. In 2008 about 85% of the freight to Australasia was carried in passenger flight. Over the forecast period, passenger number to Australasia is expected to grow faster than cargo resulting in an increase share of cargo being transported onboard passenger aircraft.

16.2.5 Cargo Aircraft Movements by Aircraft Type

16.2.5.1 Current situation

In 2008, cargo aircraft movements were split in the following manner: 59% of code E aircraft and 36% of code D aircraft. Code C aircraft movements only accounted for 5%. As highlighted in Table 129, the recent years saw an increasing number of code D and code C movements (respectively from 31% and 1% in 2004 to 36% and 5% in 2008). Consequently code E aircraft movements lost ground with their share shrinking from 68% in 2004 down to 59% in 2008.


Table 129 – Passenger aircraft movement split into aircraft code – 2004 and 2008 – in % of total passenger aircraft movements

2004 2008

Code C (B737F…) 1% 5%

Code D (B767F, MD11, DC10F,

A300F, A310F …) 31% 36%

Code E (B777F, B747F…) 68% 59%

Code F (A380F, B747-8F) 0% 0%

Source: AAHK

16.2.5.2 Assumptions The future cargo aircraft fleet mix was derived from assumptions on aircraft models and market considerations. The cargo industry experts generally support the idea that the average size of cargo freighter is going to increase in the next years. Several reasons support this projected increase:

� Cargo hubs concentrate a significant part of air cargo traffic; Increase in aircraft size is a solution to the saturation of these cargo hubs.

� The competition with containerized shipping is increasing due to technology advances, increased speed and improved reliability and cheaper costs. As the reliability competitive advantage is slowly vanishing, price (and thus cost) becomes a key decision criteria. The further decrease in unit costs drives the need for bigger and newer aircraft.

Additionally, some of the code D aircraft are old and will be replaced by the end of the forecast horizon. The smaller code D ones will be replaced by more recent ones (such as A300-600F or retrofitted B767). The rest of them will be replaced by code E aircraft of comparable capacity (B777F and A330F). Simultaneously, some carriers (such as Cathay Pacific Cargo) will be replacing their oldest B747 by newest code F aircraft (B747-8F).


The forecast is based on the following assumptions with respect to the aircraft models:

� Code C aircraft: � B727F will be entirely phased out before 2020. � B737F is expected to replace most of the B727F.

� Code D aircraft: � DC10F is expected to decrease rapidly after 2010. � A310F will be phased out more slowly than the DC10F. � A300-600F will keep growing as it pertains to number of movements but will loose

ground in relation to the total number of movements. It will stabilize shortly after 2020. � B767F and B757F will maintain their market share, benefiting from the retirement of

B767 and B757 passenger aircraft after the introduction of the B787. � After a strong decrease in 2008 and 2009, the number of MD11F movements will

recover slowly until 2020. Phasing out will start after 2020.

� Code E aircraft: � B747-200F, almost 40 years old, will be phased out in the short-term. They account for

16% of the B747 freighters operated by the main cargo airlines serving HKIA. � The oldest B747-400F (-BCF, -FSCD…) are about 20 years old. They represent 65% of

the B747 freighters operated by the main cargo airlines serving HKIA. About 80% of them will be progressively phased out between 2020 and 2030.

� The recent B747-400ERF are less than 10 years old. They will be phased out after 2030. They represent 19% of the B747 freighters operated by the main cargo airlines serving HKIA.

� Overall the share of B747F is expected to decrease massively from 59% in 2008 to 19% in 2030.

� A330F and B777F are promising aircraft that should grow quickly in numbers at HKIA taking advantage of the phasing out of old cargo aircraft such as the MD11F or the B747F.

� Code F aircraft: � The B747-8F seems promising in particular to address the cargo biggest hubs. Several

carriers including Cathay Pacific Cargo are reportedly taking delivery of the mega freighter in late 2010 / early 2011. B747-8F will be introduced in replacement of the B747F that are phased out.

� The freighter version of the A380 is assumed not to be rolled out.


16.2.5.3 Future Split of Cargo Aircraft Movements into Aircraft Type Based on the above assumptions, Table 130 provides a breakdown of cargo aircraft movements into the various types of aircraft.

Table 130 – Split of Cargo Aircraft Movement into Aircraft Type at HKIA – 2008 to 2030 – in % of Cargo Aircraft Movements

2008 2015 2020 2025 2030

Code C 4.8% 5.7% 5.3% 4.8% 4.5%

B737 1.5% 4.1% 5.3% 4.8% 4.5%

A320 0.0% 0.0% 0.0% 0.0% 0.0%

Other C aircraft 3.3% 1.6% 0.0% 0.0% 0.0%

Code D 36.0% 27.6% 27.0% 20.7% 15.7%

MD11F 18.7% 11.4% 10.8% 6.4% 3.5%

DC10F 0.3% 0.0% 0.0% 0.0% 0.0%

B757F 0.6% 0.6% 0.6% 0.7% 0.7%

B767F 3.4% 3.8% 3.9% 3.9% 3.5%

A300F 12.0% 11.3% 11.3% 9.4% 7.8%

A310F 1.0% 0.4% 0.3% 0.3% 0.2%

Code E 59.1% 64.2% 63.7% 62.8% 60.8%

B747F 59.1% 49.8% 48.2% 33.0% 19.0%

B777F 0.0% 12.0% 11.2% 19.6% 26.8%

A330F 0.0% 2.4% 4.3% 10.3% 15.0%

Code F 0.0% 2.5% 4.0% 11.7% 19.0%

A380F 0.0% 0.0% 0.0% 0.0% 0.0%

B747-8F 0.0% 2.5% 4.0% 11.7% 19.0%


The overall result is a slightly increasing share for code E (59% in 2008 to 60.8% in 2030), a strongly decreasing share for code D (36% in 2008 down to 15.7% in 2030) to the benefit of code F (19% in 2030). Code C is expected to be stable overall (4.8% in 2008 to 4.5% in 2030).


16.3 Non-Commercial Aircraft Movements

16.3.1 Historical Trend

About 5,600 non-commercial movements were recorded in 2008 increasing by 8.5% annually since 1998. These movements have shown to be best correlated to passenger volume (rather than to HK GDP). Equation is:

� Non-Rev ATM = (Ttlpassenger*.000177667)+(SARSvar*804.83)-3,150

� R-squared =.9812

� F-statistics =156

16.3.2 Forecast for Non-Commercial Aircraft Movements

The above calculations lead us to project that the number of non-commercial aircraft movements is expected to grow by about 4.3% p.a. from about 5,600 movements in 2008 up to 14,000 movement in 2030 (see Table 131).

Table 131 – Forecast for Cargo Aircraft Movement at HKIA and related data – 2008 to 2030

2008 2015 2020 2025 2030 08-30CAGR (%)

Non-Commercial movements (in mvt) 5,588 6,910 8,938 11,381 14,086 4.3%



16.3.3 Non-Commercial Aircraft Movements by Region

The following table provides a breakdown of non-commercial aircraft movements by region (see Table 132).

Table 132 – Non-Commercial Aircraft Movements by Region at HKIA – 2008 to 2030 – in movements

Market 2008 2015 2020 2025 2030 08-30CAGR (%)

Mainland China 2,392 2,958 3,826 4,872 6,030 5.0%

Taiwan 504 623 806 1,027 1,271 2.3%

Japan 502 621 803 1,022 1,265 0.0%

USA & Canada 283 350 453 576 713 -0.7%

SE Asia 881 1,089 1,409 1,794 2,221 5.4%

Europe 271 335 433 552 683 5.3%

Australasia 151 187 242 308 381 2.8%

Others 604 747 966 1,230 1,523 4.4%

Total 5,588 6,910 8,938 11,381 14,086 4.3%



16.3.4 Non-Commercial Aircraft Movements by Aircraft Type

Aircraft type assumptions for non-commercial aircraft movements are aligned with those for passenger aircraft movements. The results is the following movement mix (see Table 133).

Based on these assumptions, code C aircraft are expected to increase their share of the total non-commercial movement from about 68% in 2008 to over 77% in 2030. Alike passenger movement, code D aircraft will be declining from 10% to 6%. Code E aircraft are also expected to decline from 22% to 15%.

Table 133 – Split of Non-Commercial Aircraft Movement into Aircraft Type at HKIA – 2008 to 2030 – in % of Non-Commercial Aircraft Movements

2008 2015 2020 2025 2030

Code B 0.0% 1.3% 1.3% 1.4% 1.4%

Code C 67.6% 74.8% 75.8% 76.5% 77.2%

A320 5.1% 6.1% 6.4% 6.6% 6.7%

B737 4.1% 3.2% 3.2% 3.2% 3.2%

MD80/90 0.4% 0.3% 0.3% 0.3% 0.3%

Other C aircraft 57.9% 65.2% 66.0% 66.5% 66.9%

Code D 10.4% 7.1% 6.7% 6.5% 6.3%

MD11 5.5% 4.4% 4.2% 4.1% 4.0%

B757/B767 4.0% 2.1% 2.0% 1.9% 1.8%

A300/A310 0.7% 0.4% 0.4% 0.4% 0.4%

Other D aircraft 0.2% 0.1% 0.1% 0.1% 0.1%

Code E 22.0% 16.8% 16.1% 15.6% 15.1%

B747 12.7% 10.1% 9.6% 9.1% 8.8%

B777 2.6% 1.4% 1.4% 1.4% 1.3%

A330 5.4% 3.9% 3.7% 3.6% 3.5%

A340 1.3% 1.4% 1.5% 1.5% 1.5%

Code F 0.0% 0.0% 0.0% 0.0% 0.0%



16.4 Overall Forecast for Movements at HKIA

The present section details the projected number of movements at HKIA under the base scenario.

It results from the above forecasts that the number of aircraft movements is expected to grow two-fold from about 300,000 movements in 2008 up to over 601,000 movement in 2030 (see Table 134). This corresponds to a 3.2% annual increased (CAGR).

Table 134 – Projection of total number of movements at HKIA – 2008 to 2030

Passenger movements

Cargo movements

Non-Commercial movements Total

YearATM % ATM % ATM % ATM

1998 147,900 91% 12,847 8% 2,476 2% 163,223

2003 157,320 84% 27,659 15% 2,529 1% 187,508

2008 250,091 83% 45,463 15% 5,588 2% 301,142

2015 284,607 82% 55,629 16% 6,910 2% 347,147

2020 342,456 81% 69,833 17% 8,938 2% 421,227

2025 408,950 80% 88,403 17% 11,381 2% 508,735

2030 480,195 80% 107,689 18% 14,086 2% 601,970

Average growth (CAGR)

98-08 5.4% 13.5% 8.5% 6.3%

08-15 1.9% 2.9% 3.1% 2.1%

15-20 3.8% 4.7% 5.3% 3.9%

20-30 3.4% 4.4% 4.7% 3.6%

08-30 3.0% 4.0% 4.3% 3.2%



The increase in movement numbers is slowing down from 6.3% p.a. between 1998 to 2008 to 3.2% p.a. over the period 2008-2030. As explained below, it is mostly due to the slackening demand:

� Considering 1 passenger or 100kg of freight as 1 Work-Load Unit (WLU), the WLU growth at HKIA is forecast to slow down from 6.6% p.a. (over the period 1998-2008) to 3.6% p.a. (over the forecast period).

� The WLU per movement is expected to increase from 0.2% p.a. (over the last 10 years) to 0.4% p.a. (between 2008 and 2030) hence playing a minor role in comparison to the decelerating demand.

Overall the share of passenger flights will represent 80% in 2030, down form 83% in 2008, due to an increase in the share of cargo movements from 15% to 18%. The increase is limited in comparison to the 7 points of percentage increase between 1998 and 2008 mostly because the gap between passenger and cargo growth is expected to narrow down. The share of non-commercial flights is forecast to remain stable until 2030. Over the forecast period, Mainland China will record the highest growth in total movements (+3.9%) increasing the share of movements to Mainland China from 29% in 2008 to almost 34% in 2030 (see Table 135). Beside Mainland China, SE Asia and other markets will be driving the expansion with a yearly increase above the 3.2% p.a. average growth.

Table 135 – Total Aircraft Movements by Region at HKIA – 2008 to 2030 – in movements

Market 2008 2015 2020 2025 2030 08-30CAGR (%)

Mainland China 87,832 96,092 126,147 163,001 202,835 3.9%

Taiwan 39,952 42,359 48,596 57,186 66,932 2.3%

Japan 23,881 25,558 27,117 29,469 32,193 1.3%

USA & Canada 24,616 28,036 32,752 37,749 42,736 2.5%

SE Asia 56,048 70,173 84,093 100,741 118,821 3.5%

Europe 26,078 29,799 36,500 43,062 49,501 3.0%

Australasia 12,697 14,927 17,729 20,159 22,393 2.6%

Others 30,038 40,203 48,293 57,368 66,560 3.7%

Total 301,142 347,147 421,227 508,735 601,970 3.2%



The split of movements into aircraft type is derived from the projection for passenger aircraft, cargo aircraft and non-revenue flights presented in the sections above (see Table 136).

Table 136 – Split of Total Aircraft Movement into Aircraft Type at HKIA – 2008 to 2030 – in % of Total Aircraft Movements

2008 2015 2020 2025 2030

Code C 30.3% 30.2% 31.5% 32.5% 33.4%

B737 10.7% 10.1% 10.4% 9.0% 7.8%

A320 16.6% 17.8% 17.9% 15.6% 13.7%

Other C aircraft 3.0% 2.3% 3.2% 8.0% 12.0%

Code D 9.1% 5.5% 5.1% 4.1% 3.1%

MD11 3.0% 1.9% 1.9% 1.2% 0.7%

DC10 0.1% 0.0% 0.0% 0.0% 0.0%

B757 0.7% 0.2% 0.2% 0.2% 0.2%

B767 2.6% 1.5% 1.1% 1.0% 0.8%

A300 1.9% 1.8% 1.9% 1.6% 1.4%

A310 0.9% 0.1% 0.1% 0.1% 0.0%

Code E 60.6% 63.0% 61.7% 60.1% 58.7%

B747 21.8% 18.2% 17.1% 13.1% 8.6%

B777 10.0% 15.2% 15.4% 15.7% 15.1%

B787 0.0% 3.2% 5.1% 7.0% 8.7%

A330 22.7% 22.9% 21.4% 19.4% 17.5%

A340 6.0% 3.6% 2.7% 2.0% 1.5%

A350 0.0% 0.0% 0.0% 2.9% 7.3%

Code F 0.0% 1.2% 1.7% 3.3% 4.7%

A380 0.0% 0.8% 1.0% 1.3% 1.3%

B747-8 0.0% 0.4% 0.7% 2.0% 3.4%Note: Other C aircraft includes MD80/90, B727/717, F100, ERJ170/190, CRJ700/900



Table 137 – Split of Total Aircraft Movement into Aircraft Type at HKIA – 2008 to 2030 – in movements

2008 2015 2020 2025 203008-30

CAGR (%)

Code C 91,246 104,960 132,608 165,496 201,252 3.7%

B737 32,320 35,144 43,736 45,594 46,735 1.7%

A320 49,904 61,939 75,395 79,348 82,545 2.3%

Other C aircraft 9,022 7,877 13,477 40,554 71,971 9.9%

Code D 27,439 19,248 21,619 20,650 18,838 -1.7%

MD11 8,934 6,648 7,945 6,136 4,333 -3.2%

DC10 306 123 9 0 0 -100.0%

B757 2,093 636 737 936 1,014 -3.2%

B767 7,795 5,303 4,776 4,970 4,776 -2.2%

A300 5,604 6,271 7,886 8,343 8,449 1.9%

A310 2,695 261 258 255 253 -10.2%

Code E 182,457 218,783 259,806 305,868 353,630 3.1%

B747 65,726 63,142 71,851 66,588 51,828 -1.1%

B777 30,173 52,643 64,969 80,077 90,803 5.1%

B787 0 11,058 21,595 35,447 52,231

A330 68,475 79,500 90,104 98,542 105,246 2.0%

A340 18,083 12,440 11,286 10,252 9,325 -3.0%

A350 0 0 0 14,961 44,197

Code F 0 4,155 7,195 16,721 28,252

A380 0 2,737 4,380 6,387 7,797

B747-8 0 1,418 2,815 10,334 20,454

Total 301,142 347,147 421,227 508,735 601,970 3.2%

Note: Other C aircraft includes MD80/90, B727/717, F100, ERJ170/190, CRJ700/900



17. Comparison with Official Forecasts

17.1 Passenger forecast

17.1.1 Mainland China

In a speech delivered in march 2010, CAAC Director Li Jiaxiang announced that he was expecting airline passenger numbers to grow to 700 million passengers per year by 2020, and to double that to 1.5 billion by 2030, from 230 million in 2009, representing a 10.6% annual increase from 2009 to 2020 and a 9.3% increase from 2009 to 2030.

IATA’s forecast projects a slower growth compared with CAAC’s one:

� 8.9% p.a. between 2009 and 2020 to be compared with 10.6% for CAAC;

� 7.7% p.a. between 2009 and 2030 to be compared with 9.3% for CAAC.

17.1.2 Hong Kong International Airport

Table 138 - Comparison of IATA, Boeing, and Airbus passenger forecasts – 2009 to 2028

Airbus and Boeing do not forecast traffic for Hong Kong. Among the available forecasts, it has been analyzed that the forecast for Asia is the most relevant:

� About 74% of HKIA passenger traffic relate to Asia;

6.3%5.9%

3.8%

Boeing - Asia Airbus - Asia IATA - HKIA

Source: Boeing, Airbus and IATA analysis and estimates


� Hong Kong economy has proven to be very much tied to the Asian economy with almost parallel GDPs.

Included in the appendix are Boeings and Airbus definitions of Asia:

For the forecast period, Boeing forecast an annual growth rate of 6.3%, the highest amongst the three forecasts; Airbus forecast a growth rate of 5.9%. Both forecast were revised to include the impact of the crisis and to take into account the low 2009 base.

Both Airbus and Boeing forecasts are driven by an increase in intra-Asia demand provided by the growing long haul Low Cost Carrier (LCC) market, the opening of Mainland China, India/Middle East, and developing Southeast Asia tourism markets. The lifting of once restricted or limited cross-strait flights (Taiwan- Mainland China) further supports Airbus and Boeing forecast.

The demand between the North America region and Asia is expected to follow historical growth at a slightly slower rate as projected by Airbus and Boeing due to market maturity. The induction in passenger traffic will result from the opening of Chinese markets and increasing travel demand to/from Southeast Asia.

Europe market will follow similar trends as that of North America. Fuelled by the Mainland China’s liberalization and increasing travel interest from Southeast Asia to Europe as described by Boeing and Airbus, growth is expected to be higher than that of the North America region. The aviation development of Southern and Eastern Europe will further amplify travel demand growth into Europe.

IATA forecasts HKIA to follow a lower growth rate than the Boeing’s and Airbus’ ones. The main reasons are as follows:

� Similar to Boeing and Airbus, HKIA’s future traffic will be driven by the developing markets of Mainland China, Southeast Asia and India. Different from that of Boeing and Airbus, Hong Kong’s travel market is relatively mature compared to the rest of Asia, and therefore overall growth should be lower than the developing countries of Asia. For the past years, fast growing travel demand to/from Southeast East Asia and Mainland China has already been observed and factored in HKIA’s traffic model, and will likely continue at a slower pace than projected by Airbus and Boeing.

� As explained earlier, HKIA will benefit from the growth of Mainland China either as a gateway to the GPRD or as a hub. However it has been concluded that HKIA would loose ground to fast growing airports. Therefore HKIA will catch a part only of the Mainland China’s growth.

� Noting that Hong Kong is relatively mature, induction of new traffic to North America and Europe as forecasted by Boeing and Airbus for the Asia rim is unlikely as most Hong Kong


travellers have already been introduced to these markets. Growth for the North America and European region will remain relatively stable for the future years.

� While Boeing and Airbus forecast have taken into consideration of cross-strait direct links, the impact on Asia will be neutral, if not positive due to the induction in passenger demand between Taiwan and Mainland China. HKIA, although benefiting from this induction, is forecast to face a significant negative impact.

Taking into consideration all of the above factors, IATA passenger growth seems conservative in comparison to that of Boeing and Airbus.

17.2 Cargo forecast

Table 139 - Comparison of IATA, Boeing, and Airbus cargo forecasts - 2009 to 2028

Like the passenger section, IATA has compared the Boeing and Airbus forecasts to its own.

For the forecast period, Boeing forecast an annual growth rate of 6.0%, very close to Airbus with a forecast growth rate of 5.7%. Both Airbus and Boeing forecasts are driven by an increase in the India and Mainland China trade demand. Free trade areas and trade agreements between India, Mainland China, and South East Asia are drivers for the increase in cargo demand.

IATA forecast is expected to follow similar growth rate as Boeing and Airbus, however, at a slightly lower growth rate for the following reasons:

� Similar to Boeing and Airbus, HKIA’s future traffic will be driven by the developing markets of Mainland China, and India (Others). With that said, as the trade policies are between

6.0% 6.1%

5.0%

Boeing Asia Airbus Asia IATA HKIA

Source: Boeing, Airbus and IATA analysis and estimates


Mainland China and the developing countries regions, a portion of this trade benefit will trickle down to Hong Kong through partnership agreements such as CEPA and Guangdong-Hong Kong Co-operation Agreement, resulting in a slightly slower growth rate.

� Noting that the North America and Europe regions cargo traffic is focused on the opening of Mainland China, developing nations of Asia, and the Middle East, increasing competition of Mainland China’s airports and increasing air service agreement will slow down HKIA’s growth.

� Like the passenger segment, direct links will have a negative impact for Hong Kong but a relatively neutral effect for Asia.


18. Sensitivity Analysis

This section summarizes alternative traffic scenarios to the passenger and cargo base cases that are presented in sections 14 and 15. It encompasses a description of these scenarios as well as an assessment of the impact of some specific uncertain events on HKIA future traffic.

