HONG  KONG  INTERNATIONAL  AIRPORT  MASTER  PLAN  2030

AIRPORT AUTHORITY HONG KONG

HKIA Tower
1 Sky Plaza Road
Hong Kong International Airport
Lantau, Hong Kong
Telephone: +852 2188 7111
Facsimile: +852 2824 0717
[Link]

Hong Kong International Airport Master Plan 2030

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COnTENTS

P8 Chapter 2

hkia MASTER PLAN 2030

P4 Chapter 1

Hong Kong
and HKIA

P14 Chapter 3

Air Traffic Demand

Forecast

P22 Chapter 4

Practical Maximum
Capacity of HKIA’s
Two-Runway System
COVER DESIGN
Like a tree, Hong Kong International Airport is deeply rooted in Hong Kong. We
grow and develop with the city, linking Hong Kong with the world, facilitating trade
and commerce and connecting families and friends around the globe. We are part
of Hong Kong’s success today and in the future.

P32 Chapter 6

option 2:
THREE-Runway
System

P28
P38
Chapter 5
Chapter 7
option 1:
Two-Runway System Comparison
Between the Two
options

P56 Chapter 8

The Time to
act is Now

P58
Appendices
 HONG KONG  
AND HKIA

HKIA – an by aviation in Hong Kong and other

businesses at HKIA amounted to
International
HK$78 billion in value added1,
Aviation Hub or 4.6% of Hong Kong’s gross
Since its opening in 1998, Hong Kong domestic product (GDP). More
International Airport (HKIA) has importantly, the four economic pillars
grown to be one of the finest of Hong Kong – financial services,
and busiest airports in the world. trading and logistics, tourism, and
Over 95 airlines provide services producer and professional services
between Hong Kong and about (together constituting 57% of our
160 destinations (about 45 of which GDP) – rely heavily upon the efficient
are on the Mainland). Renowned flow of people and goods made
for its inspiring architectural design, possible by HKIA.
superb efficiency, superior service
Hong Kong also has significant
quality, and unrivalled connectivity,
functions and positioning in the
HKIA has over the years received
national development strategy,
close to 40 world’s best airport
as elaborated in “The Outline of
awards from organisations such as
the 12th Five-Year Plan for National
the Airports Council International and
Economic and Social Development
Skytrax. To many, HKIA is the crown
of the People’s Republic of China”
jewel of Hong Kong – the pride of
(the National 12-5 Plan), which was
Hong Kong.
promulgated in March 2011.
HKIA is not merely a piece of The National 12-5 Plan sets out the
transport infrastructure that serves Central Authorities’ support for
the local travelling public. It is Hong Kong to consolidate and
an international aviation hub that enhance its competitive advantages
generates enormous economic (including consolidating and
value for Hong Kong. In 2008, the enhancing Hong Kong’s status as
total economic contribution made an international centre for financial

1
“Value added” is defined as the value of gross output less the value of intermediate consumption (the value of goods and services
used up in the course of production). The value added figure quoted here is assessed by an independent consultant and includes
direct, indirect and induced contribution.


 1 AND
HONG KONG  
HKIA
services, trade and shipping), to network with higher frequency
nurture its emerging industries and of services. The development of
develop the six industries where HKIA was supported by the
Hong Kong enjoys clear advantages, progressive liberalisation policy
and to deepen economic cooperation on air services adopted by the
with the Mainland. Government that positions HKIA
as a gateway destination and
The rapid growth of HKIA into an opens access to a wide network
aviation hub is due to many factors. of destinations around the world.
Leveraging on our geographical Our own professional management
location at the heart of Asia Pacific and continued investment in the
and at the doorstep of the growing airport infrastructure, as well as the
Mainland market, we have over the investments and contributions made
years developed an aviation network by Hong Kong-based airlines and key
that does not only serve origin-and- stakeholders of the airport community,
destination traffic but also transfer contribute further towards sustaining
traffic of passengers and transhipment HKIA’s global reputation.

