HK$7 million payouts on offer to airlines as Hong Kong airport bids to fill new runway slots
- Cash carrot part of two-pronged plan to encourage airlines to add new destinations and boost number of long-haul flights
Hong Kong’s Airport Authority has offered a subsidy carrot of up to HK$7 million (US$897,000) a year to airlines that launch a new daily route as part of a bid to fill up extra capacity created by a third runway.
Chapman Fong Shui-man, the authority’s deputy director of operations, on Tuesday explained the incentive was part of a two-pronged plan designed to encourage airlines to add new destinations and increase the number of long-haul routes as the airport prepared to open its three-runway system before the end of the year.
“We will accept as many flights and routes as possible to fulfil the target of returning to pre-pandemic passenger traffic by the end of the year,” he said.
Fong said five airlines had added a total of eight destinations since the new routes scheme launched on June 1.
The carriers are HK Express, the budget wing of city flag carrier Cathay Pacific Airways, Taiwan’s Starlux Airlines, China Southern Airlines, Hong Kong Airlines and Jin Air of South Korea.
The new routes served are to Kashgar, Xining and Harbin in mainland China, Taipei and Taichung in Taiwan, Seoul in South Korea, Vietnam’s Da Nang, and the city of Clark in the Philippines.
The authority is working to take advantage of the new capacity that will come on stream from the HK$141.5 billion three-runway system.
The 650-hectare (1,606 acre) project is expected in time to boost the airport’s capacity by 50 per cent to 120 million passengers and 10 million tonnes of cargo a year.
“The new facilities will be operated gradually according to demand,” Fong said. “When the new runway is operating, there will be more time slots available for airlines to decide whether they run flights to Hong Kong.”
The subsidy scheme for new routes will last two years and the long-haul route programme will run for three years.
Airlines involved in the new routes element will be given cash bonuses based on the weight of the aircraft.
Airlines will be eligible for two potential rewards. Under the first, they can receive between HK$10,000 and HK$20,000 for every tonne of an aircraft’s maximum take-off weight during the first year, which will be halved in the second year.
“If a flight operates every day, each new route is estimated to be rewarded with HK$6 million to HK$7 million a year, depending on the flight model,” Fong said. “There is no upper limit on the total amount of incentives that can be earned.”
Under the second incentive, airlines that take part in a three-year scheme to boost the number of long-haul carriers that create or expand routes, particularly to Europe and the United States, will be entitled to the same amount for every take-off and landing in the first year.
The cash incentives will be reduced to 75 per cent in the second year and to half in the final year.
“The slight lagging behind of long-haul flights is the main consideration for running the scheme longer than for those who establish new routes,” Fong said.
An airline will have to run the new routes, destinations or extra flight frequencies for a minimum of 20 consecutive weeks a year to qualify for incentives.
Short-haul flights are expected to get back to 100 per cent of pre-pandemic capacity or even surpass it based on the latest estimates for this year’s winter season.
But Fong said long-haul flights were predicted to reach 90 per cent of pre-pandemic levels.
“During the pandemic, many aviation maintenance companies have closed down,” he added.
“There has been a loss of aviation personnel, which limited the capacity of airlines to expand their flight operations and made them more cautious about the profitability of routes.”