18.1 High and Low Cases

IATA assessed the interval in which one expects future traffic to be with a 95% probability in 2030 given the historical figures (traffic and GDP) and their correlation. The lower and upper traffic cases were based on this interval in 2030, referred as the P95 prediction interval (see section 19.3 for more details about the P95 prediction interval concept).

In addition, IATA carried out a reality check based on lower and higher GDP assumptions, all other assumptions being kept constant. Considering the fluctuations of the GDP forecasts, IATA closely monitored trends and changes in the economic environment before defining the range of GDP assumptions to be adopted.

� High case: +3.5% p.a. GDP growth over the period 2008-2030 (instead of 3.2% p.a.).

� Low case: +2.8% p.a. GDP growth over the period 2008-2030.

Both approaches led to a similar range of passenger and cargo traffic between 89 and 105 million passengers and 8 and 9.8 million tons respectively. The number of movements was estimated accordingly.


18.1.1 High and Low Passenger Cases

Based on the above, the high and low passenger forecasts stand, in 2030, at 89.4 and 104.7 million passengers respectively.

Table 140 – High and low passenger cases (based on P95 prediction interval) – 2008 to 2030 – in million passengers

Case 2008 2015 2020 2025 2030

High case 48.6 58.8 72 87.6 104.7

Low case 48.6 54.4 64 75.9 89.4

Note: All figures relate to OD and TT passengers (in similar proportions to the one of the forecast). Source: IATA estimates

Table 141 – High and low passenger cases (based on P95 prediction interval) – 2008 to 2030 – in million passengers


The reality check based on high and low GDP led to a very close traffic range of 89.6 to 105.1 million passengers in 2030.

0102030405060708090

100110

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

Mill

ions

HighLowBase


18.1.2 High and Low Cargo Cases

Similarly, the high and low cargo forecasts stand, in 2030, at 8 and 9.8 million tonnes respectively.

Table 142 – High and low cargo cases (based on P95 prediction interval) – 2008 to 2030 – in thousand tonnes

Case 2008 2015 2020 2025 2030

High case 3,627 4,696 6,112 7,873 9,782

Low case 3,627 4,188 5,180 6,517 8,002

Note: All figures relate to OD and TT passengers (in similar proportions to the one of the forecast). Source: IATA estimates

Table 143 – High and low cargo cases (based on P95 prediction interval) – 2008 to 2030 – in thousand tonnes


The reality check using the high and low GDP resulted in a similar cargo traffic range in 2030 between 8 and 9.7 million tonnes.

0123456789

1011

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

Mill

ions

HighLowBase


18.1.3 High and Low Movement Cases

High and low movement cases were derived from the passenger and cargo high and low scenarios based on P95 prediction level, using the same key assumptions (pax / atm and payload / atm) as in the base case. Under the low case, the number of movements is reduced by 50,500, reaching 552,000 movements in 2030. Under the high case, the number of movements is increased to 652,000 in 2030.

Table 144 – High and low movement cases – 2008 to 2030 – in thousand movements

Case 2008 2015 2020 2025 2030

High case 301 362 448 548 652

Low case 301 332 394 470 552

Note: Translation of the high and low passenger and cargo cases; no change to the basic assumptions pax/atm and payload / atm. Source: IATA estimates

Table 145 – High, base and low movement cases – 2008 to 2030 – in thousand movements


200,000

300,000

400,000

500,000

600,000

700,000

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

HighLowBase


18.2 Traffic sensitivity to uncertain factors

Upsides and downsides are summarized in this section and their impact is estimated individually in relation to the base case.

18.2.1 Construction of the Hong Kong Shenzhen Western Express Line (WEL)

With the aim to strengthen the co-operation and expansion of transportation networks between the Hong Kong International Airport (HKIA) and Shenzhen International Airport (SZX), the HKSAR and Shenzhen Municipal Governments are considering the construction of a cross-boundary rail system, the Western Express Line (WEL), that would link, in particular, Shenzhen and HKIA airports. The WEL is still under study.

For HKIA air passengers travelling on the WEL, the WEL aims at being a bonded train departing from or arriving at the airside of HKIA, without the need to clear Hong Kong CIQ. On the whole, the aim is for the WEL service to be a seamless and convenient inter-modal passenger travel option with high levels of customer service.

An independent study, conducted by IATA and MVA Hong Kong concludes, among other things, that WEL service could generate 4.3 million additional passengers to HKIA in 2030 provided that it meets specific operational and service requirements including a Minimum Connecting Time (MCT) of 100 minutes between HKIA and SZX.

� WEL would extend HKIA’s catchment area (45-minute decrease in the access time to HKIA), and reinforce HKIA’s competitive position in the buoyant international market from the GPRD area and specifically the Shenzhen, Dongguan, Huizhou and Guangzhou territories resulting in an additional 1.9 million passengers in 2030.

The influence of WEL on the leakage of HKSAR domestic passengers to SZX is estimated to be marginal because of the smaller time saving (15 minutes at best) induced by the service from Hong Kong to SZX.

� WEL would significantly develop the number of available routings through HKIA by linking the HKIA and SZX networks. Provided that several requirements on WEL service are met and the MCT does not exceed 100 minutes, HKIA’s position as a gateway to Mainland China would be strengthened resulting in an additional 2.4 million passengers in 2030.

� WEL would contribute to improve HKIA’s efficiency by increasing the more lucrative international traffic at HKIA and shifting domestic traffic to SZX.

� WEL would enhance inter-modal networks and foster regional integration.


� WEL would encourage other investments and expand the contribution the airport makes to the community and region. Generating additional traffic, creating new air service demand and expanding the overall reach and business at both airports will promote economic development and growth of the local and national economies.

As shown in Table 146, it is expected that the WEL will have an overall positive impact on HKIA with incremental traffic from 2.4 million passengers in 2020 to 4.3 million passengers in 2030.

Table 146 - WEL net impact on HKIA passenger traffic – 2020, 2025 and 2030 – in million passengers

WEL 2008 2015 2020 2025 2030

Total WEL impact 0 0 +2.4 +3.3 +4.3

(1) Above assessment assumes that the WEL is built by 2020. (2) All traffic figures above relates to OD passengers.

Source: Opportunity and Feasibility Study on Airport Rail Link commissioned by AAHK to IATA, 2009

IATA’s findings were based on a comprehensive study, including analytical modeling, a review of worldwide air-rail intermodal best practices, lessons learnt and interviews with a wide range of government bodies, airports, airlines, distribution technology providers, travel agents, and rail operators.


18.2.2 HZMB impact to economy exceeding the GDP forecasts

Under this analysis, it is assumed that the western-PRD would catch up with the eastern –PRD as the bridge stimulates flows of capital and expertise across the delta.

18.2.2.1 Impact on HKIA passenger traffic

In 2007, the western municipalities were totalling a population of 11.2 million inhabitants and generated 2.4 million international OD passengers. Related international travel propensity was 0.22 international trips per inhabitant. The same year, the eastern cities of the PRD recorded an international travel propensity of 0.33.

This upside assumes that the bridge increases dramatically the economy and wealth of the western municipalities allowing the travel propensity of these municipalities to close the gap with the eastern ones within 25 years after its construction.

The following assumptions have been made to assess the HZMB upside. It could bring an additional 1.5 million passengers to HKIA in 2030 (see Table 147).

� HKIA market share on the western cities of the GPRD (72% in 2007) will be following the overall trend for HKIA market share on GPRD international OD traffic (see section 14.3.1).

� International average travel propensity of the western bank cities will catch up with the eastern cities in 25 years (from 2016 to 2041).

� International OD demand from the western PRD cities will follow the forecast established for GPRD airports (exclude HKIA) international traffic (see section 14.2 and Table 175 in appendix).

� The additional traffic to HKIA is international and follows the distribution of international passengers at HKIA.

18.2.2.2 Impact on HKIA cargo traffic

It is considered that industrial activities in the Western-PRD would develop faster, partially closing the gap with the Eastern-PRD and generating additional economy growth.

It is assumed that the contribution of the western-PRD to the GPRD air cargo traffic would double. As the computer and communication industry accounts for about half of the global air cargo traffic, it is assumed that 12% is a representative estimate for the current contribution of the western-PRD cities to the GPRD air cargo traffic.


Based on the following considerations, it is estimated that HKIA could increase its cargo traffic by 0.8 million tonnes in 2030 (see Table 147):

� GPRD international OD cargo traffic is forecast to total 10.5 million tonnes in 2030, of which HKIA represents 61% (see sub-section 15.3.2);

� Without the bridge and with no change in the distribution of the manufacturing activities around GPRD, the western-GPRD would account for 1.2 million tonnes in 2030.

� Based on this upside assumptions, the incremental development of western-GPRD due to the bridge would increase the total by another 1.2 million tonnes in 2030.

� Assuming a 61% market share for HKIA, it would represent almost an additional 800,000 tonnes for HKIA.

Table 147 – HZMB impact to HKIA assuming higher impact on economy – 2008 to 2030 – in million passengers and tonnes

HZMB 2008 2015 2020 2025 2030

Higher impact economy Passenger

0 0 +0.3 +0.8 +1.5

Higher impact economy Cargo

0 0 +496,000 +640,000 +769,000

Note: all passengers are international OD passengers; all cargo traffic is OD international traffic


18.2.3 No induction of new demand due to XRL

In case no induction is expected, train diverts 1.4 million air passengers at the horizon 2030 (see Table 148).

Table 148 – XRL and HST impact to HKIA assuming no traffic induction – 2008 to 2030 – in million passengers

XRL 2008 2015 2020 2025 2030

No induction of new traffic 0 0 -0.8 -1.1 -1.4

Note: All passenger figures relate to domestic OD traffic. Source: IATA estimates


18.2.4 Higher new demand induction (15%) due to XRL

Assuming a higher induction of new demand (15% instead of 10% under the base case), an additional 0.5 to 0.9 million passengers to HKIA (see Table 149) is forecast.

Table 149 – Potential XRL and HST impact to HKIA considering a 15% induction – 2008 to 2030 – in million passengers

XRL 2008 2015 2020 2025 2030

Higherinduction 0 0 +0.5 +0.7 +0.9

Note: All passenger figures relate to domestic OD traffic. The potential induction of intermodal passengers is not included. Source: IATA estimates

18.2.5 Aggressive low-cost strategy implemented by MFM

Under certain conditions, it has been determined that Macau airport could develop into a strong low-cost base capable of diverting passengers from the HKSAR market.

IATA’s assessment is that the Macau low-cost base, combined with the HZMB, could divert up to 3.7 million passengers. The following table (see Table 150) provides the impact of the low-cost base along with the Bridge.

Table 150– Potential impact to HKIA of MFM’s LCC strategy – 2008 to 2030 – in million pax

MFM 2008 2015 2020 2025 2030

MFM LCC strategy 0 -2.2 -2.9 -3.3 -3.7

Note: all passengers are OD international passengers Source: IATA estimates

A benchmark with a sample of major European metropolitan areas (see Table 151) shows that on average low-cost airports account for 14% of the total passenger traffic generated by these metropolitan areas. Assuming HKSAR market may further become cost sensitive and develop into that of the European low cost airport structure, cost sensitive travellers may choose a more low cost carrier structured airport. Applying the result of this benchmark to the number of HKSAR-related international passengers (14.2 million passengers in 2007), an equivalent of


2 million passengers could fly on low-cost carriers and in particular from an airport such as Macau.

The building of the bridge after 2016 will improve the accessibility of Macau airport for HKSAR related passenger, allowing the diversion to reach 20% (i.e. 3.7 million passengers in 2030), in the high range of the benchmark. This additional impact is considered as related to the HMZB.

Table 151 – Low-Cost airport traffic at a selection of European metropolitan areas – 2008

7%20% 17% 15% 12%

23%

93% 98%80% 83% 85% 88%

77%

2%Frankfurt Paris Manchester Milan Barcelona Stockholm London

LCC Dedicated Airports Region's Main Airports

Average: 14%

Source: Airport Authorities


18.2.6 More severe impact of UPS / FedEx settlement in PRD

As a consequence of their relocation, some of UPS and FedEx Asian OD traffic related to HKIA will be trucked to SZX and CAN respectively. A total diversion of UPS/FedEx traffic to SZX and CAN would reduce HKIA base case traffic by 300,000 tonnes in 2030 (see Table 152).

Table 152 – Impact to HKIA OD traffic of UPS and FedEx settlement in SZX and CAN – 2008 to 2030 – in

tonnes

UPS/FedEx 2008 2015 2020 2025 2030

More severe impact of UPS/FedEx

0 -152,000 -193,000 -243,000 -298,000


18.2.7 Intensification of the shift from Air to Sea

In this assumption, IATA considers that the shift from air cargo to sea intensifies in the coming years. The accelerating shift will reduce the forecast growth in air cargo traffic by 1% between 2010 and 2015. After 2015, the containerized shipping will have matured and air cargo traffic will revert to the previous trend. It would result in a loss of 132,000 tonnes in 2030.

Table 153 - Impact to HKIA traffic of Air-Sea competition – 2008 to 2030 – in tonnes

Air / Sea 2008 2015 2020 2025 2030

Accelerated shift Air -> Sea 0 -64,000 -84,000 -107,000 -132,000



19. Appendices

19.1 Boeing and Airbus Forecasts

Table 154 – Composition of Asia according to Boeing and Airbus forecasts

Boeing Airbus

Oceania Australia/New Zealand South East Asia South East Asia South West Asia Indian Subcontinent Within Asia Domestic Asia China People Republic of China North East Asia Japan Korea Pacific

Source: Airbus Global Market Forecast, Boeing World Air cargo Forecast, Boeing World Air Passenger Forecast

Table 155 – Boeing and Airbus forecasts for the Asia Pacific region, Mainland China and the world – 2009 to 2028 – in CAGR

CAGR 2009-2028 Boeing17 Airbus18

Asia Pacific Region Passenger 6.3% 5.9%Cargo 6.0% 6.1%China Passenger 7.6% 7.3%Cargo 6.6% 7.8%World Passenger 4.7% 4.5%Cargo 5.2% 5.0%

Source: Airbus Global Market Forecast, Boeing World Air cargo Forecast, Boeing World Air Passenger Forecast

17 Link to detailed Boeing Forecast 9 Link to detailed Airbus Forecast


19.2 Abbreviations and Acronyms

AAHK Airport Authority of Hong Kong

ACI Airports Council International

AirportIS IATA Internal Traffic Database

AEL Airport Express Line

ASI Air Service Index

BKK Bangkok Airport

BSP Business Settlement Plan

CA Air China

CX Cathay Pacific

CAGR Compound Annual Growth Rate

CAN Guangzhou Airport

CZ China Southern Airlines

DXB Dubai Airport

EU European Union

FDI Foreign Direct Investment

FRA Frankfurt Airport

GDP Gross Domestic Product

GDS Global Distribution System

GMP Seoul-Incheon / Seoul-Gimpo

GNE Global Distribution System New Entrants

GPRD Greater Pearl River Delta

GZIA Guangzhou International Airport (or CAN)

HKIA Hong Kong International Airport (or HKG)

HKG Hong Kong Airport (IATA Code)

HKSAR Hong Kong Special Administrative Region


HND Tokyo-Narita / Tokyo-Haneda Airport

HSR High Speed Railway

HST High Speed Train

HZMB Hong Kong-Zhuhai-Macau Bridge

IATA International Air Transportation Association

ICAO International Civil Aviation Organization

ICN Seoul-Incheon Airport

JFK New York John F. Kennedy Airport

KMG Kunming Airport

LGA New York La Guardia Airport

LHR London Heathrow

MCT Minimum Connecting Time

MIA Macau Airport

MFM Macau International Airport (or MFM)

MVA MVA Hong Kong Ltd.

NRT Tokyo-Narita Airport

OD Origin/Destination

PATA Pacific Asia Travel Association

PAX Passenger

PEK Beijing Airport

PRC Peoples Republic of China

PRD Pearl River Delta

PVG Shanghai-Pudong Airport

RMB Renminbi

SAI Surface Access Index

SHA Shanghai Metro Airport or Shanghai Metropolitan Area Code

SIN Singapore Airport

SRS Schedule Reference Service


SZA Shenzhen International Airport

SZX Shenzhen International Airport (IATA Code)

TMCLKL Tuen Mun-Chek Lap Kok Link

THB Transport and Housing Bureau

TGV French High Speed Train (Train à Grande Vitesse)

TT Transfer/Transit for passenger market; Transshipment for cargo market

UA United Airlines

USA United States of America

XRL Express Rail Link

YRD Yangtze River Delta


19.3 Statistical definitions

The main models tested are the linear models and the log models.

Linear models are written as follows : tti,

N

1iit BXAY ��

�

,

Where : Yt represents total traffic or traffic on a specific segment of the market on year t

Xi,t designates the causal variable i on year t Ai represents the coefficient of the causal variable i B is a constant €t represents the residual traffic on year t N is the number of causal variables used in the model .

Linear model are characterized by a constant proportionality between the causal variables and the outcome (traffic). Linear model are represented by lines. As a result elasticity of the outcome to the causal variables declines in time.

Log models are written as follows : tti,

N

1iit B)Log(XA)Log(Y ��

�

Where : Yt represents total traffic or traffic on a specific segment of the market on year t

Xi,t designates the causal variable i on year t Ai represents the coefficient of the causal variable i B is a constant €t represents the residual traffic on year t N is the number of causal variables used in the model .

Log model are characterized by proportional increase in the causal variable and the outcome. Take a one variable model, a x% increase in the causal variable results in a A*x% increase in the oitcome. Elasticity is constant which can result in a significant increase in the outcome when elasticity is more than 1.


Listed below are explanations of the analytical figures provided in the forecast:

� Elasticity: Ratio of the percent change in one variable to the percent change in another variable.

� R-squared (Coefficient of Determination): Describes what proportion of dependent variable (pax and cargo) is explained by the independent variable (such as GDP). It is a good indicator for the goodness of fit of a model. However it does not give a full picture of the model. Should be .90 and higher.

� T statistic: Ratio of the regression coefficient (of a given independent variable) to its standard error. High t-statistics (over 2) mean the variable is significant e.g. has a significant impact on the dependent variable.

� F test: Tests and measures how strong the independent variables are correlated to the dependent variable as a complete whole (mainly used in multiple linear regression) and not just the individual variables (e.g. traffic correlation to a set of two different GDP). The higher the F test, the better the explanation of correlation between the two variables.

� Prediction intervals: Provides a measure of the reliability of the model. In statistics, a prediction interval is an estimate of an interval in which future observations will fall, with a certain probability, given what has already been observed. Prediction intervals are often used in regression analysis. The 95% prediction interval (referred as the P95 interval) is the interval in which one expects future traffic to be with a 95% probability given the historical figures (traffic and GDP) and correlation between them. The P95 interval is usually considered as a relevant indicator of traffic sensitivity by airport investors.

Table 156 – Illustration of the prediction interval concept

Time

Historical observations Forecast

P90 Predictioninterval


Time

Historical observations Forecast




19.4 GDP assumptions

Major uncertainties existed when the forecast had been carried out. This resulted in conservative GDP assumptions being retained for the traffic model.

Back in 2008, as financial stresses were becoming increasingly severe further to the sub-prime crisis in the US and the following freezing of credit markets in the developed world, most economists started to revise down their economy forecasts. When tangible signs of trade and economy contraction were observed, GDP forecasts were further worsened until Q2,2009.

In the second half of 2009, the massive fiscal stimulus packages implemented by most of the major countries showed positive repercussions. Economic outlook started to improve. In early 2010, economists were still upgrading their expectations for 2009 and further years. At the worst of the crisis, Hong Kong 2009 GDP was expected to fall by -6.7% whereas latest estimates for 2009 (issued by EIU in May 2010) counted on -2.7%.

19.4.1 GDP Assumptions for the base case

In this context, IATA had to reconsider several times the GDP assumptions for the traffic forecast model. The final GDP assumptions (see Table 158) were derived from EIU’s July 2009 5-YR forecast and Global Insight July 2009 long-term forecast (2015 to 2030).

These assumptions predict a 3.2% annual growth for the HKSAR GDP between 2008 and 2030.

Eventually the main GDP assumptions retained in July 2009 look conservative in light of the most recent releases, particularly in the short- and medium-term (see Table 157).