78
of cargo around the world. Transfer

HK$
traffic tends to flow through aviation HKIA’s status as an international
hubs with the best connections and aviation hub is best testified to by BILLION
such traffic would in turn facilitate its remarkable growth in throughput generated by Hong Kong’s aviation
aviation hubs to develop a thicker and connectivity. In 1998, HKIA industry in 2008

HKIA MASTER PLAN 2030 

HONG KONG AND HKIA

handled 28.6 million passengers in Chapter 3), the global aviation summarises the plans we gathered
and 1.6 million tonnes of cargo, with market, and the market in this region in from publicly available information.
450 air traffic movements (ATMs, also particular, is expected to grow in leaps
Air connectivity is crucial to
known as flight movements) per day and bounds in the next two decades.
maintaining Hong Kong as
to about 120 destinations. The level
of throughput reached 50.9 million Between 2008 and 2030, the an international business centre
passengers and 4.1 million tonnes global GDP is forecast to grow at and Asia’s World City. However,
a compound annual growth rate as HKIA approaches its maximum
of cargo, respectively with more
(CAGR) of 4% and the Mainland GDP runway capacity, the growth of our
than 850 ATMs per day to about
growth at an even higher rate of 7%. air connectivity will slowly grind to
160 destinations at the end of 2010.
Accordingly, the aviation market is a halt unless we continue to invest
also expected to grow robustly. In and expand our handling capacity.
A Vibrant Aviation the light of this rising demand for air Hong Kong’s overall competitiveness
Market travel, many airports in this region would be at risk (discussed in
are responding by mapping out plans Chapter 7). This could be avoided by
In accordance with our air traffic to enhance their facilities. Figure 1.1 planning well ahead, hence, the need
demand forecast (discussed in detail for the HKIA Master Plan 2030.


Figure
1 AND
HONG KONG  
HKIA
Planned Developments of Airports in the Region
1.1
Existing Number Planned Number
Airport
of Runways of Runways
Planning to build a second
Beijing Capital 3
international airport

Guangzhou Baiyun 2 To be increased to 5

Shanghai Pudong 3 To be increased to 5

2 in 2011,
Shenzhen Bao’an 1
to be increased to 3

Bangkok Suvarnabhumi 2 3 by 2016

Seoul Incheon 3 5 by 2020

HKIA MASTER PLAN 2030 

2 HKIA MASTER  
PLAN 2030

Planning Ahead In Germany, Frankfurt has taken

13 years to plan and build the Frankfurt
Airport development is capital Airport’s fourth runway, which is
investment-intensive and requires expected to be completed in late 2011.
a long lead time with considerable
advance planning. In view of the
impending “capacity crunch”, we The Master Planning
must act promptly to map out the Process
future development strategy for
Hong Kong International Airport Since the commissioning of HKIA in
(HKIA) in order to secure our 1998, we have adopted a forward
competitiveness. looking approach in addressing the
airport’s long-term needs. This is
Over the years, we have done through the preparation of
continuously invested in the a 20-year Master Plan, which is
infrastructure of HKIA and planned reviewed and updated every
for its future expansion. Hitherto, five years.
about HK$18 billion has been
invested in capital expenditure We regularly review market changes
since airport opening, and a and ensure that airport facility
further HK$9.3 billion has just enhancements are planned in time
been committed to the Phase 1 of to meet the needs of the aviation
Midfield Development. industry. The master planning
process is highly structured.
Planning and development of airport A step-by-step approach of the
infrastructure around the world process is summarised in Figure 2.1.
requires a long lead time, due invariably
to the complicated planning process, We have so far published two
extended public consultation and master plans, namely Master Plan
approval procedures required, let 2020 and Master Plan 2025. Both
alone the often highly complicated planning documents have guided the
construction works involved. development of our airport to date,
In Japan, Narita Airport Authority including some of the major projects
took 16 years, from 1986 to 2002, to undertaken in recent years (see
plan and construct a second runway. Figure 2.2).


