HONG KONG 2004 - Transport

Hong Kong is a major international and regional aviation centre. Hong Kong International Airport (HKIA) is one of the busiest airports in the world. At the end of 2004, there were 72 scheduled airlines serving Hong Kong. These airlines together operated about 4 600 scheduled flights weekly in each direction between Hong Kong to some 130 cities worldwide. In addition, an average of about 40 non-scheduled flights were operated to and from HKIA each week.

After Hong Kong has fully recovered from the impact of the Severe Acute Respiratory Syndrome (SARS), passenger traffic at the HKIA surpassed the pre-SARS level by December 2003. A record high of 37.14 million passengers (including 850 000 in transit) passed through HKIA during 2004, representing a significant increase of 35.4 per cent from 2003. Aircraft movements also increased by 26.6 per cent to a total of 237 308.

Air cargo throughput at HKIA also set a record as a result of the continued strong demand for goods from North America, Europe and the Mainland. In 2004, the airport handled 3.09 million tonnes of air cargo, representing an increase of 16.9 per cent from 2003. The corresponding value also increased by 24.7 per cent to $1,340 billion.

Air transport continues to play an important role in Hong Kong's external trade. Goods carried by air accounted for about 36.4 per cent, 31.7 per cent and 28 per cent in value terms of Hong Kong's total imports, exports and re-exports respectively in 2004.

Enhancement of connectivity with the Pearl River Delta (PRD) through the development of multi-modal transport links remains the Airport Authority's (AA) dominant strategy to extend HKIA's catchment area to cover a population of over 40 million in the PRD region. During the year, two more ports in the PRD (Zhongshan and Guangzhou Lianhuashan) were added to HKIA's highly-popular network of cross-boundary ferry transfer services, which now cover six PRD ports. As the passengers of these ferry services are only in transit through Hong Kong, they need not go through customs and immigration procedures in Hong Kong, resulting in significant savings in total travel time.

Cross-boundary coach services remain the dominant mode of connection between HKIA and the PRD. In 2004, coverage of these services continued to expand to over 40 destinations throughout the PRD, with about 200 daily services.

During the year, the AA launched the 'Fly via Hong Kong' service platform in the form of a website (www.flyviahk.com) that provides customers with information on all flights operating at HKIA and details of promotional packages, as well as useful travel and tourist information. Bundled tickets comprising air tickets from HKIA and transit to PRD destinations are also offered to customers via some 200 participating travel agencies located in the PRD.

To better integrate passenger and air cargo flows in the region, HKIA continued to work closely with airports in the Mainland to explore cooperation opportunities. During the year, the AA signed agreements with Beijing Capital International Airport and Shanghai International Airport to provide consultancy services on various aspects of airport management.

The inclusion of the airport services sector in Phase II of the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA II) has provided Hong Kong suppliers of airport services new business opportunities in the Mainland. Airport services that are covered under CEPA II include contract airport management, airport management training and consultancy, and seven types of air transport ground services.

To meet the ever-increasing customer expectations, HKIA spares no effort to attain the highest service standards in all areas of airport operation. Facility enhancements and service improvements are ongoing. The airport's shopping mall, Hong Kong SkyMart, which was substantially expanded in March, offers customers a shopping experience that matches any high-end downtown shopping mall. SkyMart currently is home to a wide array of over 200 shops and restaurants, including 25 top-line brand names.

The AA also launched the Customer Services Excellence Programme with participation by all major service providers in the airport, including government departments, airlines and retail and catering licensees, to promote the culture of providing the best possible level of hospitality and services to the airport's customers.

With the dedication and commitment of the whole airport community, the HKIA itself is fast becoming one of Hong Kong's most successful brand names. For the fourth year in a row, it was voted Airport of the Year (2004) in a poll conducted by UK Skytrax Research. In recognition of it HKIA's high service standard, the International Air Transport Association awarded it the title of Best Airport Worldwide (Special Recognition).

The fast growing aviation market in the Mainland brought growth opportunities as well as new challenges to HKIA. In the face of intensifying competition from other airports in the region, HKIA has been taking proactive measures to maintain its competitive edge.