Table 157 – Comparison of IATA’s GDP assumptions against the most recent forecasts released by EIU and Global Insight - Cumulated HKSAR GDP growth at index 100 in 2008

80

100

120

140

160

180

200

220

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

IATA

GI- Feb 2010EIU - May 2010*

(1) In May 2010, EIU has revised up its 5 YR forecast; further years (2015 2030) are based on the long term forecast released in July 2009 Source: Economist Intelligence Unit, IHS Global Insight

IATA’s GDP assumptions combine EIU’sJuly 09 short-term forecast and IHS GI’s July 09 long-term prediction

HK

IA 2

030

Prm

ary

Fore

cast

– F

na R

epor

t

244

Tabl

e 15

8 –

GD

P G

row

th A

ssum

ptio

ns fo

r Wor

ld R

egio

ns

Region

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

Mainland

China

9.0%

7.2%

7.6%

8.2%

8.5%

8.8%

9.0%

8.8%

8.2%

7.8%

7.6%

7.4%

7.2%

7.1%

6.8%

6.7%

6.6%

6.4%

6.2%

6.1%

5.8%

5.6%

5.5%

Taiwan

0.1%

�4.5%

3.2%

5.7%

5.3%

4.8%

4.4%

4.2%

3.9%

3.7%

3.6%

3.5%

3.4%

3.2%

3.1%

3.1%

3.0%

2.9%

2.8%

2.8%

2.8%

2.8%

2.8%

Japan

�0.7%

�6.8%

0.9%

2.1%

2.9%

3.2%

3.0%

2.5%

1.5%

0.9%

0.7%

0.6%

0.5%

0.4%

0.4%

0.4%

0.4%

0.3%

0.3%

0.4%

0.4%

0.4%

0.3%

USA

&Canada

1.1%

�3.0%

1.4%

3.2%

3.8%

2.9%

2.7%

2.8%

2.9%

2.8%

2.9%

3.0%

3.3%

3.0%

2.8%

2.7%

2.6%

2.8%

2.6%

2.5%

2.5%

2.4%

2.5%

Australasia

1.7%

�0.6%

0.9%

3.3%

4.4%

4.0%

4.0%

3.5%

3.2%

3.1%

3.0%

2.9%

2.7%

2.3%

2.1%

2.5%

2.7%

2.8%

2.7%

2.5%

2.5%

2.5%

2.5%

Europe

1.1%

�4.6%

0.1%

1.4%

1.7%

1.9%

1.9%

1.8%

1.8%

1.8%

1.7%

1.7%

1.6%

1.6%

1.6%

1.6%

1.6%

1.6%

1.5%

1.5%

1.5%

1.5%

1.5%

SEAsia

4.5%

�0.2%

4.2%

4.8%

4.9%

5.1%

5.0%

5.0%

5.0%

4.9%

4.8%

4.7%

4.5%

4.2%

4.1%

4.2%

4.2%

4.2%

4.1%

4.1%

4.1%

4.0%

3.9%

Others

4.9%

�0.7%

2.9%

4.4%

5.0%

5.0%

4.9%

4.8%

4.7%

4.6%

4.5%

4.4%

4.3%

4.2%

4.2%

4.1%

4.1%

4.1%

4.0%

4.0%

3.9%

3.9%

3.9%

Hon

gKo

ng2.5%

�3.9%

0.9%

2.7%

4.1%

4.9%

4.4%

4.1%

3.9%

3.8%

3.8%

3.7%

3.7%

3.6%

3.6%

3.6%

3.5%

3.5%

3.3%

3.3%

3.2%

3.2%

3.1%

Sou

rce:

5-Y

R fo

reca

st fr

om E

IU (J

uly

2009

) and

long

-term

fore

cast

from

Glo

bal I

nsig

hts

(Jul

y 20

09)


19.4.2 GDP assumptions for the high and low scenarios

Although the P95 confidence interval is the main method used to define the high and low traffic scenarios, an alternative approach based on high and low GDP assumptions has been tested as well to serve as a reality check.

Considering the fluctuations of the GDP forecasts, IATA closely monitored trends and changes in the economic environment before defining the range of GDP assumptions to be adopted.

� Under the low case, GDP growth is 11% lower than in the base case resulting in a 2.8% growth p.a. between 2008 and 2030.

� Under the high case, GDP growth is 11% higher than in the base case resulting in a 3.5% growth p.a. between 2008 and 2030.

As highlighted in Table 159, the low case is slightly more optimistic than the EIU forecast of May 2010. The high case is almost aligned with the most recent Global Insight forecast (released in February 2010).

Table 159 – Comparison of IATA’s low and high GDP assumptions against the most recent forecasts released by EIU and Global Insight - Cumulated HKSAR GDP growth at index 100 in 2008

80

100

120

140

160

180

200

220

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

GI- Feb 2010

EIU - May 2010*

IATA - low

IATA - high

* In May 2010, EIU has revised up its 5 YR forecast; further years (2015 2030) are based on the long term forecast released in July 2009 Source: Economist Intelligence Unit, IHS Global Insight

Index 100 in 2008




Source: Cathay Pacific

Source: Cathay Pacific


19.5 HKSAR tourism projects

� 2004 - Symphony of lights

Launched in January 2004, the Symphony of lights is a synchronized building exterior decorative light and laser multimedia display, featuring 33 buildings on both sides of the Victoria Harbour of Hong Kong accompanied by symphonic music. The show was continuously improved since its early days and received several awards120.

� 2005 / 2012 - Hong Kong Disneyland

The theme park opened in 2005 with about 70 attractions on 311 acres of land and 1,000 hotel rooms121. The park recorded 4.5 million entrances in 2008, far below its theoretical capacity of 12.4 million visitors122. It ranked 7th in Asia and 18th worldwide among theme parks (see Table 62) behind Ocean Park.

Table 160 – Top 10 Theme Parks in Asia123 – 2008 – in million visitors

The combined number of visitors at Hong Kong Disneyland and Ocean Park actually dropped by -0.5% p.a. between 2006 and 2008. A recent study by the Economics Research Associates confirmed the low profile trend of the Asian and global Theme Park industry with a marginal growth in Asia (+1.3% p.a.) and worldwide (+0.7% p.a.) over the last 4 years124. Both Tokyo Disneyland and the nearby Shenzhen Happy Valley were more successful, growing at 5.3% p.a. and 5.1% p.a. respectively over the last 2 years. The small size of Hong Kong parks is often

14.3

12.5

8.3

6.6

5.0 4.6 4.5 4.3 3.8 3.2

Toky

oD

isne

ylan

d

Toky

o D

isne

yS

ea

Uni

vers

alS

tudi

os J

apan

Eve

rland

Sou

thK

orea

Oce

an P

ark

Hon

g K

ong

Yok

oham

aH

akke

ijim

aS

ea P

arad

ise

Hon

g K

ong

Dis

neyl

and

Lotte

Wor

ldS

outh

Kor

ea

Nag

ashi

ma

Spa

Lan

dJa

pan

Hap

py V

alle

yS

henz

hen

Source: Economics Research Associates (ERA) Attraction Attendance Report 2008

Mll

on V

sto

rs


cited as a reason for their lower relative attendance. Tokyo Disneyland is 1.5 times bigger and Disneyland Paris 5 times bigger than Hong Kong Disneyland.

In November 2009, the Walt Disney Company announced that the Project Application Report (PAR) for a 1,000 acres Disney theme park in the Pudong district of Shanghai had received approval from the relevant authorities of the central Government of China125.

Hong Kong Disneyland will be expanded to reach 457 acres by 2012 (+47%, same as Tokyo126. Based on benchmarks and depending on the occupancy ratio and adverse effect of the competing Shanghai Disneyland project, the expansion project could generate between 1.7 million and 8.5 million additional visitors.

The expansion of the Disney Park will keep developing the attractiveness of Hong Kong as a major destination in Asia. With about 50% of foreign visitors the park is a solid driver to inbound tourism and a potential one to air traffic127.

� 2006 - Hong Kong Wetland Park

In 1998, the Agriculture and Fisheries Department (now renamed as Agriculture, Fisheries and Conservation Department, AFCD) and the Hong Kong Tourists Association (now renamed as Hong Kong Tourism Board, HKTB) decided to expand the ecological mitigation area, located at the northern part of Tin Shui Wai, into a world-class wetland ecotourism attraction. Opened in 2006, the 61-hectare Hong Kong Wetland Park demonstrates the diversity of the Hong Kong's wetland ecosystem and presents an opportunity to provide an education and recreation venue with a theme on the functions and values of wetlands128.

� 2006 - Ngong Ping 360

Ngong Ping 360 is a tourism project in Lantau Island, Hong Kong, consisting of Ngong Ping Cable Car and Ngong Ping Village and was opened in mid 2006. It is owned by the MTR Corporation. Ngong Ping Cable Car is a 5.7 km long bi-cable gondola lift system, a 25-minute cable car ride which offers a spectacular view of the landscape of Lantau Island, and the cultural and religious themed Ngong Ping Village129.

� 2007 / 2013 - Ocean Park

The Ocean Park is a public recreational and educational park with a history of more than 30 years and continues to be an attractive tourist destination for resident and foreign visitors. In 2007-08, the Ocean Park achieved an attendance of over 5 million, ranking 5th in Asia (see Table 62) and 15th worldwide130. In 1999, the park was forced to close several of its attractions due to low visitor numbers but was able to re-open some of them by 2007. In the end of 2006,


a long-term development plan was announced aiming at majorly improving the park’s infrastructure between 2007 and 2013. The government is currently implementing the eighth phase of the park development plan which, upon completion in 2012-13, will reportedly transform the park into a world-class marine-themed park featuring more than 70 attractions (a 75% increase in comparison to 2008). The Ocean Park’s development plan further eyes at significantly increasing its hotel capacity by 2012-13. It is planned to create three themed hotels with a total capacity of 1,280 rooms; in particular, a 660 room three-star hotel, a 460 room four-star hotel and a 160 room five-star Summit Hotel & Spa131,132,133.

Currently, 90% of the visitors to Ocean Park Hong Kong are local residents and mainlanders from the PRD. It is reported that tourists from mainland will most likely contribute the largest proportion of increase in traffic to the theme park in the future. So far, the park has set up tourist offices in Shanghai and Guangzhou and plans to add new offices in Beijing and Chengdu.

� 2013 - Hong Kong as a regional cruise hub

The Government aims at developing Hong Kong into a leading regional cruise hub and plans to expand the current harbour facilities134.

Hong Kong’s cruise business is flourishing with foreign tourists growing about 18% p.a. since 2002 and 34% since 2005 (see Table 161). In total, over 782,000 foreign passengers were handled at the Ocean Terminal in 2008. Over the last 3 years, the mainlander tourists drove the growth (about +37% p.a.) whereas other foreigners grew a bit more slowly (about +29% p.a.).

Table 161 – Evolution in the number of foreign tourists handled at the Hong Kong Ocean Terminal135 – 2002 to 2008 – in thousand visitors

Source: Hong Kong Tourism Board

126 164 217 201294

459 515163 97

97 124

118

167

268

2002 2003 2004 2005 2006 2007 2008

Mainland China Other Foreign

289 261314 325

412

626

783

34.2%

65.8%

CAGR Mainland: 26.5%CAGR Other Foreign: 8.6%CAGR Average: 18.1%



126 164 217 201294

459 515163 97

97 124

118

167

268

2002 2003 2004 2005 2006 2007 2008

Mainland China Other Foreign

289 261314 325

412

626

783

34.2%

65.8%



Thou

sand

Vs

tors


The worldwide cruise business showed a steady 7% annual growth between 2002 and 2008. With 18% annual increase, the cruise market in Hong Kong outpaced by far the global average.

� The vast majority of foreign cruise passengers in Hong Kong are Mainland Chinese residents. The largest source of foreign passengers outside of Mainland China originates in South and South East Asia directly followed by Europe and Americas. In total foreign visitors excluding Mainlanders, Taiwanese and residents of Macau represent 236,000 tourists among which 183,000 actually start their cruise in Hong Kong (see Table 153). Most of these tourists are potential air passengers.

Table 162 – Foreign tourists handled at the Hong Kong Ocean Terminal split into country of residence 136– 2008 – in thousand tourists

In the long run, the overall cruise industry appears to have had a healthy growth. Since 1990, members of the Cruise Line International Association (CLIA) have had an average annual passenger growth of 7.1%, the total number of cruise passengers reaching 13.4 million in 2008 (see Table 163). The cruise industry is still a low maturity business. In particular, the international market outside North America only represented 22% of the global cruise traffic in 2008 and recorded a 14% annual growth from 1990 to 2008137.

As for the current infrastructure, the Ocean Terminal, built in 1966, is a terminal used for cruise ship operations and a shopping centre in Tsim Sha Tsui, Hong Kong. It is a finger pier of 381 meters of overall length. It is the sole cruise terminal in Hong Kong and can accommodate ships of up to 50,000 tonnes (about 2,000 passengers). The harbour facilities are reaching their capacity limits and cannot handle larger ships.

5.4

41.5

24.0

32.4 19.8

18.218.310.9

15.5 15.3

Ma

nlan

dC

hna

Sou

th &

Sou

th E

ast

As

a

Eur

ope

Am

erca

s

Nor

th A

sa

Aus

trala

sa

Mac

ao

Taw

an

Afr

ca

Mdd

le E

ast


515.0

64.059.8

42.237.8

30.7

1.0 0.6

Transit Local

5.4

41.5

24.0

32.4 19.8

18.218.310.9

15.5 15.3

Ma

nlan

dC

hna

Sou

th &

Sou

th E

ast

As

a

Eur

ope

Am

erca

s

Nor

th A

sa

Aus

trala

sa

Mac

ao

Taw

an

Afr

ca

Mdd

le E

ast


515.0

64.059.8

42.237.8

30.7

1.0 0.6

Transit Local

Thou

sand

Tou

rst


In order to attract the leading cruise line companies, Hong Kong has embarked on a large cruise harbour development program within Victoria Harbour. The new cruise harbour will provide deep-water berths for ships up to 220,000 tonnes able to carry up to 6300 passengers and faster processing will be provided. The terminal building will be comprised of a 30,000 square metres for passenger and baggage processing and 50,000 square metres for commercial activities (hotels, retail space, convention halls, offices, shops and eating places). Located in the southern tip of the former Kai Tak runway, the first berth of the new cruise terminal is expected to be operational in mid-2013138.

Table 163 – Evolution of the worldwide cruise passengers – CLIA members – 1990 to 2009 – in million passengers

Cruise tourism is growing globally and Hong Kong as a cruise holiday hub is poised for becoming more significant. It is expected that the cruise harbour development will have a positive impact on the already staggering trend in the cruise tourism at Hong Kong. With increasing attractiveness of Hong Kong as a cruise hub, international cruise tourists, in particular from Asia Pacific, will be likely to use HKIA as a means to access Kai Tak cruise terminal and will have a beneficial impact on HKIA air passenger traffic.

Source: Cruise Line International Association (CLIA), 2009

3.8 4.2 4.4 4.7 4.8 4.7 5.0 5.4 5.9 6.37.2 7.5

8.69.5

10.511.2

12.0 12.6 13.0 13.4

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

E

CAGR 1990-2008: 7.1%

CAGR 2002-2008: 7.0%

Mll

on p

asse

nger

s


19.6 Traffic distribution in GPRD

19.6.1 Guangdong International OD Air Passengers Market

Table 164 – Distribution of Guangdong-international passengers into location and airport

The chart below shows that when HKIA directly competes with CAN to international destinations, the traffic diversion is limited.

Source: AAHK, MVA Passenger Survey, 2009

Distribution of Guangdong-related OD international passengers – 2009 – in %

HKIA naturalmarket: 52%

CAN natural market: 25%

Battle field:23%

64%48% 41%

11%

10%11%

22%

33%34%

3% 10% 15%

2007 2015 2030

SZAGZIAMIAHKIA

16.2 27.6 58

Guangdong OD international traffic by airport and market share – 2007 to 2030 – in % and Mpax

Source: IATA / MVA estimates, AAHK

13.2

2.8

9.0

2.6

10.4

1.8

3.5

0.5

23.6

6.5

19.5

8.5

0

5

10

15

20

25

30

35

40

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

CAN HKG

� DXB� FRA� HEL

2005 2006 2007 2008

Baseline growth*+36%

-10%

nduc

tion

Div

ersi

on

HKG -> FRA, DXB, HEL

CAN-> FRA, DXB, HEL

Number of LH destinations serviced from HKIA and CAN

Source: SRS Analyzer, first quarter of each year Source: IATA AirportIS

O/D traffic between HKIA / CAN and DXB, FRA and HEL – 2005 to 2008 – in PDEW

PDEW: Passengers Daily Each WayMarket above represented 650PDEW in 2008*Evolution of traffic from HKIA to Europe and Middle East

FRA: Frankfurt AirportDXB: Dubai AirportHEL: Helsinki


19.6.2 Connectivity at GPRD airports

The tables below complement tables Table 23 and Table 24.

Table 165 - Evolution of the weekly frequencies to Asia excluding Mainland China from HKIA, CAN and SZX – 1st quarter from 2000 to 2008

Airport in the GPRD

Q1, 2000 Q1, 2004 Q1, 2008 Variation


2004 to 2008

HKIA 806 978 1,142 +336 +164

CAN 84 147 307 +223 +160

SZX 0 14 120 +106 +120

Note: 1 frequency corresponds to 2 ATM


Table 166 - Evolution of the weekly frequencies to long-haul destinations from HKIA, CAN and SZX – 1st quarter from 2000 to 2008

Airport in the GPRD

Q1, 2000 Q1, 2004 Q1, 2008 Variation


2004 to 2008

HKIA 250 291 456 +206 +165

CAN 6 11 40 +34 +29

SZX 0 0 0 +0 +0

Note: 1 frequency corresponds to 2 ATM



19.7 Mainland China Transfer / Transit traffic

Split of Mainland China OD international traffic into direct and indirect – 2007

Source: IATA AirportIS, IATA estimates Source: IATA AirportIS, IATA estimates

Split of OD int‘l indirect traffic to/from Mainland China into main hubs – 2007

Direct

Indirect

Note: Market share is 11.5% if Taiwan is excluded

288%

72%

55%

37%

33%

32%

32%

31%

31%

29%

311%

HK

G

MFM FR

A

PE

K

SN

BK

K

CD

G CN

DX

B

PV

G

CA

N

Oth

er

62%

38%

6%


19.8 Regional classification

In the present report Total China refers to Mainland China, Hong Kong and Macau.

Table 167 – HKIA markets regional classification

Region Mainland China Region

Long-haul Pearl River Delta Yantze River Delta Bohai Rim

Europe Guangzhou Shanghai Beijing

USA / Canada Shenzhen Nanjing Tiangin

Australasia Foshan Suzhou Hebei

Middle East Zhuhai Wuxi Shandong

Africa Jiangmen Changzhou Liaoning

Caribbean Zhongshan Yangzhou

South America Dongguan Zhenjiang

Russia/CIS Huizhou Nantong

Others Zhaoqing Taizhou

Asia (excl. Mainland China) Hangzhou

South East Asia Ningbo

Taiwan Huzhou

Japan Jiaxing

India Subcontinents Shaoxing

Korea Zhoushan

Mainland China Taizhou Note: Region classification was applied to passenger and cargo segments

HK

IA 2

030

Prm

ary

Fore

cast

– F

na R

epor

t

257

19.9

Tr

affic

fore

cast

tabl

es

Tabl

e 16

8 –

HKI

A O

D a

nd T

T pa

ssen

ger t

raff

ic fo

reca

st -

199

3 to

203

0 –

in m

illio

n pa

ssen

gers

Not

e 1

993

to 2

008

are

actu

al f

gure

s 2

009

fgur

es a

re e

stm

ated

bas

ed o

n A

ugus

t yea

r-to

-dat

e tra

ffc

201

0 an

d be

yond

num

bers

are

fore

cast

Sou

rce:

IATA

est

imat

es, A

AH

K a

ctua

l tra

ffic

figur

es

OD

TT

-20406080100

120

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

Millions

HK

IA 2

030

Prm

ary

Fore

cast

– F

na R

epor

t

258

Tabl

e 16

9 –

HKI

A to

tal p

asse

nger

traf

fic s

plit

into

regi

ons

– 20

08 to

203

0 –

in th

ousa

nds

pass

enge

rs

Mainlan

dCh

ina

Taiwan

Japa

nUSA

Cana

daSE

Asia

Europe

Australasia

Others

Total

Year

Pax

yoy

Pax

yoy

Pax

yoy

Pax

yoy

Pax

yoy

Pax

yoy

Pax

yoy

Pax

yoy

Pax

yoy

2008

10,076

�3.2%

8,289

�1.4%

3,532

0.7%

3,710

8.7%

11,337

1.3%

4,451

1.3%

2,807

9.3%

4,383

12.8%

48,585

1.7%

2009

9,135

�9.3%

6,738

�18.7%

3,124

�11.6%

3,559

�4.1%

11,128

�1.8%

4,289

�3.6%

2,717

�3.2%

4,318

�1.5%

45,007

�7.4%

2010

9,522

4.2%

6,894

2.3%

3,255

4.2%

3,599

1.1%

11,523

3.6%

4,316

0.6%

2,771

2.0%

4,433

2.7%

46,312

2.9%

2011

9,899

4.0%

7,007

1.6%

3,354

3.1%

3,777

4.9%

11,689

1.4%

4,459

3.3%

2,838

2.4%

4,678

5.5%

47,700

3.0%

2012

10,219

3.2%

7,023

0.2%

3,500

4.3%

3,930

4.0%

12,242

4.7%

4,549

2.0%

3,024

6.6%

5,018

7.3%

49,505

3.8%

2013

10,872

6.4%

7,290

3.8%

3,720

6.3%

4,111

4.6%

12,735

4.0%

4,664

2.5%

3,172

4.9%

5,524

10.1%

52,087

5.2%

2014

11,705

7.7%

7,473

2.5%

3,912

5.2%

4,292

4.4%

13,142

3.2%

4,824

3.4%

3,345

5.5%

5,738

3.9%

54,431

4.5%

2015

12,456

6.4%

7,566

1.2%

3,979

1.7%

4,413

2.8%

13,577

3.3%

5,024

4.2%

3,544

6.0%

6,062

5.6%

56,621

4.0%

2016

13,385

7.5%

7,611

0.6%

3,998

0.5%

4,527

2.6%

14,042

3.4%

5,273

5.0%

3,705

4.5%

6,200

2.3%

58,742

3.7%

2017

14,255

6.5%

7,760

2.0%

3,925

�1.8%

4,654

2.8%

14,505

3.3%

5,496

4.2%

3,871

4.5%

6,457

4.1%

60,924

3.7%

2018

15,203

6.7%

7,883

1.6%

3,861

�1.6%

4,787

2.9%

14,993

3.4%

5,769

5.0%

4,074

5.2%

6,637

2.8%

63,208

3.7%

2019

16,221

6.7%

8,025

1.8%

3,786

�1.9%

4,920

2.8%

15,496

3.4%

6,035

4.6%

4,266

4.7%

6,828

2.9%

65,578

3.7%

2020

17,279

6.5%

8,165

1.8%

3,671

�3.0%

5,077

3.2%

15,973

3.1%

6,343

5.1%

4,501

5.5%

7,027

2.9%

68,037

3.8%

2021

18,292

5.9%

8,358

2.4%

3,646

�0.7%

5,197

2.4%

16,515

3.4%

6,569

3.6%

4,712

4.7%

7,234

2.9%

70,523

3.7%

2022

19,501

6.6%

8,540

2.2%

3,634

�0.3%

5,331

2.6%

17,060

3.3%

6,806

3.6%

4,868

3.3%

7,448

3.0%

73,189

3.8%

2023

20,741

6.4%

8,708

2.0%

3,599

�1.0%

5,493

3.0%

17,629

3.3%

7,079

4.0%

5,064

4.0%

7,675

3.1%

75,988

3.8%

2024

22,032

6.2%

8,915

2.4%

3,589

�0.3%

5,626

2.4%

18,225

3.4%

7,326

3.5%

5,226

3.2%

7,886

2.7%

78,825

3.7%

2025

23,400

6.2%

9,134

2.5%

3,585

�0.1%

5,766

2.5%

18,844

3.4%

7,578

3.4%

5,387

3.1%

8,096

2.7%

81,789

3.8%

2026

24,763

5.8%

9,326

2.1%

3,562

�0.6%

5,919

2.6%

19,419

3.0%

7,834

3.4%

5,569

3.4%

8,300

2.5%

84,690

3.5%

2027

26,190

5.8%

9,535

2.2%

3,579

0.5%

6,056

2.3%

20,004

3.0%

8,087

3.2%

5,738

3.0%

8,545

3.0%

87,733

3.6%

2028

27,650

5.6%

9,749

2.2%

3,547

�0.9%

6,205

2.5%

20,642

3.2%

8,350

3.3%

5,923

3.2%

8,726

2.1%

90,792

3.5%

2029

29,110

5.3%

9,988

2.4%

3,562

0.4%

6,343

2.2%

21,272

3.1%

8,601

3.0%

6,099

3.0%

8,930

2.3%

93,907

3.4%

2030

30,579

5.0%

10,212

2.2%

3,585

0.6%

6,480

2.2%

21,916

3.0%

8,846

2.8%

6,271

2.8%

9,126

2.2%

97,015

3.3%

CAGR

Mainlan

dCh

ina

Taiwan

Japa

nUSA

Cana

daSE

Asia

Europe

Australasia

Others

Total

2008

�2020

4.6%

�0.1%

0.3%

2.6%

2.9%

3.0%

4.0%

4.0%

2.8%

2020

�2030

5.9%

2.3%

�0.2%

2.5%

3.2%

3.4%

3.4%

2.6%

3.6%

2008

�2030

5.2%

1.0%

0.1%

2.6%

3.0%

3.2%

3.7%

3.4%

3.2%

HK

IA 2

030

Prm

ary

Fore

cast

– F

na R

epor

t

259

Tabl

e 17

0– H

KIA

OD

pas

seng

er tr

affic

spl

it in

to re

gion

s –

in th

ousa

nds

pass

enge

rs

Mainlan

dCh

ina

Taiwan

Japa

nUSA

Cana

daSE

Asia

Europe

Australasia

Others

Total

Year

Pax

yoy

Pax

yoy

Pax

yoy

Pax

yoy

Pax

yoy

Pax

yoy

Pax

yoy

Pax

yoy

Pax

yoy

2008

6,360

�3.4%

4,972

2.2%

3,062

1.4%

2,066

0.7%

8,022

�1.5%

2,613

�2.4%

1,366

1.5%

2,707

7.1%

31,168

�0.1%

2009

6,141

�3.4%

4,188

�15.8%

2,684

�12.3%

1,990

�3.7%

7,873

�1.9%

2,516

�3.7%

1,324

�3.1%

2,671

�1.3%

29,386

�5.7%

2010

6,298

2.6%

4,211

0.6%

2,799

4.3%

2,024

1.7%

8,077

2.6%

2,536

0.8%

1,361

2.8%

2,772

3.8%

30,078

2.4%

2011

6,494

3.1%

4,211

0.0%

2,895

3.4%

2,144

5.9%

8,217

1.7%

2,598

2.4%

1,372

0.8%

2,928

5.6%

30,858

2.6%

2012

6,684

2.9%

4,228

0.4%

3,046

5.2%

2,251

5.0%

8,743

6.4%

2,676

3.0%

1,465

6.8%

3,222

10.0%

32,315

4.7%

2013

7,255

8.6%

4,465

5.6%

3,268

7.3%

2,362

5.0%

9,135

4.5%

2,707

1.2%

1,526

4.1%

3,647

13.2%

34,365

6.3%

2014

7,810

7.6%

4,609

3.2%

3,449

5.6%

2,464

4.3%

9,361

2.5%

2,766

2.2%

1,596

4.6%

3,742

2.6%

35,799

4.2%

2015

8,312

6.4%

4,735

2.7%

3,510

1.8%

2,494

1.2%

9,600

2.5%

2,853

3.1%

1,685

5.6%

3,940

5.3%

37,130

3.7%

2016

9,030

8.6%

4,819

1.8%

3,518

0.2%

2,545

2.0%

9,923

3.4%

3,026

6.1%

1,764

4.7%

3,984

1.1%

38,609

4.0%

2017

9,655

6.9%

4,973

3.2%

3,441

�2.2%

2,580

1.3%

10,183

2.6%

3,141

3.8%

1,823

3.4%

4,112

3.2%

39,907

3.4%

2018

10,371

7.4%

5,104

2.6%

3,370

�2.0%

2,636

2.2%

10,517

3.3%

3,329

6.0%

1,937

6.2%

4,188

1.8%

41,452

3.9%

2019

11,155

7.6%

5,250

2.9%

3,293

�2.3%

2,702

2.5%

10,890

3.5%

3,523

5.8%

2,052

5.9%

4,291

2.4%

43,156

4.1%

2020

11,873

6.4%

5,368

2.2%

3,176

�3.6%

2,746

1.6%

11,155

2.4%

3,704

5.2%

2,165

5.5%

4,353

1.5%

44,540

3.2%

2021

12,629

6.4%

5,520

2.8%

3,144

�1.0%

2,812

2.4%

11,563

3.7%

3,868

4.4%

2,310

6.7%

4,471

2.7%

46,317

4.0%

2022

13,516

7.0%

5,672

2.8%

3,127

�0.6%

2,876

2.3%

11,958

3.4%

4,022

4.0%

2,384

3.2%

4,585

2.6%

48,140

3.9%

2023

14,325

6.0%

5,801

2.3%

3,091

�1.2%

2,921

1.6%

12,291

2.8%

4,151

3.2%

2,445

2.6%

4,667

1.8%

49,693

3.2%

2024

15,267

6.6%

5,962

2.8%

3,079

�0.4%

2,988

2.3%

12,723

3.5%

4,313

3.9%

2,524

3.2%

4,777

2.4%

51,632

3.9%

2025

16,275

6.6%

6,131

2.8%

3,074

�0.2%

3,061

2.5%

13,187

3.6%

4,485

4.0%

2,607

3.3%

4,892

2.4%

53,713

4.0%

2026

17,165

5.5%

6,261

2.1%

3,049

�0.8%

3,105

1.4%

13,529

2.6%

4,612

2.8%

2,667

2.3%

4,955

1.3%

55,342

3.0%

2027

18,141

5.7%

6,415

2.5%

3,062

0.4%

3,153

1.5%

13,911

2.8%

4,753

3.1%

2,729

2.4%

5,076

2.5%

57,241

3.4%

2028

19,138

5.5%

6,567

2.4%

3,026

�1.2%

3,217

2.0%

14,347

3.1%

4,908

3.3%

2,810

2.9%

5,134

1.1%

59,147

3.3%

2029

20,151

5.3%

6,727

2.4%

3,037

0.4%

3,274

1.8%

14,771

3.0%

5,058

3.1%

2,884

2.6%

5,212

1.5%

61,114

3.3%

2030

21,212

5.3%

6,887

2.4%

3,055

0.6%

3,339

2.0%

15,232

3.1%

5,218

3.2%

2,966

2.8%

5,296

1.6%

63,205

3.4%

CAGR

Mainlan

dCh

ina

Taiwan

Japa

nUSA

Cana

daSE

Asia

Europe

Australasia

Others

Total

2008

�2020

5.3%

0.6%

0.3%

2.4%

2.8%

3.0%

3.9%

4.0%

3.0%

2020

�2030

6.0%

2.5%

�0.4%

2.0%

3.2%

3.5%

3.2%

2.0%

3.6%

2008

�2030

5.6%

1.5%

0.0%

2.2%

3.0%

3.2%

3.6%

3.1%

3.3%

HK

IA 2

030

Prm

ary

Fore

cast

– F

na R

epor

t

260

Tabl

e 17

1 –

HKI

A TT

pas

seng

er tr

affic

spl

it in

to r

egio

ns –

200

8 to

203

0 –

in th

ousa

nds

pass

enge

rs

Mainlan

dCh

ina

Taiwan

Japa

nUSA

Cana

daSE

Asia

Europe

Australasia

Others

Total

Year

Pax

yoy

Pax

yoy

Pax

yoy

Pax

yoy

Pax

yoy

Pax

yoy

Pax

yoy

Pax

yoy

Pax

yoy

2008

3,716

�2.9%

3,317

�6.4%

470

�3.9%

1,644

20.7%

3,315

8.5%

1,838

7.1%

1,441

18.0%

1,676

23.2%

17,417

5.1%

2009

2,994

�19.4%

2,550

�23.1%

439

�6.5%

1,569

�4.6%

3,255

�1.8%

1,773

�3.5%

1,393

�3.3%

1,647

�1.7%

15,621

�10.3%

2010

3,224

7.7%

2,682

5.2%

455

3.6%

1,575

0.4%

3,445

5.9%

1,780

0.4%

1,411

1.3%

1,661

0.8%

16,234

3.9%

2011

3,405

5.6%

2,796

4.2%

460

0.9%

1,633

3.7%

3,471

0.8%

1,861

4.6%

1,466

3.9%

1,750

5.4%

16,842

3.7%

2012

3,535

3.8%

2,794

�0.1%

454

�1.2%

1,679

2.8%

3,499

0.8%

1,873

0.6%

1,559

6.4%

1,796

2.6%

17,190

2.1%

2013

3,616

2.3%

2,825

1.1%

452

�0.5%

1,748

4.1%

3,600

2.9%

1,957

4.5%

1,647

5.6%

1,877

4.5%

17,721

3.1%

2014

3,895

7.7%

2,864

1.4%

462

2.3%

1,828

4.6%

3,781

5.0%

2,057

5.1%

1,749

6.2%

1,996

6.3%

18,632

5.1%

2015

4,144

6.4%

2,831

�1.1%

469

1.4%

1,919

5.0%

3,977

5.2%

2,171

5.5%

1,859

6.3%

2,121

6.3%

19,491

4.6%

2016

4,355

5.1%

2,793

�1.3%

480

2.4%

1,982

3.3%

4,119

3.6%

2,247

3.5%

1,941

4.4%

2,216

4.5%

20,133

3.3%

2017

4,600

5.6%

2,788

�0.2%

484

0.8%

2,075

4.7%

4,322

4.9%

2,355

4.8%

2,048

5.5%

2,344

5.8%

21,017

4.4%

2018

4,832

5.0%

2,779

�0.3%

490

1.3%

2,151

3.7%

4,476

3.6%

2,440

3.6%

2,138

4.4%

2,449

4.4%

21,755

3.5%

2019

5,067

4.9%

2,774

�0.2%

493

0.5%

2,218

3.1%

4,606

2.9%

2,512

2.9%

2,214

3.6%

2,537

3.6%

22,421

3.1%

2020

5,407

6.7%

2,798

0.8%

496

0.5%

2,331

5.1%

4,818

4.6%

2,639

5.0%

2,336

5.5%

2,674

5.4%

23,497

4.8%

2021

5,664

4.8%

2,838

1.4%

502

1.2%

2,386

2.3%

4,951

2.8%

2,700

2.3%

2,403

2.9%

2,763

3.3%

24,206

3.0%

2022

5,986

5.7%

2,869

1.1%

507

1.0%

2,455

2.9%

5,102

3.1%

2,784

3.1%

2,484

3.4%

2,863

3.6%

25,049

3.5%

2023

6,416

7.2%

2,907

1.3%

509

0.4%

2,571

4.8%

5,338

4.6%

2,927

5.1%

2,618

5.4%

3,009

5.1%

26,296

5.0%

2024

6,766

5.4%

2,953

1.6%

510

0.3%

2,638

2.6%

5,501

3.1%

3,013

2.9%

2,702

3.2%

3,109

3.3%

27,193

3.4%

2025

7,124

5.3%

3,002

1.7%

511

0.1%

2,705

2.5%

5,657

2.8%

3,092

2.6%

2,779

2.9%

3,204

3.1%

28,076

3.2%

2026

7,598

6.7%

3,065

2.1%

512

0.2%

2,813

4.0%

5,890

4.1%

3,221

4.2%

2,902

4.4%

3,345

4.4%

29,348

4.5%

2027

8,049

5.9%

3,121

1.8%

516

0.8%

2,903

3.2%

6,093

3.4%

3,334

3.5%

3,009

3.7%

3,469

3.7%

30,492

3.9%

2028

8,512

5.8%

3,182

2.0%

521

0.9%

2,988

2.9%

6,295

3.3%

3,442

3.2%

3,113

3.5%

3,592

3.5%

31,645

3.8%

2029

8,959

5.3%

3,261

2.5%

525

0.8%

3,069

2.7%

6,502

3.3%

3,543

2.9%

3,215

3.3%

3,718

3.5%

32,793

3.6%

2030

9,366

4.5%

3,325

2.0%

530

0.9%

3,140

2.3%

6,684

2.8%

3,628

2.4%

3,305

2.8%

3,830

3.0%

33,809

3.1%

CAGR

Mainlan

dCh

ina

Taiwan

Japa

nUSA

Cana

daSE

Asia

Europe

Australasia

Others

Total

2008

�2020

3.2%

�1.4%

0.4%

3.0%

3.2%

3.1%

4.1%

4.0%

2.5%

2020

�2030

5.6%

1.7%

0.7%

3.0%

3.3%

3.2%

3.5%

3.7%

3.7%

2008

�2030

4.3%

0.0%

0.5%

3.0%

3.2%

3.1%

3.8%

3.8%

3.1%

HK

IA 2

030

Prm

ary

Fore

cast

– F

na R

epor

t

261

Tabl

e 17

2 –

HKI

A Ai

r Pas

seng

er s

plit

into

OD

and

TT–

in th

ousa

nds

pass

enge

rs

OD

TTTo

tal

AirPa

ssen

gersplit

in%

Year

HKS

AR

Reside

nts

Vistors

Total

Tran

sfer

Tran

sit

Total

Pax

yoy

OD

TT

2008

11,552

19,616

31,168

15,972

1,445

17,417

48,585

1.7%

64.2%

35.8%

2009

11,167

18,219

29,386

14,371

1,250

15,621

45,007

�7.4%

65.3%

34.7%

2010

11,430

18,648

30,078

14,936

1,299

16,234

46,312

2.9%

64.9%

35.1%

2011

11,726

19,132

30,858

15,495

1,347

16,842

47,700

3.0%

64.7%

35.3%

2012

12,280

20,035

32,315

15,814

1,375

17,190

49,505

3.8%

65.3%

34.7%

2013

13,059

21,307

34,365

16,304

1,418

17,721

52,087

5.2%

66.0%

34.0%

2014

13,603

22,195

35,799

17,142

1,491

18,632

54,431

4.5%

65.8%

34.2%

2015

14,109

23,021

37,130

17,932

1,559

19,491

56,621

4.0%

65.6%

34.4%

2016

14,672

23,938

38,609

18,522

1,611

20,133

58,742

3.7%

65.7%

34.3%

2017

15,165

24,742

39,907

19,336

1,681

21,017

60,924

3.7%

65.5%

34.5%

2018

15,752

25,700

41,452

20,015

1,740

21,755

63,208

3.7%

65.6%

34.4%

2019

16,399

26,757

43,156

20,628

1,794

22,421

65,578

3.7%

65.8%

34.2%

2020

16,925

27,615

44,540

21,618

1,880

23,497

68,037

3.8%

65.5%

34.5%

2021

17,600

28,716

46,317

22,270

1,937

24,206

70,523

3.7%

65.7%

34.3%

2022

18,293

29,846

48,140

23,045

2,004

25,049

73,189

3.8%

65.8%

34.2%

2023

18,883

30,809

49,693

24,192

2,104

26,296

75,988

3.8%

65.4%

34.6%

2024

19,620

32,012

51,632

25,017

2,175

27,193

78,825

3.7%

65.5%

34.5%

2025

20,411

33,302

53,713

25,830

2,246

28,076

81,789

3.8%

65.7%

34.3%

2026

21,030

34,312

55,342

27,000

2,348

29,348

84,690

3.5%

65.3%

34.7%

2027

21,751

35,489

57,241

28,053

2,439

30,492

87,733

3.6%

65.2%

34.8%

2028

22,476

36,671

59,147

29,114

2,532

31,645

90,792

3.5%

65.1%

34.9%

2029

23,223

37,891

61,114

30,169

2,623

32,793

93,907

3.4%

65.1%

34.9%

2030

24,018

39,187

63,205

31,105

2,705

33,809

97,015

3.3%

65.2%

34.8%

CAGR

OD

TTTo

tal

2008

�2020

3.2%

2.6%

2.8%

2020

�2030

3.6%

3.7%

3.6%

2008

�2030

3.4%

3.1%

3.2%

HK

IA 2

030

Prm

ary

Fore

cast

– F

na R

epor

t

262

Tabl

e 17

3 –

GPRD

tota

l pas

seng

er tr

affic

spl

it in

to G

PRD

airp

orts

with

out H

KIA

and

HKI

A –

in th

ousa

nds

pass

enge

rs

GPR

Dtotalpassenger

split

in%

GPR

Dairports(exclude

HKIA)

HKIA

GPR

DYe

arPa

xyoy

Pax

yoy

Pax

yoy

GPR

Dairports(exclude

HKIA)

HKIA

2008

61,056

48,585

109,641

55.7%

44.3%

2009

64,326

5.4%

45,007

�7.4%

109,332

�0.3%

58.8%

41.2%

2010

70,843

10.1%

46,312

2.9%

117,155

7.2%

60.5%

39.5%

2011

78,401

10.7%

47,700

3.0%

126,101

7.6%

62.2%

37.8%

2012

87,101

11.1%

49,505

3.8%

136,605

8.3%

63.8%

36.2%

2013

96,357

10.6%

52,087

5.2%

148,444

8.7%

64.9%

35.1%

2014

106,052

10.1%

54,431

4.5%

160,483

8.1%

66.1%

33.9%

2015

116,330

9.7%

56,621

4.0%

172,951

7.8%

67.3%

32.7%

2016

126,741

8.9%

58,742

3.7%

185,484

7.2%

68.3%

31.7%

2017

131,040

3.4%

60,924

3.7%

191,964

3.5%

68.3%

31.7%

2018

141,750

8.2%

63,208

3.7%

204,958

6.8%

69.2%

30.8%

2019

152,945

7.9%

65,578

3.7%

218,522

6.6%

70.0%

30.0%

2020

164,724

7.7%

68,037

3.8%

232,762

6.5%

70.8%

29.2%

2021

177,145

7.5%

70,523

3.7%

247,668

6.4%

71.5%

28.5%

2022

189,884

7.2%

73,189

3.8%

263,073

6.2%

72.2%

27.8%

2023

203,184

7.0%

75,988

3.8%

279,172

6.1%

72.8%

27.2%

2024

217,198

6.9%

78,825

3.7%

296,023

6.0%

73.4%

26.6%

2025

231,852

6.7%

81,789

3.8%

313,641

6.0%

73.9%

26.1%

2026

238,401

2.8%

84,690

3.5%

323,091

3.0%

73.8%

26.2%

2027

244,644

2.6%

87,733

3.6%

332,377

2.9%

73.6%

26.4%

2028

259,489

6.1%

90,792

3.5%

350,281

5.4%

74.1%

25.9%

2029

274,601

5.8%

93,907

3.4%

368,508

5.2%

74.5%

25.5%

2030

290,113

5.6%

97,015

3.3%

387,128

5.1%

74.9%

25.1%

CAGR

GPR

Dairports(exclude

HKIA)

HKIA

GPR

D

2008

�2020

8.6%

2.8%

6.5%

2020

�2030

5.8%

3.6%

5.2%

2008

�2030

7.3%

3.2%

5.9%

HK

IA 2

030

Prm

ary

Fore

cast

– F

na R

epor

t

263

Tabl

e 17

4 –

GPRD

dom

estic

(Mai

nlan

d) p

asse

nger

traf

fic s

plit

into

GPR

D a

irpor

ts (e

xclu

de H

KIA)

and

HKI

A –

in th

ousa

nds

pass

enge

rs

GPR

Ddo

mesticpa

ssen

gersplit

in%

GPR

Dairports(exclude

HKIA)

HKIA

GPR

DYe

arPa

xyoy

Pax

yoy

Pax

yoy

GPR

Dairports(exclude

HKIA)

HKIA

2008

53,729

10,076

63,805

84.2%

15.8%

2009

58,002

8.0%

9,135

�9.3%

67,137

5.2%

86.4%

13.6%

2010

63,773

10.0%

9,522

4.2%

73,295

9.2%

87.0%

13.0%

2011

70,460

10.5%

9,899

4.0%

80,359

9.6%

87.7%

12.3%

2012

78,150

10.9%

10,219

3.2%

88,369

10.0%

88.4%

11.6%

2013

86,311

10.4%

10,872

6.4%

97,183

10.0%

88.8%

11.2%

2014

94,839

9.9%

11,705

7.7%

106,544

9.6%

89.0%

11.0%

2015

103,826

9.5%

12,456

6.4%

116,282

9.1%

89.3%

10.7%

2016

112,929

8.8%

13,385

7.5%

126,314

8.6%

89.4%

10.6%

2017

116,564

3.2%

14,255

6.5%

130,819

3.6%

89.1%

10.9%

2018

125,880

8.0%

15,203

6.7%

141,083

7.8%

89.2%

10.8%

2019

135,593

7.7%

16,221

6.7%

151,815

7.6%

89.3%

10.7%

2020

146,483

8.0%

17,279

6.5%

163,763

7.9%

89.4%

10.6%

2021

157,529

7.5%

18,292

5.9%

175,821

7.4%

89.6%

10.4%

2022

168,857

7.2%

19,501

6.6%

188,358

7.1%

89.6%

10.4%

2023

180,684

7.0%

20,741

6.4%

201,425

6.9%

89.7%

10.3%

2024

193,146

6.9%

22,032

6.2%

215,178

6.8%

89.8%

10.2%

2025

206,343

6.8%

23,400

6.2%

229,743

6.8%

89.8%

10.2%

2026

210,956

2.2%

24,763

5.8%

235,719

2.6%

89.5%

10.5%

2027

215,495

2.2%

26,190

5.8%

241,685

2.5%

89.2%

10.8%

2028

228,920

6.2%

27,650

5.6%

256,570

6.2%

89.2%

10.8%

2029

242,252

5.8%

29,110

5.3%

271,362

5.8%

89.3%

10.7%

2030

255,937

5.6%

30,579

5.0%

286,515

5.6%

89.3%

10.7%

CAGR

GPR

Dairports(exclude

HKIA)