 2
PLAN 2030
HKIA MASTER  
Figure
Master Planning Process
2.1

Derived
Forecasts
Landside

Passenger
and Cargo

Capacity/ Analysis/
Air Traffic Processing Facility
Demand Costs Environmental Master Plan
Forecasts Terminals Need/Land Use
Analysis Assessment

Air Traffic
Movements
Airfield

Figure
Major Projects Undertaken in Recent Years
2.2
Completion Year

Enhancements to the airfield facilities for A380 operation 2006

Terminal 2 2007

Addition of 10 cargo stands and taxiways 2008

SkyPier 2010

North Satellite Concourse 2010

Capacity and services enhancements to Terminal 1 including its Central Concourse, Arrival
2011
and Departure processing facilities, and baggage handling system

HKIA MASTER PLAN 2030 

HKIA MASTER PLAN 2030

Master Plan 2030 Traffic Services (NATS) in 2008, we To ensure a transparent,

have evaluated the optimum airport professional and objective planning
Through the preparation of the layout plan and land use development process, we have commissioned
Master Plan 2030, we hope to strategy to accommodate the air nine independent consultants –
map out the development needs traffic forecast demand up to 2030 experts in their respective fields –
that help HKIA achieve sustainable and the potential growth beyond, to research into different strategic
growth while retaining its long-term including a preliminary engineering aspects of airport development,
competitiveness and position as an feasibility and environmental which have been consolidated into
international aviation hub. On the basis assessment of building a third the Master Plan 2030.
of the airspace and runway capacity runway and its supporting facilities
analysis completed by the National Air and infrastructure.

10
 2
PLAN 2030
HKIA MASTER  
The master planning process also Representatives in Hong Kong,
involves consulting the airport the Airline Operators Committee,
community through the Airport etc.) and relevant Government
Infrastructure Planning and departments. Since October 2008,
Development Users Working Group AIPDUWG has met periodically to
(AIPDUWG). AIPDUWG has discuss potential operational and
25 members covering the core technical issues related to HKIA’s
airport-related community including further development. AIPDUWG’s
Hong Kong based airlines, airport comments and suggestions have
support services providers, been duly incorporated into the
airport community associations Master Plan 2030.
(for example, the Board of Airline

Figure
Consultants Appointed for the Development of HKIA Master Plan 2030
2.3

Primary Air Traffic

Forecast
Preliminary Financial
International Air Assessment
Airport Facilities Planning Transport Association
Consulting The Hongkong &
AECOM (IATA Consulting) Shanghai Banking
Corporation Limited
(HSBC)

Airspace and Runway Economic Impact

Capacity Analysis Analysis
National Air Traffic Enright, Scott &
Services (NATS) Associates (ESA)

HKIA Master Plan 2030

(Airport Authority
Hong Kong – AAHK)

Initial Land Formation Preliminary Air Quality

Engineering Evaluation Impact Analysis
Meinhardt Arup

Preliminary
Engineering Feasibility Preliminary Aircraft
& Environmental Noise Impact Analysis
Assessment
URS Corporation
Mott MacDonald

HKIA MASTER PLAN 2030 11

 AIR TRAFFIC DEMAND
FORECAST

The first step of the master planning (e) Carrying out reality checks with demonstrated that air traffic growth
process is to determine the long-term aviation-related industries; bears a strong correlation with the
air traffic demand forecast up to global GDP growth. Figure 3.2
(f) Determining a set of primary
2030. International Air Transport shows the two trends in the past
projections for passenger and
Association (IATA) Consulting has four decades.
cargo traffic and air traffic
been commissioned to undertake
movements (ATMs, also known as As Hong Kong is an international
this task, which is a very structured
flight movements); and city with an open market and
process involving –
externally-oriented economy, the
(g) Conducting sensitivity analysis to
(a) Evaluating the best model to apply correlation between air traffic growth
produce a range of estimates for
for the forecast; and GDP growth in Hong Kong is
high, low and base cases.
even more pronounced, as can be
(b) Compiling gross domestic product
seen from the close correlation
(GDP) forecast;
between historical traffic derived
GDP Forecast
(c) Producing preliminary traffic from the regression formulae used
Compiling a GDP forecast is a very by IATA Consulting and the actual
forecasts based on GDP;
important step as it provides the traffic (see Figures 3.3 and 3.4). For
(d) Adjusting traffic forecasts based essential building block for the passenger demand forecast, IATA
upon the latest market changes; entire traffic demand forecast. Consulting adopted simple linear
IATA Consulting’s research clearly regression based on Hong Kong