In September, the AA re-introduced the New Destination Incentive Arrangement (NDIA) to encourage existing and new airlines to operate flights from HKIA to new destinations. In respect of all qualifying flights, a 50 per cent landing charge rebate is offered for the first year of operation, followed by a 25 per cent rebate in the second year.

To cope with the robust growth in demand for air cargo services, various enhancements of air cargo facilities and services were made. A new express cargo terminal, DHL's Central Asia Hub, was opened at HKIA in August. As the largest facility of its kind in the region, the 18 200 sq.m. terminal provides an annual handling capacity of 160 000 tonnes. Asia Airfreight Terminal (AAT) has also signed an agreement with the AA to expand its handling capacity from the present 0.4 million tonnes per annum to over 1.3 million tonnes in 2006. Also, four additional freighter parking stands will be built, bringing the total number to 25 by 2006.

Other value-added facilities are in the pipeline to meet the diverse needs of HKIA's customers. Construction of AsiaWorld-Expo is in progress; it will provide more than 70 000 square metres of exhibition space at the airport when it is opened in 2005. SkyPlaza, a multi-purpose development comprising a new departure hall, airline check-in counters, ground transportation facilities and retail and office space, is under construction for commissioning in 2006.

In August 2003, the Government announced a plan to start work in preparation for partial privatisation of the AA. A financial adviser was subsequently appointed to provide professional services and assistance. Privatisation will reinforce the airport's first-class operations to bring about more commercial opportunities. It will enhance the AA's access to the capital market and introduce an additional quality stock to add diversity to the local financial markets. In addition, it will offer an opportunity for Hong Kong people to participate in the success of a well-managed company with strong growth potential. Proceeds from privatisation will help strengthen the Government's finances in the short to medium term. As a first step in preparing for the privatisation, the Government optimised the capital structure of the AA in September 2004 by reducing its equity capital by $6 billion. In November 2004, the Government issued a public consultation document to seek the community's views on the regulatory and institutional framework for the privatised AA to help formulate the necessary legislative proposals.

The HKSAR Government's policy objective on air services is to maintain the status of Hong Kong as an international and regional aviation centre and to ensure the provision of air links to a wide range of destinations to meet the needs of the travelling public and shippers.

Under the specific authorisation of the Central People's Government, the HKSAR Government continues to negotiate and conclude bilateral Air Services Agreements (ASAs) with aviation partners, providing the legal framework for scheduled air services between Hong Kong and other places. In 2004, the Government concluded new ASAs with Kuwait, Kenya, Iceland and Jordan. By the end of 2004, a total number of 54 ASAs had been concluded.

The Government also actively reviews the traffic rights arrangements with our bilateral partners to expand Hong Kong's aviation network and introduce more competition into the market. In 2004, the Government substantially expanded traffic arrangements with 11 aviation partners, including major partners such as the Mainland, Australia, Thailand, Malaysia, Spain and Russia.

In 2004, the Air Transport Licensing Authority (ATLA) granted nine licences: four to Cathay Pacific Airways (CPA), three to Hong Kong Dragon Airlines (HDA), one to Air Hong Kong (AHK) and one to Hong Kong Express Airways (HKE) (formerly known as Helicopters Hong Kong Limited). At year-end, CPA held nine licences to operate scheduled services to 137 destinations, HDA held 12 licences to operate scheduled services to 109 destinations, AHK held seven licences to operate scheduled services to 57 destinations, CR Airways held two licences to operate scheduled services to five destinations and HKE held three licences to operate scheduled services to four destinations.

CPA commenced codeshare services on passenger flights with Aeroflot to Moscow in June 2004 and with Iberia to Barcelona and Madrid in July. The airline also started passenger services to New York in July. During the year, CPA increased the frequency of scheduled passenger services to Bahrain, Beijing, Brisbane, Colombo, Dubai, Manila, Melbourne, Riyadh, Sapporo, Sydney, Surabaya and Taipei. In June, the airline launched a joint freighter operation with Lufthansa Cargo AG to Munich. CPA also announced its participation in the new B747-400 passenger-to-freighter conversion programme. At least six CPA aircraft are committed for the programme which will make CPA the first airline in the world to operate these freighters in 2005. CPA recorded monthly record highs in passengers in December and air cargo shipment in October. At the end of the year, CPA operated scheduled services to 49 destinations worldwide.