HKIA

GPR

D

2008

�2020

8.7%

4.6%

8.2%

2020

�2030

5.7%

5.9%

5.8%

2008

�2030

7.4%

5.2%

7.1%

HK

IA 2

030

Prm

ary

Fore

cast

– F

na R

epor

t

264

Tabl

e 17

5 –

GPRD

inte

rnat

iona

l pas

seng

er tr

affic

spl

it in

to G

PRD

airp

orts

(exc

lude

HKI

A) a

nd H

KIA

– in

thou

sand

s pa

ssen

ger

GPR

Dinternationa

lpassenger

split

in%

GPR

Dairports(exclude

HKIA)

HKIA

GPR

DYe

arPa

xyoy

Pax

yoy

Pax

yoy

GPR

Dairports(exclude

HKIA)

HKIA

2008

7,327

38,509

45,836

16.0%

84.0%

2009

6,324

�13.7%

35,872

�6.8%

42,196

�7.9%

15.0%

85.0%

2010

7,070

11.8%

36,790

2.6%

43,860

3.9%

16.1%

83.9%

2011

7,940

12.3%

37,802

2.7%

45,742

4.3%

17.4%

82.6%

2012

8,951

12.7%

39,286

3.9%

48,237

5.5%

18.6%

81.4%

2013

10,045

12.2%

41,215

4.9%

51,260

6.3%

19.6%

80.4%

2014

11,214

11.6%

42,726

3.7%

53,939

5.2%

20.8%

79.2%

2015

12,505

11.5%

44,165

3.4%

56,670

5.1%

22.1%

77.9%

2016

13,812

10.5%

45,358

2.7%

59,170

4.4%

23.3%

76.7%

2017

14,476

4.8%

46,669

2.9%

61,145

3.3%

23.7%

76.3%

2018

15,870

9.6%

48,004

2.9%

63,874

4.5%

24.8%

75.2%

2019

17,351

9.3%

49,356

2.8%

66,708

4.4%

26.0%

74.0%

2020

18,241

5.1%

50,758

2.8%

68,999

3.4%

26.4%

73.6%

2021

19,617

7.5%

52,231

2.9%

71,847

4.1%

27.3%

72.7%

2022

21,027

7.2%

53,687

2.8%

74,715

4.0%

28.1%

71.9%

2023

22,500

7.0%

55,247

2.9%

77,747

4.1%

28.9%

71.1%

2024

24,052

6.9%

56,793

2.8%

80,845

4.0%

29.8%

70.2%

2025

25,509

6.1%

58,389

2.8%

83,898

3.8%

30.4%

69.6%

2026

27,444

7.6%

59,927

2.6%

87,372

4.1%

31.4%

68.6%

2027

29,149

6.2%

61,543

2.7%

90,692

3.8%

32.1%

67.9%

2028

30,569

4.9%

63,142

2.6%

93,711

3.3%

32.6%

67.4%

2029

32,349

5.8%

64,796

2.6%

97,146

3.7%

33.3%

66.7%

2030

34,177

5.6%

66,436

2.5%

100,613

3.6%

34.0%

66.0%

CAGR

GPR

Dairports(exclude

HKIA)

HKIA

GPR

D

2008

�2020

7.9%

2.3%

3.5%

2020

�2030

6.5%

2.7%

3.8%

2008

�2030

7.3%

2.5%

3.6%

HK

IA 2

030

Prm

ary

Fore

cast

– F

na R

epor

t

265

Tabl

e 17

6 –

Mai

nlan

d Ch

ina

tota

l pas

seng

er tr

affic

– in

mill

ion

pass

enge

rs

Passen

gers

yoy

2008

406

2009

430

5.9%

2010

460

7.1%

2011

513

11.5%

2012

562

9.6%

2013

618

9.8%

2014

680

10.0%

2015

745

9.6%

2016

812

8.9%

2017

880

8.4%

2018

952

8.2%

2019

1,028

7.9%

2020

1,106

7.7%

2021

1,190

7.5%

2022

1,275

7.2%

2023

1,365

7.0%

2024

1,459

6.9%

2025

1,557

6.7%

2026

1,658

6.5%

2027

1,763

6.4%

2028

1,869

6.0%

2029

1,978

5.8%

2030

2,090

5.6%

CAGR

Mainlan

dCh

ina

2008

�2020

8.7%

2020

�2030

8.9%

2008

�2030

7.7%

HK

IA 2

030

Prm

ary

Fore

cast

– F

na R

epor

t

266

Tabl

e 17

7 –

Tota

l Chi

na to

tal p

asse

nger

traf

fic s

plit

into

mai

n re

gion

s– in

mill

ion

pass

enge

rs

TotalChina

split

in%

GPR

DYR

DBe

ijing

Restof

Mainlan

dCh

ina

TotalChina

Year

Pax

yoy

Pax

yoy

Pax

yoy

Pax

yoy

Pax

yoy

GPR

DYR

DBe

ijing

Restof

Mainlan

dCh

ina

2008

110

0.0%

760.0%

560.0%

213

0.0%

454

0.0%

24.1%

16.8%

12.3%

46.8%

2009

109

�0.3%

8511

.3%

606.9%

221

3.9%

475

4.5%

23.0%

17.9%

12.6%

46.5%

2010

117

7.2%

917.4%

6610

.3%

233

5.3%

507

6.7%

23.1%

18.0%

13.0%

45.9%

2011

126

7.6%

102

11.5%

7311

.1%

260

11.8%

561

10.7%

22.5%

18.1%

13.1%

46.3%

2012

137

8.3%

111

9.6%

8111

.2%

283

8.7%

612

9.1%

22.3%

18.2%

13.3%

46.2%

2013

148

8.7%

116

4.3%

9010

.3%

315

11.6%

670

9.5%

22.2%

17.3%

13.4%

47.1%

2014

160

8.1%

128

10.1%

944.1%

352

11.6%

734

9.6%

21.9%

17.4%

12.8%

48.0%

2015

173

7.8%

140

9.6%

103

9.6%

386

9.6%

802

9.2%

21.6%

17.5%

12.8%

48.1%

2016

185

7.2%

153

8.9%

112

8.9%

420

8.9%

870

8.5%

21.3%

17.5%

12.8%

48.3%

2017

192

3.5%

166

8.5%

121

8.6%

462

9.9%

941

8.1%

20.4%

17.6%

12.9%

49.1%

2018

205

6.8%

170

2.5%

131

8.2%

509

10.2%

1,015

7.9%

20.2%

16.7%

12.9%

50.2%

2019

219

6.6%

183

7.9%

142

7.9%

550

7.9%

1,093

7.7%

20.0%

16.8%

13.0%

50.3%

2020

233

6.5%

197

7.7%

153

7.7%

592

7.6%

1,174

7.4%

19.8%

16.8%

13.0%

50.4%

2021

248

6.4%

212

7.5%

164

7.5%

636

7.5%

1,260

7.3%

19.7%

16.8%

13.0%

50.5%

2022

263

6.2%

228

7.3%

176

7.3%

682

7.1%

1,349

7.0%

19.5%

16.9%

13.1%

50.5%

2023

279

6.1%

244

7.0%

188

7.0%

729

7.0%

1,441

6.8%

19.4%

16.9%

13.1%

50.6%

2024

296

6.0%

253

3.9%

194

3.1%

794

8.9%

1,538

6.7%

19.3%

16.5%

12.6%

51.6%

2025

314

6.0%

270

6.7%

207

6.7%

848

6.7%

1,639

6.6%

19.1%

16.5%

12.7%

51.7%

2026

323

3.0%

279

3.4%

213

2.5%

927

9.4%

1,742

6.3%

18.5%

16.0%

12.2%

53.2%

2027

332

2.9%

297

6.4%

226

6.4%

995

7.3%

1,851

6.2%

18.0%

16.1%

12.2%

53.8%

2028

350

5.4%

315

6.0%

240

6.0%

1,055

6.0%

1,960

5.9%

17.9%

16.1%

12.2%

53.8%

2029

369

5.2%

334

5.8%

254

5.8%

1,116

5.8%

2,072

5.7%

17.8%

16.1%

12.2%

53.9%

2030

387

5.1%

352

5.6%

268

5.6%

1,179

5.6%

2,187

5.5%

17.7%

16.1%

12.3%

53.9%

CAGR

GPR

DYR

DBe

ijing

R.of

Mainlan

dCh

ina

TotalChina

2008

�2020

6.5%

8.2%

8.7%

8.9%

8.2%

2020

�2030

5.2%

6.0%

5.8%

7.1%

6.4%

2008

�2030

5.9%

7.2%

7.4%

8.1%

7.4%

HK

IA 2

030

Prm

ary

Fore

cast

– F

na R

epor

t

267

Tabl

e 17

8 –

Tota

l Chi

na in

tern

atio

nal t

raff

ic s

plit

into

mai

n re

gion

s– in

mill

ion

pass

enge

rs

GPR

DYR

DBe

ijing

Restof

MLCh

ina

TotalChina

Year

Pax

yoy

Pax

yoy

Pax

yoy

Pax

yoy

Pax

yoy

2008

460.0%

180.0%

130.0%

100.0%

870.0%

2009

42�7.9%

18�0.9%

12�7.0%

1112

.4%

84�4.1%

2010

443.9%

195.0%

137.8%

127.1%

885.2%

2011

464.3%

2111

.5%

1511

.1%

1311

.4%

957.8%

2012

485.5%

239.6%

1711

.2%

145.8%

102

7.3%

2013

516.3%

256.7%

1912

.8%

1510

.0%

110

7.9%

2014

545.2%

265.2%

19�0.5%

2029

.9%

118

7.6%

2015

575.1%

299.6%

209.6%

218.6%

127

7.4%

2016

594.4%

318.9%

228.9%

238.0%

136

6.8%

2017

613.3%

323.5%

233.5%

2822

.1%

144

6.6%

2018

644.5%

332.5%

258.2%

3214

.0%

154

6.5%

2019

674.4%

367.9%

277.9%

347.2%

164

6.3%

2020

693.4%

387.7%

297.7%

378.9%

174

6.2%

2021

724.1%

417.5%

317.5%

407.5%

184

6.2%

2022

754.0%

422.1%

322.1%

4716

.4%

195

5.9%

2023

784.1%

457.0%

347.0%

507.0%

207

5.9%

2024

814.0%

473.9%

353.1%

5612

.2%

219

5.8%

2025

843.8%

506.7%

376.7%

607.0%

231

5.7%

2026

874.1%

523.4%

382.5%

6711

.0%

244

5.5%

2027

913.8%

556.4%

416.4%

716.4%

257

5.5%

2028

943.3%

586.0%

436.0%

756.5%

271

5.2%

2029

973.7%

625.8%

465.8%

805.8%

285

5.1%

2030

101

3.6%

655.6%

485.6%

845.6%

299

4.9%

CAGR

GPR

DYR

DBe

ijing

Restof

MLCh

ina

TotalChina

2008

�2020

3.5%

6.4%

6.6%

11.9%

5.9%

2020

�2030

3.8%

5.4%

5.3%

8.5%

5.6%

2008

�2030

3.6%

6.0%

6.0%

10.4%

5.8%

HK

IA 2

030

Prm

ary

Fore

cast

– F

na R

epor

t

268

Tabl

e 17

9 –

HKI

A O

D a

nd T

rans

ship

men

t car

go tr

affic

fore

cast

- 1

993

to 2

030

– in

mill

ion

tonn

es

Not

e 1

993

to 2

008

are

actu

al f

gure

s 2

009

fgur

es a

re e

stm

ated

bas

ed o

n A

ugus

t yea

r-to

-dat

e tra

ffc

201

0 an

d be

yond

num

bers

are

fore

cast

Sou

rce:

IATA

est

imat

es, A

AH

K a

ctua

l tra

ffic

figur

es

OD

-

123456789101993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

Millions

Tran

sshi

pmen

t

HK

IA 2

030

Prm

ary

Fore

cast

– F

na R

epor

t

269

Tabl

e 18

0 –

HKI

A to

tal c

argo

traf

fic s

plit

into

regi

ons

– 20

08 to

203

0 –

in th

ousa

nd to

nnes

Mainlan

dCh

ina

Taiwan

Japa

nUSA

Cana

daSE

Asia

Europe

Australasia

Others

Total

Year

Cargo

yoy

Cargo

yoy

Cargo

yoy

Cargo

yoy

Cargo

yoy

Cargo

yoy

Cargo

yoy

Cargo

yoy

Cargo

yoy

2008

435

�0.2%

455

�9.5%

325

�6.6%

530

�3.1%

594

�3.4%

679

�9.0%

115

4.6%

495

12.8%

3,627

�3.1%

2009

388

�10.7%

414

�9.1%

305

�6.1%

469

�11.7%

565

�4.9%

606

�10.8%

114

�0.3%

399

�19.3%

3,260

�10.1%

2010

396

1.9%

401

�3.1%

306

0.3%

489

4.3%

573

1.4%

653

7.8%

118

3.2%

425

6.5%

3,360

3.1%

2011

410

3.6%

424

5.7%

313

2.3%

510

4.4%

593

3.4%

672

3.0%

119

1.0%

448

5.4%

3,489

3.8%

2012

441

7.5%

449

5.9%

326

4.3%

541

6.0%

621

4.8%

712

5.9%

123

3.4%

486

8.6%

3,699

6.0%

2013

483

9.5%

474

5.6%

344

5.3%

575

6.4%

663

6.7%

765

7.5%

128

3.7%

531

9.2%

3,963

7.1%

2014

521

8.0%

495

4.5%

360

4.6%

605

5.1%

704

6.3%

818

6.8%

132

3.3%

575

8.3%

4,210

6.2%

2015

557

7.0%

504

1.8%

377

4.8%

634

4.9%

748

6.2%

867

6.0%

136

3.0%

619

7.6%

4,442

5.5%

2016

591

6.1%

503

�0.3%

393

4.4%

667

5.1%

793

6.0%

913

5.3%

140

3.0%

663

7.1%

4,663

5.0%

2017

624

5.6%

510

1.5%

411

4.6%

699

4.8%

838

5.7%

961

5.2%

145

2.9%

707

6.8%

4,895

5.0%

2018

658

5.5%

517

1.2%

429

4.2%

734

5.0%

884

5.5%

1,011

5.2%

149

3.1%

754

6.6%

5,135

4.9%

2019

693

5.3%

522

1.1%

448

4.6%

769

4.9%

931

5.3%

1,062

5.0%

154

3.0%

801

6.2%

5,380

4.8%

2020

738

6.5%

527

0.9%

470

4.9%

806

4.8%

981

5.4%

1,114

4.9%

159

3.5%

850

6.2%

5,646

4.9%

2021

789

6.8%

550

4.3%

490

4.3%

843

4.6%

1,033

5.3%

1,168

4.8%

164

3.4%

902

6.0%

5,939

5.2%

2022

841

6.6%

573

4.2%

510

4.0%

881

4.5%

1,087

5.3%

1,222

4.7%

170

3.4%

955

5.9%

6,240

5.1%

2023

896

6.5%

596

4.1%

527

3.3%

920

4.4%

1,146

5.4%

1,280

4.7%

176

3.5%

1,010

5.8%

6,550

5.0%

2024

951

6.2%

620

3.9%

544

3.1%

960

4.3%

1,206

5.3%

1,337

4.5%

182

3.4%

1,066

5.6%

6,866

4.8%

2025

1,009

6.1%

643

3.8%

561

3.2%

1,002

4.4%

1,270

5.2%

1,397

4.4%

188

3.4%

1,124

5.5%

7,195

4.8%

2026

1,067

5.7%

667

3.6%

579

3.2%

1,042

4.1%

1,333

5.0%

1,455

4.1%

195

3.3%

1,183

5.2%

7,520

4.5%

2027

1,126

5.6%

690

3.6%

599

3.4%

1,083

3.9%

1,399

4.9%

1,514

4.1%

201

3.3%

1,242

5.1%

7,855

4.4%

2028

1,186

5.3%

715

3.5%

616

2.8%

1,124

3.8%

1,466

4.8%

1,574

4.0%

207

3.2%

1,304

4.9%

8,192

4.3%

2029

1,247

5.2%

740

3.5%

634

3.0%

1,166

3.7%

1,535

4.7%

1,636

3.9%

214

3.2%

1,367

4.9%

8,540

4.2%

2030

1,309

4.9%

765

3.4%

654

3.1%

1,209

3.7%

1,606

4.6%

1,697

3.7%

221

3.2%

1,432

4.7%

8,892

4.1%

CAGR

Mainlan

dCh

ina

Taiwan

Japa

nUSA

Cana

daSE

Asia

Europe

Australasia

Others

Total

2008

�2020

4.5%

1.2%

3.1%

3.6%

4.3%

4.2%

2.8%

4.6%

3.8%

2020

�2030

5.9%

3.8%

3.4%

4.1%

5.1%

4.3%

3.3%

5.4%

4.6%

2008

�2030

5.1%

2.4%

3.2%

3.8%

4.6%

4.3%

3.0%

5.0%

4.2%

HK

IA 2

030

Prm

ary

Fore

cast

– F

na R

epor

t

270

Tabl

e 18

1– H

KIA

OD

car

go tr

affic

spl

it in

to re

gion

s –

in th

ousa

nd to

nnes

Mainlan

dCh

ina

Taiwan

Japa

nUSA

Cana

daSE

Asia

Europe

Australasia

Others

Total

Year

Cargo

yoy

Cargo

yoy

Cargo

yoy

Cargo

yoy

Cargo

yoy

Cargo

yoy

Cargo

yoy

Cargo

yoy

Cargo

yoy

2008

217

�6.0%

319

�12.3%

270

�7.5%

427

�8.8%

483

�4.6%

601

�8.0%

761.8%

421

12.0%

2,813

�5.1%

2009

190

�12.5%

286

�10.3%

256

�5.0%

378

�11.4%

456

�5.6%

520

�13.5%

74�2.5%

322

�23.5%

2,482

�11.8%

2010

208

9.5%

292

1.9%

255

�0.5%

395

4.4%

458

0.5%

563

8.3%

763.2%

346

7.5%

2,593

4.5%

2011

220

5.7%

317

8.7%

262

2.6%

415

5.1%

476

4.0%

581

3.2%

770.8%

369

6.5%

2,716

4.8%

2012

240

9.2%

342

7.9%

274

4.7%

444

7.0%

500

5.1%

620

6.6%

793.1%

402

9.0%

2,900

6.8%

2013

267

11.3%

363

6.1%

290

5.9%

470

6.0%

534

6.8%

669

7.9%

834.8%

442

9.9%

3,118

7.5%

2014

293

9.8%

382

5.1%

305

5.1%

493

4.9%

570

6.7%

716

7.0%

864.3%

481

8.9%

3,326

6.7%

2015

318

8.8%

389

1.9%

321

5.2%

516

4.5%

608

6.7%

761

6.3%

904.0%

520

8.1%

3,524

5.9%

2016

344

8.0%

387

�0.4%

336

4.8%

540

4.6%

648

6.5%

806

5.9%

933.9%

560

7.7%

3,715

5.4%

2017

370

7.6%

395

2.1%

353

5.0%

564

4.5%

688

6.2%

851

5.6%

973.8%

601

7.3%

3,920

5.5%

2018

397

7.4%

402

1.7%

370

4.7%

591

4.8%

729

5.9%

899

5.6%

101

4.0%

643

7.0%

4,132

5.4%

2019

425

7.0%

408

1.4%

388

5.0%

619

4.8%

771

5.7%

946

5.3%

105

3.8%

686

6.6%

4,348

5.2%

2020

454

6.8%

412

1.0%

408

5.1%

648

4.7%

814

5.6%

996

5.2%

109

3.9%

730

6.4%

4,571

5.1%

2021

484

6.6%

430

4.3%

426

4.4%

678

4.5%

859

5.5%

1,046

5.1%

113

3.9%

775

6.2%

4,811

5.3%

2022

516

6.4%

447

4.1%

443

4.0%

707

4.3%

906

5.5%

1,099

5.0%

117

3.9%

823

6.1%

5,057

5.1%

2023

548

6.3%

465

4.0%

457

3.3%

737

4.2%

956

5.6%

1,153

4.9%

122

3.9%

872

6.0%

5,310

5.0%

2024

581

6.1%

483

3.9%

471

3.0%

767

4.1%

1,009

5.5%

1,208

4.8%

127

3.8%

922

5.8%

5,568

4.9%

2025

616

6.0%

501

3.7%

486

3.1%

800

4.3%

1,065

5.5%

1,264

4.7%

131

3.9%

974

5.6%

5,837

4.8%

2026

650

5.5%

519

3.5%

502

3.3%

832

4.0%

1,121

5.3%

1,319

4.3%

136

3.6%

1,026

5.3%

6,105

4.6%

2027

686

5.4%

537

3.5%

519

3.4%

864

3.8%

1,179

5.1%

1,375

4.3%

141

3.6%

1,080

5.2%

6,380

4.5%

2028

721

5.2%

556

3.5%

533

2.8%

895

3.7%

1,239

5.1%

1,432

4.1%

146

3.5%

1,135

5.1%

6,657

4.3%

2029

758

5.1%

575

3.4%

549

3.0%

928

3.6%

1,300

4.9%

1,491

4.1%

151

3.5%

1,192

5.0%

6,943

4.3%

2030

795

4.9%

594

3.4%

566

3.1%

962

3.7%

1,363

4.8%

1,549

3.9%

156

3.4%

1,249

4.9%

7,234

4.2%

CAGR

Mainlan

dCh

ina

Taiwan

Japa

nUSA

Cana

daSE

Asia

Europe

Australasia

Others

Total

2008

�2020

6.4%

2.1%

3.5%

3.5%

4.4%

4.3%

3.1%

4.7%

4.1%

2020

�2030

5.8%

3.7%

3.3%

4.0%

5.3%

4.5%

3.7%

5.5%

4.7%

2008

�2030

6.1%

2.9%

3.4%

3.8%

4.8%

4.4%

3.4%

5.1%

4.4%

HK

IA 2

030

Prm

ary

Fore

cast

– F

na R

epor

t

271

Tabl

e 18

2 –

HKI

A Tr

anss

hipm

ent c

argo

traf

fic s

plit

into

reg

ions

– 2

008

to 2

030

– in

thou

sand

tonn

es

Mainlan

dCh

ina

Taiwan

Japa

nUSA

Cana

daSE

Asia

Europe

Australasia

Others

Total

Year

Cargo

yoy

Cargo

yoy

Cargo

yoy

Cargo

yoy

Cargo

yoy

Cargo

yoy

Cargo

yoy

Cargo

yoy

Cargo

yoy

2008

218

6.4%

136

�2.2%

55�2.1%

104

30.6%

111

2.6%

77�16.0%

3910

.4%

7417

.7%

814

4.6%

2009

199

�9.0%

127

�6.1%

49�11.4%

90�12.7%

109

�1.4%

8610

.7%

413.9%

774.3%

778

�4.4%

2010

188

�5.4%

109

�14.4%

514.2%

943.9%

115

5.3%

904.4%

423.3%

792.3%

767

�1.4%

2011

190

1.3%

107

�2.2%

510.6%

951.3%

117

1.2%

911.5%

431.6%

790.2%

772

0.7%

2012

201

5.6%

107

0.0%

522.2%

972.1%

121

3.8%

921.6%

444.1%

846.6%

799

3.4%

2013

216

7.3%

111

3.9%

542.6%

105

8.3%

128

5.9%

964.4%

451.9%

896.1%

845

5.7%

2014

228

5.7%

114

2.5%

551.8%

111

5.8%

134

4.8%

102

5.6%

461.4%

945.2%

884

4.6%

2015

239

4.7%

115

1.6%

562.4%

118

6.3%

140

4.0%

105

3.6%

461.1%

984.6%

918

3.9%

2016

247

3.5%

116

0.2%

572.0%

127

7.3%

145

3.7%

107

1.5%

471.4%

102

4.3%

948

3.3%

2017

254

2.8%

115

�0.6%

582.3%

135

5.9%

150

3.4%

110

2.5%

481.2%

106

4.1%

976

2.9%

2018

261

2.7%

114

�0.6%

591.3%

142

5.8%

155

3.5%

112

2.5%

481.4%

111

4.0%

1,003

2.8%

2019

268

2.6%

115

0.2%

601.9%

150

5.2%

160

3.2%

115

2.4%

491.3%

115

3.7%

1,032

2.8%

2020

284

6.0%

115

0.3%

623.6%

158

5.4%

167

4.5%

118

2.6%

502.6%

120

4.9%

1,075

4.2%

2021

304

7.1%

120

4.3%

653.7%

166

5.1%

174

4.2%

121

2.4%

512.5%

126

4.7%

1,128

4.9%

2022

326

6.9%

125

4.5%

674.1%

175

5.2%

182

4.2%

124

2.4%

532.4%

132

4.6%

1,183

4.9%

2023

348

6.8%

131

4.5%

703.6%

184

5.2%

189

4.3%

127

2.4%

542.7%

138

4.6%

1,240

4.9%

2024

370

6.5%

137

4.2%

723.8%

193

4.9%

197

4.0%

130

2.3%

552.5%

144

4.4%

1,298

4.6%

2025

393

6.3%

142

4.2%

764.4%

202

4.7%

205

4.0%

133

2.2%

572.5%

150

4.3%

1,357

4.6%

2026

417

5.9%

148

3.9%

782.6%

210

4.3%

212

3.7%

136

2.2%

582.6%

157

4.1%

1,415

4.3%

2027

441

5.8%

153

3.8%

803.3%

219

4.3%

220

3.6%

139

2.2%

602.5%

163

4.0%

1,475

4.2%

2028

465

5.5%

159

3.7%

822.7%

228

4.1%

228

3.5%

142

2.2%

612.6%

169

4.0%

1,535

4.1%

2029

490

5.3%

165

3.7%

853.5%

238

4.1%

236

3.5%

145

2.2%

632.6%

176

3.9%

1,597

4.0%

2030

514

5.1%

171

3.5%

883.0%

247

3.8%

244

3.3%

148

2.1%

652.7%

183

3.8%

1,658

3.8%

CAGR

Mainlan

dCh

ina

Taiwan

Japa

nUSA

Cana

daSE

Asia

Europe

Australasia

Others

Total

2008

�2020

2.2%

�1.4%

1.0%

3.6%

3.5%

3.6%

2.1%

4.2%

2.3%

2020

�2030

6.1%

4.0%

3.5%

4.6%

3.8%

2.3%

2.6%

4.3%

4.4%

2008

�2030

4.0%

1.0%

2.1%

4.0%

3.6%

3.0%

2.3%

4.2%

3.3%

HK

IA 2

030

Prm

ary

Fore

cast

– F

na R

epor

t

272

Tab

le 1

83 –

HKI

A O

D &

Tra

nssh

ipm

ent c

argo

traf

fic –

200

8 to

203

0 –

in th

ousa

nd to

nnes

Cargosplit

in%

OD

Tran

sshipm

ent

Excl.Tarmac

Tran

sshipm

ent

Tarm

acTran

sshipm

ent

Incl.Tarmac

Total

Year

Cargo

yoy

Cargo

yoy

Cargo

yoy

Cargo

yoy

Cargo

yoy

OD

TT

2008

2,813

�5.1%

483

7.1%

331

1.2%

814

4.6%

3,627

�3.1%

77.6%

22.4%

2009

2,482

�11.8%

462

�4.3%

316

�4.6%

778

�4.4%

3,260

�10.1%

76.1%

23.9%

2010

2,593

4.5%

453

�2.1%

315

�0.3%

767

�1.4%

3,360

3.1%

77.2%

22.8%

2011

2,716

4.8%

448

�1.0%

324

3.1%

772

0.7%

3,489

3.8%

77.9%

22.1%

2012

2,900

6.8%

455

1.7%

344

5.9%

799

3.4%

3,699

6.0%

78.4%

21.6%

2013

3,118

7.5%

477

4.8%

367

6.9%

845

5.7%

3,963

7.1%

78.7%

21.3%

2014

3,326

6.7%

495

3.7%

389

5.8%

884

4.6%

4,210

6.2%

79.0%

21.0%

2015

3,524

5.9%

510

3.0%

409

5.1%

918

3.9%

4,442

5.5%

79.3%

20.7%

2016

3,715

5.4%

522

2.3%

427

4.4%

948

3.3%

4,663

5.0%

79.7%

20.3%

2017

3,920

5.5%

527

1.0%

449

5.2%

976

2.9%

4,895

5.0%

80.1%

19.9%

2018

4,132

5.4%

537

1.9%

467

4.0%

1,003

2.8%

5,135

4.9%

80.5%

19.5%

2019

4,348

5.2%

547

1.9%

485

3.9%

1,032

2.8%

5,380

4.8%

80.8%

19.2%

2020

4,571

5.1%

565

3.3%

511

5.3%

1,075

4.2%

5,646

4.9%

81.0%

19.0%

2021

4,811

5.3%

586

3.9%

541

6.0%

1,128

4.9%

5,939

5.2%

81.0%

19.0%

2022

5,057

5.1%

609

3.9%

574

6.0%

1,183

4.9%

6,240

5.1%

81.0%

19.0%

2023

5,310

5.0%

639

4.9%

602

4.9%

1,240

4.9%

6,550

5.0%

81.1%

18.9%

2024

5,568

4.9%

668

4.6%

630

4.6%

1,298

4.6%

6,866

4.8%

81.1%

18.9%

2025

5,837

4.8%

699

4.6%

658

4.6%

1,357

4.6%

7,195

4.8%

81.1%

18.9%

2026

6,105

4.6%

729

4.3%

686

4.3%

1,415

4.3%

7,520

4.5%

81.2%

18.8%

2027

6,380

4.5%

752

3.2%

723

5.3%

1,475

4.2%

7,855

4.4%

81.2%

18.8%

2028

6,657

4.3%

775

3.0%

760

5.1%

1,535

4.1%

8,192

4.3%

81.3%

18.7%

2029

6,943

4.3%

798

3.0%

798

5.1%

1,597

4.0%

8,540

4.2%

81.3%

18.7%

2030

7,234

4.2%

821

2.8%

837

4.9%

1,658

3.8%

8,892

4.1%

81.4%

18.6%

CAGR

OD

Tran

s.Excl.Tarmac

Tran

s.Tarm

acTran

s.Incl.Tarmac

Total

2008

�2020

4.1%

1.3%

3.7%

2.3%

3.8%

2020

�2030

4.7%

3.8%

5.1%

4.4%

4.6%

2008

�2030

4.4%

2.4%

4.3%

3.3%

4.2%

HK

IA 2

030

Prm

ary

Fore

cast

– F

na R

epor

t

273

Tabl

e 18

4 –

GPRD

tota

l car

go tr

affic

spl

it in

to G

PRD

air

port

s (e

xclu

de H

KIA)

and

HKI

A –

in th

ousa

nd to

nnes

GPR

Dtotalcargo

split

in%

GPR

Dairports(exclude

HKIA)

HKIA

GPR

DYe

arCa

rgo

yoy

Cargo

yoy

Cargo

yoy

GPR

Dairports(exclude

HKIA)

HKIA

2008

1,385

3,627

5,012

27.6%

72.4%

2009

1,847

33.4%

3,258

�10.2%

5,105

1.9%

36.2%

63.8%

2010

2,118

14.7%

3,332

2.3%

5,450

6.8%

38.9%

61.1%

2011

2,389

12.8%

3,482

4.5%

5,871

7.7%

40.7%

59.3%

2012

2,661

11.4%

3,699

6.2%

6,360

8.3%

41.8%

58.2%

2013

2,903

9.1%

3,963

7.1%

6,866

7.9%

42.3%

57.7%

2014

3,153

8.6%

4,210

6.2%

7,363

7.2%

42.8%

57.2%

2015

3,418

8.4%

4,442

5.5%

7,861

6.8%

43.5%

56.5%

2016

3,681

7.7%

4,663

5.0%

8,344

6.2%

44.1%

55.9%

2017

3,967

7.8%

4,895

5.0%

8,862

6.2%

44.8%

55.2%

2018

4,279

7.9%

5,135

4.9%

9,414

6.2%

45.5%

54.5%

2019

4,605

7.6%

5,380

4.8%

9,985

6.1%

46.1%

53.9%

2020

4,942

7.3%

5,646

4.9%

10,588

6.0%

46.7%

53.3%

2021

5,282

6.9%

5,939

5.2%

11,221

6.0%

47.1%

52.9%

2022

5,631

6.6%

6,240

5.1%

11,871

5.8%

47.4%

52.6%

2023

5,995

6.5%

6,550

5.0%

12,545

5.7%

47.8%

52.2%

2024

6,377

6.4%

6,866

4.8%

13,243

5.6%

48.2%

51.8%

2025

6,774

6.2%

7,195

4.8%

13,969

5.5%

48.5%

51.5%

2026

7,182

6.0%

7,520

4.5%

14,702

5.2%

48.8%

51.2%

2027

7,608

5.9%

7,855

4.4%

15,463

5.2%

49.2%

50.8%

2028

8,041

5.7%

8,192

4.3%

16,233

5.0%

49.5%

50.5%

2029

8,485

5.5%

8,540

4.2%

17,024

4.9%

49.8%

50.2%

2030

8,941

5.4%

8,892

4.1%

17,833

4.8%

50.1%

49.9%

CAGR

GPR

Dairports(exclude

HKIA)

HKIA

GPR

D

2008

�2020

11.2%

3.8%

6.4%

2020

�2030

6.1%

4.6%

5.4%

2008

�2030

8.8%

4.2%

5.9%

HK

IA 2

030

Prm

ary

Fore

cast

– F

na R

epor

t

274

Tabl

e 18

5 –

Mai

nlan

d Ch

ina

tota

l car

go tr

affic

– in

thou

sand

tonn

es

Cargo

yoy

2008

8,834

2009

10,147

14.9%

2010

10,918

7.6%

2011

11,813

8.2%

2012

12,818

8.5%

2013

13,945

8.8%

2014

15,206

9.0%

2015

16,544

8.8%

2016

17,899

8.2%

2017

19,298

7.8%

2018

20,770

7.6%

2019

22,309

7.4%

2020

23,915

7.2%

2021

25,617

7.1%

2022

27,363

6.8%

2023

29,185

6.7%

2024

31,106

6.6%

2025

33,111

6.4%

2026

35,161

6.2%

2027

37,309

6.1%

2028

39,484

5.8%

2029

41,705

5.6%

2030

43,985

5.5%

CAGR

Mainlan

dCh

ina

2008

�2020

8.7%

2020

�2030

6.3%

2008

�2030

7.6%

HK

IA 2

030

Prm

ary

Fore

cast

– F

na R

epor

t

275

Tabl

e 18

6 –

Tota

l Chi

na c

argo

traf

fic d

istr

ibut

ion

– in

mill

ion

tonn

es

HKIA

GPR

DMLCh

ina

TotalChina

Year

Cargo

yoy

Cargo

yoy

Cargo

yoy

Cargo

yoy

2008

3,627

5,012

8,834

12,461

2009

3,258

�10.2%

5,105

1.9%

10,147

14.9%

13,407

7.6%

2010

3,332

2.3%

5,450

6.8%

10,918

7.6%

14,278

6.3%

2011

3,482

4.5%

5,871

7.7%

11,813

8.2%

15,302

7.3%

2012

3,699

6.2%

6,360

8.3%

12,818

8.6%

16,517

8.0%

2013

3,963

7.1%

6,866

7.9%

13,945

8.8%

17,908

8.4%

2014

4,210

6.2%

7,363

7.2%

15,206

9.0%

19,416

8.4%

2015

4,442

5.5%

7,861

6.8%

16,544

8.7%

20,986

8.0%

2016

4,663

5.0%

8,344

6.2%

17,899

8.2%

22,561

7.5%

2017

4,895

5.0%

8,862

6.2%

19,298

7.8%

24,193

7.2%

2018

5,135

4.9%

9,414

6.2%

20,770

7.6%

25,905

7.1%

2019

5,380

4.8%

9,985

6.1%

22,309

7.4%

27,689

6.9%

2020

5,646

4.9%

10,588

6.0%

23,915

7.2%

29,561

6.7%

2021

5,939

5.2%

11,221

6.0%

25,617

7.2%

31,555

6.8%

2022

6,240

5.1%

11,871

5.8%

27,363

6.8%

33,602

6.5%

2023

6,550

5.0%

12,545

5.7%

29,185

6.7%

35,736

6.4%

2024

6,866

4.8%

13,243

5.6%

31,106

6.6%

37,972

6.3%

2025

7,195

4.8%

13,969

5.5%

33,111

6.4%

40,305

6.1%

2026

7,520

4.5%

14,702

5.2%

35,161

6.2%

42,682

5.9%

2027

7,855

4.4%

15,463

5.2%

37,309

6.1%

45,164

5.8%

2028

8,192

4.3%

16,233

5.0%

39,484

5.8%

47,676

5.6%

2029

8,540

4.2%

17,024

4.9%

41,705

5.6%

50,245

5.4%

2030

8,892

4.1%

17,833

4.8%

43,985

5.5%

52,878

5.2%

CAGR

HKIA

GPR

DMLCh

ina

TotalChina

2008

�2020

3.8%

6.4%

8.9%

7.5%

2020

�2030

4.6%

5.4%

6.3%

6.0%

2008

�2030

4.2%

5.9%

7.7%

6.8%

HK

IA 2

030

Prm

ary

Fore

cast

– F

na R

epor

t

276

Tabl

e 18

7 –

HKI

A m

ovem

ent t

raff

ic fo

reca

st -

199

3 to

203

0 –

in th

ousa

nd m

ovem

ents

Not

e 1

993

to 2

008

are

actu

al f

gure

s 2

009

fgur

es a

re e

stm

ated

bas

ed o

n A

ugus

t yea

r-to

-dat

e tra

ffc

201

0 an

d be

yond

num

bers

are

fore

cast

Sou

rce:

IATA

est

imat

es, A

AH

K a

ctua

l tra

ffic

figur

es

Pax

Car

go

Non

-rev

enue

-

100

200

300

400

500

600

7001993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

Thousands

HK

IA 2

030

Prm

ary

Fore

cast

– F

na R

epor

t

277

Tabl

e 18

8 –

HKI

A ai

r tra

ffic

mov

emen

ts s

plit

into

seg

men

ts –

200

8 to

203

0 -

in th

ousa

nd m

ovem

ents

ATM

split

in%

Passen

ger

Cargo

Non

�Reven

ueTo

tal

Year

ATM

yoy

ATM

yoy

ATM

yoy

ATM

yoy

Pax

Cargo

Non

�Rev

2008

250

2.4%

45�1.2%

69.7%

301

2.0%

83.0%

15.1%

1.9%

2009

229

�8.3%

40�11.3%

5�13.3%

275

�8.8%

83.6%

14.7%

1.8%

2010

235

2.4%

423.5%

54.8%

282

2.6%

83.4%

14.8%

1.8%

2011

241

2.5%

433.7%

54.9%

289

2.7%

83.2%

15.0%

1.8%

2012

249

3.4%

466.7%

66.0%

301

4.0%

82.8%

15.3%

1.9%

2013

262

5.1%

507.4%

68.1%

318

5.5%

82.5%

15.6%

1.9%

2014

274

4.5%

536.3%

76.8%

333

4.8%

82.2%

15.8%

2.0%

2015

285

4.0%

565.5%

76.0%

347

4.3%

82.0%

16.0%

2.0%

2016

296

3.9%

584.7%

75.5%

361

4.0%

81.9%

16.1%

2.0%

2017

307

3.8%

614.8%

85.3%

376

4.0%

81.7%

16.2%

2.0%

2018

319

3.8%

644.6%

85.3%

390

4.0%

81.6%

16.3%

2.1%

2019

331

3.8%

674.4%

95.2%

406

3.9%

81.5%

16.4%

2.1%

2020

342

3.6%

704.8%

95.1%

421

3.8%

81.3%

16.6%

2.1%

2021

354

3.5%

735.2%

94.9%

437

3.8%

81.1%

16.8%

2.1%

2022

368

3.7%

774.9%

105.0%

455

3.9%

80.9%

17.0%

2.2%

2023

381

3.7%

814.8%

105.0%

472

3.9%

80.7%

17.1%

2.2%

2024

395

3.6%

854.6%

114.9%

490

3.8%

80.5%

17.3%

2.2%

2025

409

3.6%

884.5%

114.9%

509

3.8%

80.4%

17.4%

2.2%

2026

423

3.4%

924.3%

124.5%

527

3.5%

80.2%

17.5%

2.3%

2027

437

3.4%

964.1%

124.5%

546

3.6%

80.1%

17.6%

2.3%

2028

451

3.3%

100

4.0%

134.4%

564

3.4%

80.0%

17.7%

2.3%

2029

466

3.2%

104

3.9%

144.3%

583

3.4%

79.9%

17.8%

2.3%

2030

480

3.1%

108

3.8%

144.1%

602

3.2%

79.8%

17.9%

2.3%

CAGR

Passen

ger

Cargo

Non

�Reven

ueTo

tal

2008

�2020

2.7%

3.6%

4.0%

2.8%

2020

�2030

3.4%

4.4%

4.7%

3.6%

2008

�2030

3.0%

4.0%

4.3%

3.2%

HK

IA 2

030

Prm

ary

Fore

cast

– F

na R

epor

t

278

Tabl

e 18

9 –

HKI

A ai

r tra

ffic

mov

emen

ts fo

r pas

seng

ers

split

into

airc

raft

cod

e –

2008

to 2

030

– in

thou

sand

mov

emen

ts

ICAOAircraftC

ode

CD

EF

Total

Year

ATM

yoy

ATM

yoy

ATM

yoy

ATM

yoy

ATM

yoy

2008

850.9%

10�10.9%

154

4.3%

0250

2.4%

2009

78�8.2%

8�22.4%

143

�7.6%

0229

�8.3%

2010

802.3%

7�16.8%

147

3.4%

177

.6%

235

2.4%

2011

822.2%

6�16.8%

152

3.1%

174

.4%

241

2.5%

2012

842.0%

5�16.3%

159

4.8%

113

.8%

249

3.4%

2013

874.8%

4�10.6%

168

5.5%

237

.5%

262

5.1%

2014

925.5%

4�4.6%

175

4.2%

29.1%

274

4.5%

2015

974.6%

3�15.0%

182

3.8%

325

.0%

285

4.0%

2016

102

5.2%

3�11.7%

188

3.4%

36.7%

296

3.9%

2017

106

4.7%

30.2%

194

3.2%

318

.7%

307

3.8%

2018

111

4.7%

30.1%

200

3.3%

45.3%

319

3.8%

2019

117

4.8%

3�15.9%

207

3.3%

415

.0%

331

3.8%

2020

122

4.6%

2�15.1%

214

3.3%

44.4%

342

3.6%

2021

127

4.3%

20.1%

220

2.9%

512

.5%

354

3.5%

2022

133

4.8%

20.0%

227

3.1%

53.7%

368

3.7%

2023

139

4.6%

20.0%

234

3.0%

610

.7%

381

3.7%

2024

146

4.5%

2�9.1%

241

3.2%

63.2%

395

3.6%

2025

152

4.6%

2�17.5%

249

3.1%

69.4%

409

3.6%

2026

159

4.2%

2�0.5%

256

2.9%

72.9%

423

3.4%

2027

165

4.2%

1�33.6%

264

3.0%

78.3%

437

3.4%

2028

172

4.1%

1�1.3%

271

2.8%

73.2%

451

3.3%

2029

179

3.9%

1�1.6%

278

2.8%

83.1%

466

3.2%

2030

185

3.7%

1�2.0%

286

2.7%

83.0%

480

3.1%

CAGR

CD

EF

Total

2008

�2020

3.0%

�12.3%

2.8%

2.7%

2020

�2030

4.3%

�7.2%

2.9%

5.9%

3.4%

2008

�2030

3.6%

�10.0%

2.8%

3.0%

HK

IA 2

030

Prm

ary

Fore

cast

– F

na R

epor

t

279

Tabl

e 19

0 –

HKI

A ai

r tra

ffic

mov

emen

ts fo

r fre

ight

spl

it in

to a

ircra

ft c

ode

– 20

08 to

203

0 –

in th

ousa

nd m

ovem

ents

ICAOAircraftC

ode

CD

EF

Total

Year

ATM

yoy

ATM

yoy

ATM

yoy

ATM

yoy

ATM

yoy

2008

283

.5%

16�7.9%

27�0.5%

045

�1.2%

2009

318

.5%

12�28.9%

26�3.0%

040

�11.3%

2010

3�2.3%

121.2%

274.6%

042

3.5%

2011

31.2%

122.7%

283.3%

0249.4%

433.7%

2012

32.8%

135.7%

305.7%

1126.9%

466.7%

2013

38.3%

146.1%

327.6%

114

.1%

507.4%

2014

36.0%

145.4%

346.5%

113

.3%

536.3%

2015

33.8%

157.3%

364.6%

112

.4%

565.5%

2016

33.1%

164.2%

374.7%

211

.7%

584.7%

2017

34.9%

174.3%

394.6%

211

.9%

614.8%

2018

42.9%

174.4%

414.6%

211

.8%

644.6%

2019

42.7%

184.7%

434.1%

211

.7%

674.4%

2020

42.9%

193.5%

444.4%

327

.1%

704.8%

2021

43.5%

190.0%

475.5%

438

.6%

735.2%

2022

42.6%

190.2%

495.1%

528

.9%

774.9%

2023

43.0%

19�0.9%

514.2%

733

.3%

814.8%

2024

42.6%

19�1.1%

534.0%

826

.0%

854.6%

2025

42.1%

18�1.3%

563.9%

1022

.3%

884.5%

2026

42.7%

18�1.4%

583.6%

1218

.9%

924.3%

2027

52.8%

18�1.5%

593.4%

1416

.0%

964.1%

2028

52.4%

17�1.6%

613.3%

1614

.2%

100

4.0%

2029

52.0%

17�1.6%

633.3%

1812

.7%

104

3.9%

2030

52.4%

17�1.6%

663.2%

2011

.5%

108

3.8%

CAGR

CD

EF

Total

2008

�2020

4.5%

1.2%

4.3%

3.6%

2020

�2030

2.6%

�1.1%

4.0%

21.9%

4.4%

2008

�2030

3.6%

0.2%

4.1%

4.0%

HK

IA 2

030

Prm

ary

Fore

cast

– F

na R

epor

t

280

Tabl

e 19

1 –

HKI

A ai

r tra

ffic

mov

emen

ts fo

r non

-rev

enue

spl

it in

to a

ircra

ft c

ode

– 20

08 to

203

0 –

in th

ousa

nd m

ovem

ents

ICAOAircraftC

ode

BC

DE

Total

Year

ATM

yoy

ATM

yoy

ATM

yoy

ATM

yoy

ATM

yoy

2008

0�75.0%

415

.5%

138

.8%

1�12.2%

69.7%

2009

02892

.5%

4�4.0%

0�40.9%

1�33.4%

5�13.3%

2010

05.9%

44.7%

06.2%

14.4%

54.8%

2011

04.8%

44.7%

05.4%

15.3%

54.9%

2012

08.0%

46.0%

05.3%

16.3%

66.0%

2013

08.2%

57.8%

09.4%

18.8%

68.1%

2014

07.0%

57.1%

05.6%

16.0%

76.8%

2015

06.6%

56.2%

04.7%

15.6%

76.0%

2016

06.4%

55.9%

13.7%

14.2%

75.5%

2017

06.2%

65.5%

14.4%

14.6%

85.3%

2018

06.3%

65.6%

14.2%

14.3%

85.3%

2019

06.0%

65.5%

14.3%

14.3%

95.2%

2020

05.9%

75.4%

14.2%

14.3%

95.1%

2021

05.6%

75.1%

14.6%

24.3%

94.9%

2022

05.4%

75.3%

14.3%

24.3%

105.0%

2023

05.5%

85.3%

14.2%

24.3%

105.0%

2024

05.2%

85.1%

14.2%

24.1%

114.9%

2025

05.2%

95.1%

14.2%

24.1%

114.9%

2026

04.8%

94.7%

13.8%

23.9%

124.5%

2027

04.6%

104.7%

13.9%

24.0%

124.5%

2028

04.7%

104.6%

13.7%

23.7%

134.4%

2029

04.4%

104.4%

13.8%

23.7%

144.3%

2030

04.2%

114.2%

13.5%

23.5%

144.1%

CAGR

CD

EF

Total

2008

�2020

40.6%

5.0%

0.3%

1.3%

4.0%

2020

�2030

5.0%

4.8%

4.0%

4.0%

4.7%

2008

�2030

23.1%

4.9%

2.0%

2.5%

4.3%

HK

IA 2

030

Prm

ary

Fore

cast

– F

na R

epor

t

281

Tabl

e 19

2 –

HKI

A to

tal a

ir tr

affic

mov

emen

ts s

plit

into

airc

raft

cod

e –

2008

to 2

030

– in

thou

sand

mov

emen

ts

ICAOAircraftC

ode

Ban

dC

DE

FTo

tal

Year

ATM

yoy

ATM

yoy

ATM

yoy

ATM

yoy

ATM

yoy

2008

912.5%

27�8.4%

182

3.4%

0301

2.0%

2009

85�7.3%

20�26.7%

169

�7.1%

0275

�8.8%

2010

862.2%

19�6.0%

176

3.6%

1107.3%

282

2.6%

2011

882.3%

18�4.2%

181

3.2%

299

.5%

289

2.7%

2012

902.2%

18�1.2%

190

5.0%

242

.2%

301

4.0%

2013

955.0%

181.8%

201

5.8%

328

.1%

318

5.5%

2014

100

5.6%

193.1%

210

4.6%

310

.6%

333

4.8%

2015

105

4.7%

192.5%

219

4.0%

420

.4%

347

4.3%

2016

110

5.2%

201.3%

227

3.7%

58.4%

361

4.0%

2017

116

4.7%

203.7%

235

3.4%

516

.3%

376

4.0%

2018

121

4.7%

213.7%

243

3.5%

67.5%

390

4.0%

2019

127

4.8%

211.7%

251

3.5%

613

.8%

406

3.9%

2020

133

4.5%

221.3%

260

3.5%

712

.2%

421

3.8%

2021

138

4.3%

220.2%

269

3.4%

922

.7%

437

3.8%

2022

145

4.7%

220.3%

278

3.4%

1014

.8%

455

3.9%

2023

151

4.6%

22�0.7%

287

3.2%

1221

.9%

472

3.9%

2024

158

4.5%

21�1.7%

296

3.3%

1415

.6%

490

3.8%

2025

165

4.5%

21�2.6%

306

3.2%

1717

.0%

509

3.8%

2026

172

4.2%

20�1.2%

315

3.0%

1912

.8%

527

3.5%

2027

180

4.2%

20�3.9%

325

3.1%

2113

.4%

546

3.6%

2028

187

4.0%

19�1.3%

334

2.9%

2410

.5%

564

3.4%

2029

194

3.8%

19�1.3%

344

2.9%

269.7%

583

3.4%

2030

201

3.7%

19�1.4%

354

2.8%

289.0%

602

3.2%

CAGR

CD

EF

Total

2008

�2020

3.2%

�2.0%

3.0%

2.8%

2020

�2030

4.3%

�1.4%

3.1%

14.7%

3.6%

2008

�2030

3.7%

�1.7%

3.1%

3.2%

HK

IA 2

030

Prm

ary

Fore

cast

– F

na R

epor

t

282

Tabl

e 19

3 –

HKI

A to

tal p

asse

nger

mov

emen

ts s

plit

into

regi

ons

– 20

08 to

203

0 –

in th

ousa

nd m

ovem

ents

Mainlan

dCh

ina

Taiwan

Japa

nUSA

Cana

daSE

Asia

Europe

Australasia

Others

Total

Year

ATM

yoy

ATM

yoy

ATM

yoy

ATM

yoy

ATM

yoy

ATM

yoy

ATM

yoy

ATM

yoy

ATM

yoy

2008

80�6.3%

364.0%

1814

.6%

148.0%

503.9%

17�0.1%

1216

.1%

2413

.9%

250

2.4%

2009

70�12.0%

30�17.1%

16�12.6%

13�5.0%

50�0.9%

16�4.6%

12�4.2%

24�1.5%

229

�8.3%

2010

711.2%

314.4%

162.9%

130.1%

524.6%

16�0.4%

121.0%

252.7%

235

2.4%

2011

720.9%

323.7%

161.8%

133.9%

532.5%

162.3%

121.4%

265.5%

241

2.5%

2012

721.2%

332.3%

173.1%

143.0%

565.8%

161.0%

135.5%

287.3%

249

3.4%

2013

764.3%

355.9%

185.0%

143.6%

595.1%

171.5%

133.8%

3110

.1%

262

5.1%

2014

816.6%

364.6%

183.9%

153.4%

613.2%

172.4%

144.4%

323.9%

274

4.5%

2015

855.4%

383.3%

190.5%

151.8%

633.3%

173.1%

144.9%

345.6%

285

4.0%

2016

906.4%

392.7%

191.5%

151.6%

653.4%

183.9%

153.5%

342.3%

296

3.9%

2017

955.4%

404.0%

19�0.8%

161.8%

673.3%

193.2%

153.4%

364.1%

307

3.8%

2018

101

5.6%

423.7%

19�0.6%

161.8%

693.4%

193.9%

164.2%

372.8%

319

3.8%

2019

106

5.6%

433.9%

18�0.9%

161.8%

723.4%

203.6%

173.7%

382.9%

331

3.8%

2020

112

5.5%

442.8%

18�2.1%

172.2%

743.1%

214.1%

174.5%

392.9%

342

3.6%

2021

117

4.8%

463.4%

180.3%

171.4%

773.4%

222.5%

183.7%

402.9%

354

3.5%

2022

124

5.6%

473.2%

180.7%

171.6%

793.3%

222.6%

182.3%

413.0%

368

3.7%

2023

131

5.3%

493.0%

180.0%

172.0%

823.3%

233.0%

193.0%

433.1%

381

3.7%

2024

137

5.2%

503.4%

180.7%

181.4%

843.4%

232.5%

192.2%

442.7%

395

3.6%

2025

144

5.2%

523.5%

180.9%

181.5%

873.4%

242.4%

202.0%

452.7%

409

3.6%

2026

151

4.8%

543.1%

190.4%

181.6%

903.0%

242.4%

202.4%

462.5%

423

3.4%

2027

158

4.7%

563.3%

191.5%

181.3%

933.0%

252.2%

212.0%

483.0%

437

3.4%

2028

166

4.5%

573.3%

190.1%

191.4%

963.2%

262.2%

212.2%

492.1%

451

3.3%

2029

173

4.2%

593.5%

191.4%

191.2%

993.1%

262.0%

212.0%

502.3%

466

3.2%

2030

180

4.0%

613.3%

191.7%

191.1%

102

3.0%

271.8%

221.8%

512.2%

480

3.1%

CAGR

Mainlan

dCh

ina

Taiwan

Japa

nUSA

Cana

daSE

Asia

Europe

Australasia

Others

Total

2008

�2020

2.9%

1.8%

0.0%

1.6%

3.3%

2.0%

3.0%

4.0%

2.7%

2020

�2030

4.8%

3.3%

0.8%

1.5%

3.2%

2.4%

2.3%

2.6%

3.4%

2008

�2030

3.8%

2.5%

0.4%

1.6%

3.3%

2.1%

2.7%

3.4%

3.0%

HK

IA 2

030

Prm

ary

Fore

cast

– F

na R

epor

t

283

Tabl

e 19

4 –

HKI

A to

tal c

argo

mov

emen

ts s

plit

into

regi

ons

– 20

08 to

203

0 –

in th

ousa

nd m

ovem

ents

Mainlan

dCh

ina

Taiwan

Japa

nUSA

Cana

daSE

Asia

Europe

Australasia

Others

Total

Year

ATM

yoy

ATM

yoy

ATM

yoy

ATM

yoy

ATM

yoy

ATM

yoy

ATM

yoy

ATM

yoy

ATM

yoy

2008

610

.1%

4�2.7%

5�1.8%

11�6.7%

5�2.4%

92.4%

07.3%

5�4.1%

45�1.2%

2009

5�9.1%

40.1%

5�3.3%

9�13.0%

5�10.3%

8�12.8%

030

.3%

4�28.7%

40�11.3%

2010

53.1%

3�9.1%

5�0.3%

105.3%

4�3.8%

910

.8%

114

.7%

49.8%

423.5%

2011

65.0%

46.9%

51.9%

103.9%

53.9%

92.6%

1�2.5%

44.5%

433.7%

2012

612

.1%

49.0%

64.3%

116.1%

51.9%

106.9%

1�6.2%

58.9%

466.7%

2013

712

.2%

44.1%

64.7%

116.2%

58.1%

118.3%

1�0.4%

57.6%

507.4%

2014

87.6%

42.8%

64.0%

124.8%

69.8%

117.2%

0�8.4%

510

.1%

536.3%

2015

86.8%

4�1.1%

65.5%

134.6%

69.3%

125.9%

0�13.1%

67.6%

565.5%

2016

94.5%

4�5.0%

74.5%

134.9%

77.9%

134.9%

0�8.8%

68.9%

584.7%

2017

94.4%

4�3.1%

75.8%

144.5%

77.6%

134.9%

0�9.5%

77.2%

614.8%

2018

94.1%

4�3.5%

75.1%

144.7%

86.8%

144.8%

0�16.2%

77.7%

644.6%

2019

103.7%

4�4.4%

85.6%

154.6%

86.2%

144.6%

0�16.5%

86.9%

674.4%

2020

105.9%

3�4.0%

86.2%

164.4%

96.8%

154.3%

0�26.0%

86.8%

704.8%

2021

117.0%

43.7%

94.7%

164.4%

96.2%

164.6%

0�21.4%

96.6%

735.2%

2022

126.0%

43.3%

94.2%

174.2%

106.0%

164.4%

01.1%

96.3%

774.9%

2023

126.0%

43.6%

93.5%

184.1%

106.3%

174.3%

0�12.7%

106.1%

814.8%

2024

135.7%

42.5%

103.0%

194.0%

116.0%

184.2%

06.0%

115.9%

854.6%

2025

145.4%

42.1%

103.1%

194.1%

125.8%

194.2%

09.4%

115.8%

884.5%

2026

145.0%

42.1%

103.2%

203.7%

125.8%

193.8%

0�2.5%

125.4%

924.3%

2027

154.9%

41.7%

113.1%

213.6%

135.5%

203.8%

06.4%

125.0%

964.1%

2028

164.6%

41.7%

112.7%

213.4%

145.2%

213.6%

01.1%

135.3%

100

4.0%

2029

174.6%

41.2%

112.7%

223.4%

145.1%

223.6%

09.1%

145.1%

104

3.9%

2030

174.4%

41.4%

112.7%

233.4%

154.9%

223.5%

012

.1%

144.9%

108

3.8%

CAGR

Mainlan

dCh

ina

Taiwan

Japa

nUSA

Cana

daSE

Asia

Europe

Australasia

Others

Total

2008

�2020

4.9%

�0.8%

3.6%

3.3%

4.3%

4.2%

�6.2%

4.2%

3.6%

2020

�2030

5.4%

2.3%

3.3%

3.8%

5.7%

4.0%

0.3%

5.6%

4.4%

2008

�2030

5.1%

0.6%

3.5%

3.5%

4.9%

4.1%

�3.3%

4.8%

4.0%

HK

IA 2

030

Prm

ary

Fore

cast

– F

na R

epor

t

284

Tabl

e 19

5 –

HKI

A to

tal n

on-r

even

ue m

ovem

ents

spl

it in

to re

gion

s –

2008

to 2

030

– in

thou

sand

mov

emen

ts

Mainlan

dCh

ina

Taiwan

Japa

nUSA

Cana

daSE

Asia

Europe

Australasia

Others

Total

Year

ATM

yoy

ATM

yoy

ATM

yoy

ATM

yoy

ATM

yoy

ATM

yoy

ATM

yoy

ATM

yoy

ATM

yoy

2008

212

.6%

13.5%

15.7%

032

.9%

119

.2%

0�21.0%

00.0%

17.5%

69.7%

2009

2�13.3%

0�13.3%

0�13.3%

0�13.3%

1�13.3%

0�13.3%

0�13.3%

1�13.3%

5�13.3%

2010

24.8%

04.8%

04.8%

04.8%

14.8%

04.8%

04.8%

14.8%

54.8%

2011

24.9%

04.9%

04.9%

04.9%

14.9%

04.9%

04.9%

14.9%

54.9%

2012

26.0%

16.0%

16.0%

06.0%

16.0%

06.0%

06.0%

16.0%

66.0%

2013

38.1%

18.1%

18.1%

08.1%

18.1%

08.1%

08.1%

18.1%

68.1%

2014

36.8%

16.8%

16.8%

06.8%

16.8%

06.8%

06.8%

16.8%

76.8%

2015

36.0%

16.0%

16.0%

06.0%

16.0%

06.0%

06.0%

16.0%

76.0%

2016

35.5%

15.5%

15.5%

05.5%

15.5%

05.5%

05.5%

15.5%

75.5%

2017

35.3%

15.3%

15.3%

05.3%

15.3%

05.3%

05.3%

15.3%

85.3%

2018

35.3%

15.3%

15.3%

05.3%

15.3%

05.3%

05.3%

15.3%

85.3%

2019

45.2%

15.2%

15.2%

05.2%

15.2%

05.2%

05.2%

15.2%

95.2%

2020

45.1%

15.1%

15.1%

05.1%

15.1%

05.1%

05.1%

15.1%

95.1%

2021

44.9%

14.9%

14.9%

04.9%

14.9%

04.9%

04.9%

14.9%

94.9%

2022

45.0%

15.0%

15.0%

05.0%

25.0%

05.0%

05.0%

15.0%

105.0%

2023

45.0%

15.0%

15.0%

15.0%

25.0%

15.0%

05.0%

15.0%

105.0%

2024

54.9%

14.9%

14.9%

14.9%

24.9%

14.9%

04.9%

14.9%

114.9%

2025

54.9%

14.9%

14.9%

14.9%

24.9%

14.9%

04.9%

14.9%

114.9%

2026

54.5%

14.5%

14.5%

14.5%

24.5%

14.5%

04.5%

14.5%

124.5%

2027

54.5%

14.5%

14.5%

14.5%

24.5%

14.5%

04.5%

14.5%

124.5%

2028

64.4%

14.4%

14.4%

14.4%

24.4%

14.4%

04.4%

14.4%

134.4%

2029

64.3%

14.3%

14.3%

14.3%

24.3%

14.3%

04.3%

14.3%

144.3%

2030

64.1%

14.1%

14.1%

14.1%

24.1%

14.1%

04.1%

24.1%

144.1%

CAGR

Mainlan

dCh

ina

Taiwan

Japa

nUSA

Cana

daSE

Asia

Europe

Australasia

Others

Total

2008

�2020

4.0%

4.0%

4.0%

4.0%

4.0%

4.0%

4.0%

4.0%

4.0%

2020

�2030

4.7%

4.7%

4.7%

4.7%

4.7%

4.7%

4.7%

4.7%

4.7%

2008

�2030

4.3%

4.3%

4.3%

4.3%

4.3%

4.3%

4.3%

4.3%

4.3%

HK

IA 2

030

Prm

ary

Fore

cast

– F

na R

epor

t

285

Tabl

e 19

6 –

HKI

A to

tal m

ovem

ents

spl

it in

to re

gion

s –

2008

to 2

030

– in

thou

sand

mov

emen

ts

Mainlan

dCh

ina

Taiwan

Japa

nUSA

Cana

daSE

Asia

Europe

Australasia

Others

Total

Year

ATM

yoy

ATM

yoy

ATM

yoy

ATM

yoy

ATM

yoy

ATM

yoy

ATM

yoy

ATM

yoy

ATM

yoy

2008

88�4.9%

403.3%

2410

.2%

251.3%

563.5%

260.5%

1315

.6%

3010

.3%

301

2.0%

2009

77�11.8%

34�15.4%

21�10.5%

22�8.6%

55�1.9%

24�7.6%

12�3.2%

28�6.3%

275

�8.8%

2010

791.4%

352.9%

222.2%

232.3%

573.9%

253.4%

121.6%

293.6%

282

2.6%

2011

801.3%

364.0%

221.9%

243.9%

592.6%

262.4%

131.2%

315.4%

289

2.7%

2012

812.1%

373.0%

