Hong Kong’s aviation sector is recovering “faster than expected,” and future air cargo growth is expected to get a boost from the Guangdong-Hong Kong-Macau Greater Bay Area, an integrated economic area consisting of nine cities and two special administrative regions in southern China with a consumer market of approximately 7.52 million people.
Willie Walsh, director general of the International Air Transport Association (IATA), said that despite its “unique challenges,” including the absence of a domestic market, Hong Kong’s aviation sector has already made significant progress towards recovery from the disruptions brought by the COVID-19 pandemic.
“I’ve been impressed by the rate of recovery [in Hong Kong],” he told a press briefing at the World Cargo Symposium (WCS) 2024. “I think it is clear that Hong Kong will be back to the 2019 level by the end of this year, which is much faster than we had anticipated.”
Walsh added that he anticipates Hong Kong International Airport (HKIA) will continue to be the top airport in terms of air cargo as recovery is also underway in terms of network and demand for passenger services.
“I think on the cargo side, it’s clear that Hong Kong will continue to be the Number one cargo airport in the world,” the IATA director-general said. He credited Hong Kong International Airport and the city’s flag carrier, Cathay Pacific, for their rebuilding efforts and for continuing to shore up the hub’s status.
“There’s still work to be done, obviously, but I think it is certainly well underway to recovery,” Walsh said. “I think the issue now is to make sure that the network recovers to where it was, not just for Cathay Pacific but also foreign carriers in terms of adding capacity back.”
Walsh nonetheless noted current challenges to the aviation industry, which continue to impact worldwide recovery post-pandemic, including supply chain issues caused by ongoing geopolitical tensions: the wars between Russia and Ukraine, Israel and Hamas, and current tensions in the Red Sea.
“I think the challenge there has become more than before,” he told the media briefing. “Supply chain issues are impacting aircraft, so widebody aircraft are not being delivered at the pace we would have liked to see.”
“But I think [for Hong Kong], it is well underway now to recover and would recover much faster than I believed was possible when I saw where we were in 2022,” Walsh said.
The IATA director-general’s comments follow a statement in April 2022 that Hong Kong, one of the world’s busiest cargo hubs, was “effectively off the map” as an international aviation gateway as the city pursued harsh Covid restrictions, including flight curbs and lengthy quarantines not just for passengers but also for aircrew.
Back then, Walsh said that it was “going to be difficult for Hong Kong to recover” and it would “lag significantly behind” the recovery elsewhere.
“You have to remember, in 2022, Hong Kong was, from a passenger point of view, affected to almost zero, and to rebuild from there, I think, as I said, you need to recognize the work that Cathay Pacific and the Airport Authority have done together,” he said. “If I was wrong, I’m pleased to be wrong.”
Cissy Chan, executive director of commercial at Airport Authority Hong Kong (AAHK), said that in terms of cargo, Hong Kong International Airport achieved 4.3 million tonnes in 2023 – representing a 3% growth versus 2022.
Chan noted that in the fourth quarter of last year, AAHK saw a 16% growth compared to the period before that, and in the January to February 2024 period, air freight volumes grew 20% year-on-year.
“Of course, a year ago, the basis might be low, but I would say that overall, we are very optimistic that we will continue to experience growth this year,” the AAHK executive director told the media briefing.
Greater Bay Area cited for future growth
Tom Owen, director of cargo at Cathay Cargo, pointed to growth opportunities for aviation in the Greater Bay Area.
“I think the future development, as well as the outbound e-commerce, is phenomenal,” Owen said, adding that for inbound trade, Hong Kong is “45-50 kilometres” away from 86 million consumers living in a “very developing and very rapidly emerging internal economy.”
“I think the air cargo opportunities for inbound (cargo) is around perishables. Consumer goods can also be phenomenal, and we’re all beginning to see that,” he said. “I think we’re all very optimistic, and Hong Kong is blessed by its location, connectivity, and commitment to working within the GBA Framework to be successful.”
Owen told the press briefing that Hong Kong is already the premier gateway for goods moving in and out of the GBA, but over the last three or four years, some of the infrastructure developments in and around Hong Kong and the Greater Bay Area have magnified this.
The Greater Bay Area is a Chinese Government initiative to promote closer cooperation and economic integration between 11 cities of the Pearl River Delta, of which Hong Kong, Macau, Shenzhen and Guangzhou are seen as core engines.
The Greater Bay Area is envisioned as the Silicon Valley of the East and Wall Street within the same city cluster, comparable to the San Francisco Bay Area, the Greater Tokyo Area or the New York Metropolitan Area.
Colliers’ research said the Greater Bay Area’s economy is expected to reach US$3.6 trillion by 2030.
Meanwhile, the IATA director-general expressed optimism for continued growth in the air cargo industry in the Asia Pacific region, citing its growth trajectory over the years.
“If you are an air cargo operator in this region, you have to be optimistic,” Walsh said, citing cargo data on the distribution of air traffic from the 1990s when Asia Pacific carriers carried 29% of the global volume. Back then, European airlines carried almost 33%, he said, while Middle East carriers’ share was at 3.6%.
“In 2019, Asia Pacific carriers are now at 34.5%, leading the pack by quite a distance. Europe had fallen to 23.6% in its share of cargo traffic, and the Middle East to 13%—almost a 10-point rise,” Walsh told the media briefing.
“Asia Pacific, based in this region, has always been the leader and will continue to be the leader—and if you look at the opportunities for growth, this Greater Bay Area, I think, is a fantastic opportunity,” he said.
“If I look at markets around the world, I think this market is the one that excites me more on the cargo side than anywhere else,” Walsh added.
By Charlee C. Delavin
Asia Cargo News | Hong Kong