HDA continued to expand its network. The airline launched scheduled passenger services to Tokyo in April and resumed services to Harbin for the winter season. In the year, the airline also started codeshare services with Air China to Chengdu, Chongqing, Dalian and Tianjin. It launched scheduled all-cargo services to Nanjing in June and to Frankfurt and London Stansted in July. The airline recorded a monthly record high in passenger and air cargo shipment carried in October. At the end of the year, HDA operated scheduled services to 33 destinations, including 19 cities in the Mainland.

AHK focused on developing its network in Asia. The airline launched scheduled all-cargo services to Taipei in March and Penang in September. It also expanded its services to Bangkok and Osaka. Services to Seoul were suspended in October. At the end of the year, AHK operated scheduled services to six destinations in Asia.

Helicopters Hong Kong Limited changed its name to Hong Kong Express Airways Ltd (HKE) in November to align with its plan to expand services using fixed wing aircraft.

As regards non-Hong Kong airlines, Valuair and Jetstar Asia Airways started scheduled passenger services between Singapore and Hong Kong in May and December, respectively. Transmile Air resumed its all-cargo services between Kuala Lumpur and Hong Kong in November after suspending them in August 2003.

Three airlines suspended their services to Hong Kong in 2004. Two suspended their passenger services: Pacific Airlines between Ho Chi Minh City, Da Nang and Hong Kong in June; and President Airlines between Siem Reap, Phnom Penh and Hong Kong in July. Scandinavian Airlines suspended its all-cargo services between Gothenburg and Hong Kong in October.

Oil prices surged during the year. To recover part of the increase in fuel cost, airlines levied a fuel surcharge on passenger and cargo services.

With respect to the development of helicopter services, preparatory work was necessary to expand the existing cross-boundary heliport on the roof-top of the Macao Ferry Terminal in Sheung Wan to meet the forecast growth in cross-boundary helicopter services. Domestic helicopter services continued to operate from the temporary heliport at the West Kowloon Reclamation. Night flights were introduced in September 2004.

The overall air traffic control (ATC) system continued to perform in a stable and reliable manner. The number of aircraft movements at HKIA and overflights handled were 237 308 and 116 885 respectively.

The replacement long-range primary Route Surveillance Radar at Mount Parker was put into operation on March 30, 2004. To meet the new requirements of the International Civil Aviation Organisation (ICAO) on Regional Operational Meteorological Bulletin Exchange (ROBEX), a new ROBEX System was developed and put into operation on November 25, 2004. The Civil Aviation Department (CAD) also started work to replace the Doppler Very High Frequency Omni-Directional Radio Range and Distance Measuring Equipment at Tung Lung Island.

CAD also worked with the General Administration of Civil Aviation of China (CAAC) to pave the way for the relay of secondary surveillance radar (SSR) data and Very High Frequency (VHF) communications signals from Xisha to Hong Kong to enhance ATC operational efficiency in the Hong Kong Flight Information Region.

To ensure the provision of efficient ATC service in the Pearl River Delta area, CAD maintained close liaison with the civil aviation authorities of the Mainland and Macao. In 2004, a high level tri-partite working group was established to oversee the development of an enhanced airspace and flight procedure model for the region with a view to supporting the long-term sustainable growth of air traffic in the region.

In anticipation of the large amount of evaluation work relating to airspace and flight procedure studies, the CAD acquired an Air Traffic Control Fast Time Simulator in 2004. With the new equipment, the department can conduct more systematic, detailed and efficient analyses of airspace/procedure changes. This will enhance the safety and efficiency of the air transport system.