Figure
A Structured Air Traffic Demand Forecast Process
3.1

Preliminary
Passenger Traffic Revised Passenger
Forecast Based on Traffic Forecast
GDP
GDP Forecast for + Air Traffic
Hong Kong and - Movement Sensitivity
Adjustment Analysis
World Markets Forecast
Factors
Preliminary Cargo Revised Cargo
Traffic Forecast Traffic Forecast
Based on GDP

Reality Check with Industries

GDP Based Preliminary Forecast Adjustments and Finalised Movement Sensitivity

Forecast Forecast Analysis

14
GDP. For cargo demand forecast, Figure
Global Air Traffic versus Economic Growth
IATA Consulting adopted multiple 3.2
linear regression based on Hong
Kong and global GDP. Global Revenue Passenger Kilometres Global GDP
(year-on-year growth percent) (year-on-year growth percent)

3
16 8
Despite the global economic

Demand Forecast
Air Traffic  
slowdown and Severe Acute 12 6

Respiratory Syndrome (SARS)

8 4
epidemic in 2001-2003, Hong Kong’s
GDP experienced an increase by 4 2

almost 4% per annum between 2004

0 0
and 2009. Following the recovery
from the global financial crisis and -4 -2
economic downturn in 2008-2009,
1971

1974

1977

1980

1983

1986

1989

1992

1995

1998

2001

2004

2007

2010
the Government estimated 6.5%
GDP growth for 20102. On the basis Source: Traffic data from International Civil Aviation Organization (ICAO) and International Air Transport Association
(IATA), GDP data from International Monetary Fund (IMF) and Economist Intelligence Unit (EIU)
of input from Economist Intelligence
Unit (EIU)3 of July 2009 and Global
Insight4 (July 2009), IATA Consulting Figure Comparison between Actual and Derived HKIA Passenger Traffic
compiled the following GDP forecast 3.3 Based on Hong Kong GDP
between 2008 and 2030 –
millions of passengers

(a) Hong Kong’s GDP will grow at a 60

Compound Annual Growth Rate 50

(CAGR) of 3.2%; 40

(b) Mainland’s GDP will grow at a 30

CAGR of 7%; and 20

SARS Outbreak
(c) The global economy will grow at a 10

CAGR of 4%. 0
1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

Actual Derived

Source: Airport Authority Hong Kong (AAHK) traffic data, IATA Consulting estimates

2
HKSAR Government, November 2010.
3
The Economist Intelligence Unit (EIU)
is the world’s leading resource for
Figure Comparison between Actual and Derived HKIA Cargo Traffic
economic and business research, 3.4 Based on Hong Kong GDP and Global GDP
forecasting and analysis. Founded in
1946 as an in-house research unit for millions of tonnes
The Economist, it now delivers trusted
4
business intelligence and advice
to over 1.5 million decision-makers
from the world’s leading companies, 3
financial institutions, governments
and universities.
4
Global Insight was founded in 2001 2
through the merger of Wharton
Econometric Forecasting Associates 9/11 Event
and Data Resources, Inc. In October 1
2008, Global Insight became part of
the Information Handling Services
(IHS) family. Based in the New England 0
Region in the US, IHS Global Insight
1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

provides comprehensive economic,

financial, and political country and Actual Derived
industry intelligence products to
support planning and decision making. Source: AAHK traffic data, IATA Consulting estimates