233.4%

254.4%

625.5%

263.2%

135.0%

337.5%

301

4.0%

2013

855.0%

395.8%

245.0%

264.7%

655.3%

274.1%

143.7%

369.7%

318

5.5%

2014

916.7%

414.4%

254.0%

274.0%

683.8%

294.3%

144.0%

384.8%

333

4.8%

2015

965.5%

422.9%

261.8%

283.1%

703.8%

304.2%

154.3%

405.9%

347

4.3%

2016

102

6.2%

431.9%

262.3%

293.1%

733.8%

314.3%

153.2%

423.3%

361

4.0%

2017

108

5.4%

453.4%

261.0%

303.1%

763.7%

323.9%

163.2%

434.6%

376

4.0%

2018

113

5.5%

463.1%

271.0%

313.2%

783.7%

344.3%

163.8%

453.6%

390

4.0%

2019

120

5.5%

473.2%

271.0%

323.1%

813.7%

354.0%

173.3%

473.6%

406

3.9%

2020

126

5.5%

492.3%

270.5%

333.3%

843.5%

374.2%

184.0%

483.6%

421

3.8%

2021

132

5.0%

503.4%

281.8%

342.9%

873.7%

383.4%

183.4%

503.6%

437

3.8%

2022

140

5.6%

523.3%

281.9%

352.9%

903.6%

393.4%

192.3%

523.6%

455

3.9%

2023

147

5.4%

533.1%

281.3%

363.1%

943.7%

403.6%

192.9%

543.6%

472

3.9%

2024

155

5.2%

553.4%

291.6%

372.7%

973.7%

423.3%

202.2%

563.4%

490

3.8%

2025

163

5.2%

573.4%

291.8%

382.8%

101

3.7%

433.2%

202.1%

573.3%

509

3.8%

2026

171

4.8%

593.1%

301.5%

392.7%

104

3.4%

443.0%

212.4%

593.1%

527

3.5%

2027

179

4.7%

613.2%

312.2%

402.5%

108

3.3%

462.9%

212.1%

613.4%

546

3.6%

2028

187

4.5%

633.2%

311.2%

412.5%

111

3.5%

472.9%

222.2%

632.8%

564

3.4%

2029

195

4.3%

653.3%

322.0%

422.4%

115

3.3%

482.7%

222.0%

652.9%

583

3.4%

2030

203

4.0%

673.2%

322.1%

432.4%

119

3.3%

502.6%

221.9%

672.8%

602

3.2%

CAGR

Mainlan

dCh

ina

Taiwan

Japa

nUSA

Cana

daSE

Asia

Europe

Australasia

Others

Total

2008

�2020

3.1%

1.6%

1.1%

2.4%

3.4%

2.8%

2.8%

4.0%

2.8%

2020

�2030

4.9%

3.3%

1.7%

2.7%

3.5%

3.1%

2.4%

3.3%

3.6%

2008

�2030

3.9%

2.4%

1.4%

2.5%

3.5%

3.0%

2.6%

3.7%

3.2%


19.10 Adjustments to the traffic forecast

19.10.1 Direct Links

-

200

400

600

800

1,000

1,200

1993

1998

2003

2008

2013

2018

2023

2028

Thou

sand

s

-

2

4

6

8

10

12

1993

1998

2003

2008

2013

2018

2023

2028

Mill

ions

Source: IATA estimates, AAHK actual data

Total passenger traffic to Taiwan with and without the Direct Links – 1993 to 2030

Total cargo traffic to Taiwan with and without the Direct Links – 1993 to 2030

Source: IATA estimates, AAHK actual data

2021 2013

With Direct Links

Without Direct Links

With Direct Links

Without Direct Links

HK

IA 2

030

Prm

ary

Fore

cast

– F

na R

epor

t

287

Tabl

e 19

7 –

Dire

ct li

nk Im

pact

on

OD

pas

seng

ers

traf

fic –

200

8 to

203

0 –

in th

ousa

nds

pass

enge

rs

HKIA<�>Taiwan

ODba

selin

ebe

fore

DL

PRD<�>Taiwan

baselin

eHKIAmarket

shareon

PRD

PRD<�>Taiwan

usingHKIA

HKS

AR<�>

Taiwan

baselin

eusingHKIA

Add

itiona

ltraffic

Taiwan

<�>PR

D

Add

itiona

ltraffic

Taiwan

<�>PR

DusingHKIA

HKIA<�>Taiwan

ODBa

selin

eafter

DL

Net

Variation

onHKIA<�>Taiwan

OD

Year

AB

CD=B

*CE

FG=F*C

H=D

+E+G

I=H�A

2008

4,972

3,167

75%

2,375

2,597

��

4,972

�2009

4,324

2,754

62%

1,715

2,259

343

214

4,188

�137

2010

4,292

2,734

58%

1,586

2,242

661

384

4,211

�81

2011

4,176

2,660

55%

1,463

2,181

1,031

567

4,211

352012

4,103

2,613

53%

1,385

2,143

1,322

700

4,228

126

2013

4,293

2,734

51%

1,394

2,242

1,625

829

4,465

173

2014

4,392

2,797

49%

1,371

2,294

1,928

945

4,609

218

2015

4,486

2,857

47%

1,343

2,343

2,233

1,049

4,735

249

2016

4,612

2,937

44%

1,292

2,409

2,540

1,117

4,819

207

2017

4,704

2,996

43%

1,288

2,457

2,854

1,227

4,973

268

2018

4,832

3,077

42%

1,293

2,524

3,066

1,288

5,104

272

2019

4,973

3,167

41%

1,305

2,597

3,273

1,348

5,250

278

2020

5,069

3,229

40%

1,286

2,648

3,600

1,434

5,368

298

2021

5,203

3,314

39%

1,282

2,718

3,927

1,520

5,520

316

2022

5,331

3,395

38%

1,281

2,784

4,255

1,606

5,672

341

2023

5,421

3,453

37%

1,276

2,832

4,582

1,693

5,801

379

2024

5,547

3,533

36%

1,282

2,898

4,909

1,782

5,962

414

2025

5,679

3,617

36%

1,293

2,966

5,236

1,872

6,131

452

2026

5,752

3,664

35%

1,293

3,005

5,564

1,963

6,261

508

2027

5,853

3,728

35%

1,301

3,057

5,891

2,056

6,415

562

2028

5,947

3,788

35%

1,310

3,106

6,218

2,151

6,567

620

2029

6,047

3,851

34%

1,322

3,159

6,545

2,247

6,727

680

2030

6,158

3,922

33%

1,294

3,217

7,200

2,376

6,887

729

Not

e: T

he n

et v

arat

on o

n pa

ssen

ger O

D s

mea

sure

d ag

ans

t a h

ypot

hetc

a p

roje

cton

ass

umng

ther

e s

no “d

rect

nk

”

HK

IA 2

030

Prm

ary

Fore

cast

– F

na R

epor

t

288

Tabl

e 19

8 –

Dire

ct li

nk Im

pact

on

TT p

asse

nger

s tr

affic

– 2

008

to 2

030

– in

thou

sand

s pa

ssen

gers

Not

e: T

he n

et v

arat

on o

n pa

ssen

ger T

T s

mea

sure

d ag

ans

t a h

ypot

hetc

a p

roje

cton

ass

umng

ther

e s

no “d

rect

nk

”

HKIA<�>

Taiwan

TTBa

selin

ebe

fore

DL

PRCexcl.P

RD<�>Taiwan

baselin

e

Share

conn

ecting

toPR

C<�>

Taiwan

Shareof

HKIA

toconn

ecting

betw

eenPR

Can

dTaiwan

Shareof

HKIA

tototalPRC

excl.P

RD<�>

Taiwan

PRCexcl.P

RD<�>Taiwan

usingHKIA

Other

region

sou

tsideof

PRC<�>

Taiwan

using

HKIAba

selin

e

Add

itiona

ltraffic

PRC

excl.P

RD<�>

Taiwan

Add

itiona

ltraffic

PRC

excl.P

RD<�>

Taiwan

using

HKIA

HKIA<�>

Taiwan

TTBa

selin

eafter

DL

Net

variation

onHKIA<�>

Taiwan

TT(cou

nted

once)

Year

AB

CD

E=C*

DF=B*

EG

HI=H*E

J=F+G+I

K=J�A

2008

3,317

3,503

100%

70%

70%

2,452

769

��

3,317

�2009

3,183

3,461

55%

67%

37%

1,283

760

1,367

507

2,550

�633

2010

3,259

3,544

51%

65%

33%

1,170

778

2,226

735

2,682

�576

2011

3,403

3,701

47%

62%

30%

1,092

812

3,018

891

2,796

�607

2012

3,375

3,671

44%

60%

27%

973

806

3,829

1,015

2,794

�581

2013

3,420

3,719

42%

57%

24%

889

816

4,682

1,119

2,825

�595

2014

3,513

3,820

39%

55%

22%

827

839

5,538

1,198

2,864

�649

2015

3,573

3,886

37%

52%

19%

748

853

6,394

1,230

2,831

�742

2016

3,614

3,931

35%

50%

18%

689

863

7,075

1,241

2,793

�821

2017

3,725

4,051

34%

47%

16%

649

889

7,802

1,250

2,788

�937

2018

3,796

4,128

33%

45%

15%

605

906

8,654

1,268

2,779

�1,017

2019

3,842

4,178

32%

42%

13%

560

917

9,665

1,296

2,774

�1,068

2020

3,925

4,268

31%

42%

13%

553

937

10,095

1,308

2,798

�1,127

2021

4,021

4,373

30%

41%

13%

550

960

10,570

1,328

2,838

�1,183

2022

4,068

4,424

30%

41%

12%

542

971

11,078

1,356

2,869

�1,200

2023

4,111

4,471

29%

41%

12%

535

981

11,628

1,391

2,907

�1,204

2024

4,151

4,514

29%

41%

12%

529

991

12,215

1,433

2,953

�1,198

2025

4,180

4,546

28%

41%

12%

524

998

12,835

1,480

3,002

�1,178

2026

4,229

4,599

28%

41%

11%

523

1,010

13,487

1,533

3,065

�1,164

2027

4,246

4,617

28%

40%

11%

518

1,014

14,161

1,589

3,121

�1,125

2028

4,264

4,637

27%

40%

11%

515

1,018

14,858

1,649

3,182

�1,082

2029

4,320

4,698

27%

40%

11%

517

1,031

15,576

1,713

3,261

�1,059

2030

4,358

4,740

26%

40%

10%

493

1,041

17,227

1,792

3,325

�1,033

HK

IA 2

030

Prm

ary

Fore

cast

– F

na R

epor

t

289

Tabl

e 19

9 –

Dire

ct li

nk Im

pact

on

OD

car

go tr

affic

– 2

008

to 2

030

– in

thou

sand

tonn

es

HKIA<�>Taiwan

ODBa

selin

ebe

fore

DL

PRD<�>Taiwan

baselin

eHKIAmarket

shareon

PRD

PRD<�>Taiwan

usingHKIA

HKS

AR<�>Taiwan

baselin

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itiona

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<�>PR

D

Add

itiona

ltraffic

Taiwan

<�>PR

DusingHKIA

HKIA<�>Taiwan

ODBa

selin

eafter

DL

Net

Variation

onHKIA<�>Taiwan

OD

Year

AB

CD=B

*CE

FG=C

*FH=D

+E+G

I=H�A

2008

319

295

86%

255

640

0319

02009

286

265

85%

226

570

0283

�32010

302

279

82%

229

603

2292

�10

2011

335

310

79%

245

676

5317

�18

2012

368

340

76%

258

7414

10342

�25

2013

396

367

73%

268

7922

16363

�33

2014

424

393

70%

275

8531

22382

�43

2015

452

418

65%

272

9042

27389

�63

2016

478

442

60%

265

9644

27387

�90

2017

504

466

58%

268

101

4727

395

�108

2018

529

490

55%

269

106

4927

402

�127

2019

555

514

53%

270

111

5127

408

�148

2020

581

538

50%

269

116

5427

412

�169

2021

606

561

50%

280

121

5628

430

�176

2022

631

584

50%

292

126

5829

447

�184

2023

656

607

50%

304

131

6130

465

�191

2024

682

631

50%

315

136

6332

483

�198

2025

707

654

50%

327

141

6533

501

�206

2026

732

677

50%

339

146

6834

519

�213

2027

758

701

50%

351

152

7035

537

�221

2028

784

726

50%

363

157

7336

556

�228

2029

811

750

50%

375

162

7538

575

�236

2030

838

776

50%

388

168

7839

594

�244

Not

e: T

he n

et v

arat

on o

n ca

rgo

OD

s m

easu

red

aga

nst a

hyp

othe

tca

pro

ject

on a

ssum

ng th

ere

s no

“dre

ct

nk”

HK

IA 2

030

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ary

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cast

– F

na R

epor

t

290

Tabl

e 20

0 –

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ct L

ink

Impa

ct o

n Tr

anss

hipm

ent c

argo

traf

fic –

200

8 to

203

0 –

in th

ousa

nd to

nnes

Not

e: T

he n

et v

arat

on o

n ca

rgo

trans

shpm

ent

s m

easu

red

aga

nst a

hyp

othe

tca

pro

ject

on a

ssum

ng th

ere

s no

“dre

ct

nk”

HKIA<�>

Taiwan

TTBa

selin

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DL

PRCexcl.P

RD<�>Taiwan

baselin

e

Share

conn

ecting

toPR

C<�>

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toconn

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betw

eenPR

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HKIA

tototalPRC

excl.P

RD<�>

Taiwan

PRCexcl.P

RD<�>Taiwan

usingHKIA

Other

region

sou

tsideof

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Taiwan

using

HKIAba

selin

e

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itiona

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PRC

excl.P

RD<�>

Taiwan

Add

itiona

ltraffic

PRC

excl.P

RD<�>

Taiwan

using

HKIA

HKIA<�>

Taiwan

TTBa

selin

eafter

DL

Net

variation

onHKIA<�>

Taiwan

TT(cou

nted

once)

Year

AB

CD

E=C*

DF=B*

EG

HI=H*E

J=F+G+I

K=J�A

2008

136

155

100%

61%

61%

9541

00

136

02009

127

145

70%

62%

43%

6338

00

101

�26

2010

148

169

64%

59%

38%

6444

1,688

1109

�39

2011

153

175

60%

57%

34%

6046

3,500

1107

�47

2012

163

186

55%

54%

30%

5549

7,458

2107

�57

2013

177

202

53%

51%

27%

5553

12,113

3111

�66

2014

189

216

50%

49%

24%

5357

17,264

4114

�75

2015

200

229

48%

46%

22%

5060

22,878

5115

�85

2016

211

241

45%

44%

20%

4763

24,147

5116

�96

2017

222

254

42%

41%

17%

4467

25,411

4115

�107

2018

234

267

39%

38%

15%

4070

26,730

4114

�120

2019

245

280

37%

36%

13%

3774

28,033

4115

�131

2020

257

294

35%

33%

12%

3477

29,407

3115

�143

2021

269

308

35%

33%

12%

3681

30,757

4120

�149

2022

281

322

35%

33%

12%

3784

32,154

4125

�156

2023

294

336

35%

33%

12%

3988

33,605

4131

�163

2024

307

350

35%

33%

12%

4092

35,031

4137

�170

2025

319

365

35%

33%

12%

4296

36,494

4142

�177

2026

332

379

35%

33%

12%

44100

37,916

4148

�184

2027

345

394

35%

33%

12%

45103

39,366

5153

�191

2028

357

408

35%

33%

12%

47107

40,818

5159

�198

2029

370

423

35%

33%

12%

49111

42,309

5165

�205

2030

383

438

35%

33%

12%

51115

43,787

5171

�213


19.10.2 High Speed Train

Projected Rail travel time in 2020 against air travel time from Hong Kong – in hours

Source: IATA estimates, Hong Kong Transport and Housing Bureau; Air travel time include an additional 3hr dwell and access time on top of the flight duration

0

2

4

6

8

10

12

14

Shanto

u

Changs

ha

Nanning

Xiamen

Wuhan

Nanchan

g

Fuzho

u

Zhengz

hou

Hangzh

ou

Shang

hai

Xi’an

Kunming

Beijing

Nanjing

Chongq

ing

Chengd

u

Train Air

Train faster than Plane

Plane faster than Train

Trav

el ti

me

(hou

rs)

Train non competitive

Rail market share from Hong Kong to the main cities served in Mainland China – OD traffic

0%

25%

50%

75%

100%

1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 5.5 6.0 6.5 7.0 7.5 8.0

Shantou

Wuhan, Nanchang, Fuzhou

Shan

ghai

Changsha, Nanning, Xiamen

Zhengzhou, Hangzhou

Rail travel time (hours)

HST

mar

ket s

hare

of t

otal

(Rai

l+A

ir) t

raffi

c (in

%)

Source: IATA estimates, Hong KongTransport and Housing Bureau,

Current observation � empirical correlation

Extrapolation of the empirical observation to longer travel

times

Beijing, Kunming, Chengdu, Xian, Chongqing, Nanjing >8H

� No rail market share (over 7.5 hours rail does not compete any more with air; the air and rail markets are

dissociated)


�

�

� � �

� �

�

�

�

�

�

�

� � �

�

�

�

�




HK

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030

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cast

– F

na R

epor

t

294

COMMERCIALLYSENSITIVE

HK

IA 2

030

Prm

ary

Fore

cast

– F

na R

epor

t

295

19.1

0.4

Impa

ct o

f airp

ort /

airl

ine

com

petit

ion

on H

KIA

car

go tr

anss

hipm

ent t

raffi

c

Tabl

e 20

3 –

Com

petit

ion

Impa

ct o

n Tr

anss

hipm

ent c

argo

traf

fic s

plit

into

regi

ons

– 20

08 to

203

0 –

in th

ousa

nd to

nnes

Mainlan

dCh

ina

Taiwan

Japa

nUSA

Cana

daSE

Asia

Europe

Australasia

Others

Total

Year

Cargo

Cargo

Cargo

Cargo

Cargo

Cargo

Cargo

Cargo

Cargo

2008

00

00

00

00

02009

00

00

00

00

02010

�50

�10

�10

0�1

�92011

�10

0�3

0�2

0�1

�2�18

2012

�16

0�4

0�4

0�1

�3�28

2013

�24

0�6

0�5

0�2

�4�41

2014

�33

0�8

0�7

0�2

�5�55

2015

�42

0�10

0�9

0�3

�6�70

2016

�52

0�12

0�11

0�4

�8�87

2017

�64

0�15

0�13

0�4

�9�105

2018

�76

0�17

0�15

0�5

�11

�124

2019

�89

0�20

0�18

0�5

�13

�145

2020

�95

0�21

0�19

0�6

�13

�153

2021

�101

0�22

0�19

0�6

�14

�162

2022

�109

0�22

0�20

0�6

�15

�172

2023

�116

0�23

0�21

0�6

�15

�182

2024

�123

0�24

0�22

0�6

�16

�192

2025

�131

0�25

0�23

0�6

�17

�202

2026

�139

0�26

0�24

0�6

�17

�212

2027

�147

0�27

0�24

0�7

�18

�223

2028

�155

0�27

0�25

0�7

�19

�233

2029

�163

0�28

0�26

0�7

�20

�244

2030

�171

0�29

0�27

0�7

�20

�255


19.11 References

ViewsWire Hong Kong, Economic Intelligence Unit, January 14th 2010 The Economics of Taiwan’s Three Direct Links With Mainland China, CHEN Chien-Hsun, EAI Background Brief No. 415, 27 November 2008 Connected Transaction, Establishment of Cargo Airline Joint Venture, Cathay Pacific Airways Limited, 8 April 2010 Cathay Pacific Investor Relations Meeting, Presentation Support, 11 December 2009

1 Interview with carrier 2 http://www.hkpri.org.hk/bulletin/7/research-update.html 3 http://www.hiebs.hku.hk/working_paper_updates/pdf/wp1084.pdf 4 http://www.hktdc.com/info/mi/etihk/en/ 5http://www.censtatd.gov.hk/hong_kong_statistics/statistical_tables/index.jsp?charsetID=1&tableID=035 6http://www.censtatd.gov.hk/hong_kong_statistics/statistical_tables/index.jsp?charsetID=1&tableID=081 7 http://www.hkeconomy.gov.hk/en/trends/index.htm#2 8 http://www.tourism.gov.hk/english/statistics/statistics_research.html 9 http://english.peopledaily.com.cn/90001/90778/90861/6795784.html 10 http://www.chinadaily.com.cn/hkedition/2009-10/10/content_8773330.htm 11 China Statistical Yearbook 2008 12 Guangdong Statistical Yearbook 2009 13 Guangdong Statistical Yearbook 2009 14 http://www.at0086.com/ShenzhenShenzhen/ 15 http://www.hktdc.com/info/mi/a/mpcn/en/1X06BW0C/1/Profiles-Of-China-Provinces-Cities-And-Industrial-Parks/YRD-Profile.htm 16 http://www.hktdc.com/info/mi/a/mpcn/en/1X06BW0C/1/Profiles-Of-China-Provinces-Cities-And-Industrial-Parks/YRD-Profile.htm 17 http://www.hktdc.com/info/mi/a/mpcn/en/1X06BVOR/1/Profiles-Of-China-Provinces-Cities-And-Industrial-Parks/SHANGHAI-MUNICIPALITY.htm 18 http://www.hktdc.com/info/mi/a/mpcn/en/1X06BVOR/1/Profiles-Of-China-Provinces-Cities-And-Industrial-Parks/SHANGHAI-MUNICIPALITY.htm 19 http://english.peopledaily.com.cn/90001/90776/90882/6656261.html 20 China Statistical Yearbook 2008 21 China Statistical Yearbook 2008 22http://econ.worldbank.org/WBSITE/EXTERNAL/EXTDEC/0,,contentMDK:22122200~pagePK:64165401~piPK:64165026~theSitePK:469372,00.html


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