On May 31 and June 1, 2004, CAD joined hands with the People's Liberation Army Military Force in the HKSAR and various government departments to conduct a local search and rescue exercise. The main objective of the exercise was to enhance coordination and cooperation among various search and rescue units. To further the cooperation between CAD and CAAC in investigating aircraft accidents, serious incidents and search and rescue operations, CAD signed a Cooperation Arrangement on Aircraft Accident Investigation and Search and Rescue with the Office of Aviation Safety of CAAC in April.

On October 20, 2004, Hong Kong staged its first large scale aerobatic display. A formation of eight Alpha Jets of the French Aerobatic Display Team, Patrouille de France, performed a flypast over Victoria Harbour and aerobatic manoeuvres off the coast of Hong Kong Island South. CAD provided technical support throughout the event.

Satellite-based Communications, Navigation and Surveillance/Air Traffic Management (CNS/ATM) Systems

To comply with the Global and Regional Implementation Plans of the ICAO for satellite-based CNS/ATM systems, studies on the latest CNS/ATM developments and detailed investigations into various elements of the CNS/ATM systems continued. Satisfactory progress and results were achieved in 2004 in various technical and operational trials. On June 23, 2004, the Aeronautical Telecommunication Network (ATN) between Hong Kong and Bangkok, the first operational ATN link in the Asia- Pacific Region, started operation.

CAD has signed mutual recognition arrangements of approval of aircraft/aircraft components organisations with the CAAC, the Civil Aviation Authority of Macao and the Civil Aviation Authority of Singapore. Maintenance release certificates issued by organisations recognised under the arrangements are accepted without additional investigation by the other participating authorities.

In Hong Kong, the impact of aircraft noise is assessed on the basis of the internationally accepted Noise Exposure Forecast (NEF) Contour. The determination of the contour takes into account factors including the decibel levels of aircraft noise, its tonal characteristics and the duration and frequency of overflying flights at different times of the day. Currently, the aircraft noise standard adopted in Hong Kong is the NEF 25 contour, which is more stringent than the standards adopted by some other airports.

CAD continues to closely monitor the flight tracks and noise impact on the community and implement all practicable aircraft noise mitigating measures. These measures include flight paths that cross fewer residential areas at night, noise abatement departure and approach procedures, and prohibiting the operation of noisy aircraft (i.e. those which do not comply with the stringent noise standard stipulated in Volume I, Part II, Chapter 3 of Annex 16 to the Convention on International Civil Aviation) at HKIA. Briefings on aircraft noise issues were conducted for concerned resident groups to explain the mitigating measures and the flight track monitoring work of CAD.

Improvements to the data processing capability of the computer-based aircraft noise and flight track monitoring system were completed in April 2004.

The Aviation Security Ordinance and Regulation constitute the comprehensive local legislation for implementation of the conventions and agreements on aviation security promulgated by the ICAO. The Hong Kong Aviation Security Programme (HKASP), developed by the Government in consultation with the airport operators, airlines and other concerned parties, stipulates the aviation security requirements for the various operators at the HKIA. A major review of the programme was completed and a new version released in December. The implementation of these requirements is closely monitored by the Government to ensure that they meet international standards.

Three officers from the department participated as auditors in the ICAO Universal Aviation Security Audit Programme during the year. The officers completed the ICAO aviation security audit missions for Laos, the Philippines, Indonesia and Papua New Guinea.

The aviation community jointly organised the 'Aerospace 100', a multifarious programme to celebrate the centenary of powered flight and showcase the importance of the aviation industry to Hong Kong's economy. A series of events, including an exhibition at the former Kai Tak aiport, an aviation management conference and a gala evening were held.

41st Conference of Directors General of Civil Aviation, Asia and Pacific Regions

CAD hosted the 41st Conference of Directors General of Civil Aviation, Asia and Pacific Regions between November 1 and 5. Under the aegis of the International Civil Aviation Organisation, the theme of the conference was 'Partnership in Achieving a Safe, Secure and Efficient Air Transport System through Effective Safety Oversight'. It was well attended by more than 170 delegates from 40 states/territories and organisations. The conference provided a valuable platform for experience sharing and partnership strengthening.