HKIA MASTER PLAN 2030 15

AIR TRAFFIC DEMAND FORECAST

Figure Aviation Market

GPRD Airports Passenger and Cargo Traffic Forecast
3.5 Outlook : The
millions of passenger trips millions of tonnes Mainland and GPRD
400 20
Actual Forecast IATA Consulting forecasts that air
300
CAGR 2008-2030
15 traffic to and from the Mainland
Passenger/Cargo = 5.9%
will reach nearly 2.1 billion trips by
200 10 2030, while cargo traffic will reach
44 million tonnes. This projection
100 5
is supported by a number of
0 0 observations. On the passenger
2004 2008 2015 2020 2025 2030 side, the World Tourism Organisation
Passenger Cargo forecasts that the Mainland will
become the world’s fourth-largest
Note: GPRD airports include Hong Kong, Guangzhou, Shenzhen, Macao and Zhuhai airports
Source: Civil Aviation Administration of China (CAAC), AAHK for actual figures, IATA Consulting forecast
tourist source market and the largest
domestic tourist market by 2015. The
Mainland’s GDP per capita will reach
Figure approximately US$14,000 in 20305,
Five Major GPRD Airports
3.6 and as the economy grows, the
desire and ability of the people on the
Mainland to travel both domestically
and internationally will grow rapidly.
Guangzhou
The Mainland is also the
manufacturing capital of the world,
and its cargo must be delivered
to their overseas destinations
around the world. Rising foreign
direct investment, improving living
Shenzhen standards, more liberal trade policies
and a growing express cargo and
logistics sector support a robust
cargo growth projection. Also,
Hong Kong
cargo traffic of Mainland airports
has increased by a CAGR of over
10% each year in the past decade,
Macao
reaching 9.5 million tonnes in 2009.
The Mainland’s substantial trade
Zhuhai
volume and growing economy will be
key factors in its cargo growth.

The Pearl River Delta (PRD)6 – HKIA’s

catchment area – is one of the
Landsat-7 Satellite Image provided by Geocarto
Mainland’s most diverse and fastest
growing regions. It is one of the
Mainland’s centres of manufacturing
and most affluent areas. With the

5
World Bank, IATA Consulting estimates based on Global Insight.
6
The PRD comprises Dongguan, Foshan, Guangzhou, Huizhou, Jiangmen, Shenzhen,
Zhaoqing, Zhongshan and Zhuhai.

16
 3
Demand Forecast
Air Traffic  
continuous growth in trade and in the Figure GPRD Airports Capacity and Forecast Passenger Demand
overall economy, IATA Consulting 3.7 (2020 and 2030)
estimates that the aviation market in
the Greater PRD (GPRD)7 will grow
Annual Passenger Demand Annual Passenger Demand
to 387 million passenger trips and by 2020 – 233 Million by 2030 – 387 Million
18 million tonnes of cargo by 2030
(see Figure 3.5). (in passenger trips) Unfulfilled Unfulfilled
Demand – Demand –
Within the GPRD, there are five major 33 Million 147 Million
airports, namely, HKIA, Guangzhou
Baiyun International Airport,
Shenzhen Bao’an International
Airport, Macao International Airport
and Zhuhai Airport (see Figure 3.6).
Having taken into account the
Anticipated Annual Anticipated Annual
anticipated increase in the handling Handling Capacity of GPRD Handling Capacity of GPRD
capacity of the five airports in the Airports – 200 Million* Airports – 240 Million*
next 20 years, IATA Consulting * For HKIA, the capacity assumed is 60 million based on completion of the committed Midfield Phase 1 Development
forecasts that there would still be Source: CAAC, IATA Consulting analysis and estimates

a significant unfulfilled demand for

air services both in the medium term
up to 2020 and in the long term
up to 2030 (see Figure 3.7).

