What is the Cost of Hong Kong’s Airport Expansion to Airlines and Passengers?
Photo courtesy of the Hong Kong Tourism Board
Hong Kong’s International Airport has begun to outgrow its current size, and the airport is about to begin construction of a third runway. It will be paid for by hitting airlines with increased landing fees, along with a new “airport construction fee” for each passenger traveling from, to, or through the airport.
When landlocked airports look to stretch their footprint and add a new runway, it often involves a political battle that lasts years. It takes the costly buyout of all properties on the plot, and/or the invocation of imminent domain laws. London has been struggling to expand Heathrow Airport and build a third runway for years. Other options include expanding Gatwick Airport, or even building an all-new airport.
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However, at Hong Kong, the whole airport is built on land that has been reclaimed from the sea — so all they have to do is expand the artificial island. It’s not cheap, but it doesn’t involve evicting existing homes or businesses. In order to pay for this expansion, the airport will impose new fees to all tickets issued on or after August 1st of this year. Fees will start at an additional $11.60(US) for short haul flights in economy class to $20.61(US) if you’re flying a short flight in Business or First Class. For long haul flights in economy, you’ll be paying $20.61(US) and $23.19(US) in Business and First Class. The fee will remain in place until all construction debts are paid off.
But that’s not all — airlines will also foot the bill for a portion of the construction cost, which will be imposed in the form of increased landing fees. Landing fees can vary greatly from airport to airport, and are typically charged based on the weight of the plane. The more congested the airport is, the higher the landing fee can be. The South China Morning Post reports that Hong Kong landing fees may increase by as much as 27 percent by September, 2018.
Hong Kong is the home of Cathay Pacific Airways, one of the highest-rated airlines in the world. This carrier also has a very large air cargo operation. For an Airbus A320 to land at Hong Kong, the average landing fee is about $756 (US) but that will rise to $959 (US) by 2018. For the massive A380, the world’s largest passenger jet, the fee will go from $4,790 right now to $5,697 US once the new fees are implemented.
As a result of landing fees being increased for airlines, there’s a good chance airlines will pass that increase along to passengers in the form of increased air fares.
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The third runway idea was hatched in 2008, and construction cost is an estimated 141 billion Hong Kong dollars, equaling $18.1 Billion US dollars. In addition to the runway itself, a new five million square foot terminal will be built. The Automated People Mover system will also be expanded, and a new high-speed baggage handling system is slated to be installed. The reclamation of land will add 2.5 square miles to Hong Kong’s territory. The project is expected to be completed in 2023.
More by Paul Thompson
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