7
The Greater PRD comprises PRD plus Hong Kong and Macao.

HKIA MASTER PLAN 2030 17

AIR TRAFFIC DEMAND FORECAST

In 2008, we handled about 80% surrounding airports and airlines’ of our throughput in 2007 to 13%
of GPRD airports’ international strategies) that might affect its air (i.e. 0.5 million tonnes) in 2010.
passengers (excluding Hong Kong – traffic demand forecast. Most, if However, this short-term negative
Mainland traffic) and about 90% of its not all, of them have been found to impact has been partly mitigated
international cargo throughput. be either having negligible impact by the relaxation of the policy for
As long as our handling capacity or have already been factored into Mainlanders to visit Taiwan and the
is not constrained, we are well IATA Consulting’s economic models. new demand for air travel stimulated
positioned to continue to capture a The assessments on the two most by increased cross-strait economic
handsome portion of this growing frequently cited factors are set activities. In 2010, overall passenger
market by leveraging our extensive out below. and cargo traffic between Hong
international air network. Kong and Taiwan grew 4% and 14%
Cross-Strait Direct Flights respectively, over 2009. Looking
Hong Kong/Taiwan has for many ahead, increasing tourism and trade
Adjustment Factors activities across the strait is expected
years been the busiest air route
Relevant to HKIA out of HKIA with currently about to stimulate further growth in the
50 flights per day. Before cross- Hong Kong/Taiwan passenger and
IATA Consulting has specifically
strait direct flights first commenced cargo market.
looked into a range of special factors
(namely, air services agreements, in July 2008, passenger traffic
segments potentially impacted
High-Speed Rail
cross-strait direct flights, trade
agreements, travel policy, tourism by direct flights constituted about The high-speed rail would cut current
development, cross-boundary 16% (i.e. 7.7 million) of our total rail travel time by nearly two thirds
infrastructure development, throughput in 2007, which has been and is therefore generally expected
passengers’ travelling preferences, decreased to 10% (i.e. 4.9 million) to compete with air services on
modal competition from containerised in 2010. Cargo traffic was reduced short-haul and overlapping markets.
shipping, developments of from 17% (i.e. 0.6 million tonnes) With the development of the Express

18
 Figure
Chinese Railway Infrastructure Development Map
3.8

3
Demand Forecast
Air Traffic  
೪՟
Legend

ৃҹ㍧ᒷ⏅␃催䗳䨉䏃䗷᥹ПܻഄЏ㽕ජᏖ
࣫Ҁ (ܿᇣᰖ) Major Mainland Cities connected to
Beijing (8 hrs) Guangzhou-Shenzhen-Hong Kong Express Rail
Link
Ҁᒷᅶ䘟ᇜ㎮ঞᵁ⽣⏅ᅶ䘟ᇜ㎮
Beijing-Guangzhou Passenger Line and
Hangzhou-Fuzhou-Shenzhen Passenger Line

ᒷ⏅␃催䗳䨉䏃
Guangzhou-Shenzhen-Hong Kong Express Rail
䜁Ꮂ (݁ᇣᰖ) Link
Zhengzhou (6 hrs) ݊Ҫᫀᓎⱘᅶ䘟ᇜ㎮
Other Proposed Passenger Line
⊯⦴ϝ㾦औඳ“9+2”㆘ೡ
㽓ᅝ (ܿᇣᰖ) फҀ (Ѩᇣᰖ) Pan-Pearl River Delta Region “9+2” Area
Xi’an (8 hrs) Nanjing (5 hrs)
៤䛑 (कѠᇣᰖ) Ϟ⍋ (݁ᇣᰖ)
Chengdu (12 hrs) ℺⓶ (ಯᇣᰖ) Shanghai (6 hrs)
Wuhan (4 hrs)
ᵁᎲ (ϗᇣᰖ)
Hangzhou (7 hrs)
䞡ᝊ (कᇣᰖ)
Chongqing (10 hrs) 䭋≭ (ϝᇣᰖ)
फᯠ (Ѩᇣᰖ)
Changsha (3 hrs)
Nanchang (5 hrs) ᵁ⽣⏅ᅶ䘟ᇜ㎮
Ҁᒷᅶ䘟ᇜ㎮
Beijing-Guangzhou
Beijing Guangzhou Passenger ⽣Ꮂ (Ѩᇣᰖ) g
Hangzhou-Fuzhou-
Line Fuzhou (5 hrs) Shenzhen Passenger Line

फᆻ (ಯᇣᰖ) ᒜ䭔 (ಯᇣᰖ)
ᯚᯢʻܿᇣᰖ) Nanning (4 hrs)
Kunming (8 hrs) ᒷᎲ Xiamen (4 hrs)

⦴⍋
∩丁 (Ѡᇣᰖ)
▇䭔 佭␃ Shantou (2 hrs)
ᒷ⏅␃催䗳䨉䏃
Guangzhou-Shenzhen-Hong
Kong Express Rail Link

Source: Transport and Housing Bureau

Rail Link (XRL) connecting Hong Kong Figure Projected High-Speed Rail Travel Time versus Air Travel Time
to the Mainland’s high-speed train 3.9 from Hong Kong in 2020
network, and further expansion of
the high-speed rail network within hours
14
the Mainland (see Figure 3.8), the Plane Faster
Train Non-
than Train
12 competitive
high-speed rail could potentially affect
the competitiveness of air travel 10

between Hong Kong and short-haul 8 Train Faster

than Plane
Mainland destinations like Shantou, 6

Changsha, Nanning, Xiamen, Wuhan, 4

Nanjing, Nanchang and Fuzhou 2

(see Figure 3.9). However, all these 0
regional Mainland routes combined
Shantou

Changsha

Nanning

Xiamen

Wuhan

Nanjing

Nanchang

Fuzhou

Shanghai

Hangzhou

Xi’an

Kunming

Beijing

Chongqing

Chengdu
Zhengzhou

contributed only about 3% of HKIA’s

passenger throughput in 2010.
Train Air
Therefore, any negative impact from
XRL would unlikely be significant. Note: Air travel time includes an additional three-hour dwell and access time on top of the flight duration.
Source: IATA Consulting estimates, Transport and Housing Bureau
On the other hand, trains provide

HKIA MASTER PLAN 2030 19

AIR TRAFFIC DEMAND FORECAST

Figure
HKIA Air Traffic Movement Projection (Up to 2030)
3.10
thousands CAGR 2008-2030
700
thousands 2015 2020 2025 2030
3.6%
High 362 448 548 652
600 Base 347 421 509 602 3.2%
Low 332 394 470 552 2.8%
500

400

300

200
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
Low Base High

Source: IATA Consulting estimates; AAHK statistics for actual figures

Figure
HKIA Passenger Traffic Projection (Up to 2030)
3.11
millions of passenger trips CAGR 2008-2030
110
millions of 3.6%
passenger trips 2015 2020 2025 2030
100
High 59 72 88 105 3.2%
90 Base 57 68 82 97 2.8%
Low 54 64 76 89
80

70

60

50 convenient and frequent link-up to

40 second-tier and third-tier locations
outside major cities, thus potentially
2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

Low Base High

enlarging the catchment area for
HKIA. Experiences in Europe and
Source: IATA Consulting estimates; AAHK statistics for actual figures
Japan indicate that the introduction
of high-speed rail may negatively
Figure
HKIA Cargo Traffic Projection (Up to 2030) affect short-haul and overlapping
3.12
markets but it can increase people’s
millions of tonnes CAGR 2008-2030 willingness to travel and, in the medium
10 4.6% to long term, increase the overall market
millions of
tonnes 2015 2020 2025 2030
4.2% size for both rail and air transportation,
High 4.7 6.1 7.9 9.8
8 Base 4.4 5.7 7.2 8.9 3.7% thereby compensating (or, as in most
Low 4.2 5.2 6.5 8.0
cases, over-compensating) for the
6
potential air traffic loss on individual
short-haul routes.
4

2
Air Traffic Demand
2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

Forecast
Low Base High
According to the GDP regression
Source: IATA Consulting estimates; AAHK statistics for actual figures
based forecasting model, and taking

20
 3
Demand Forecast
Air Traffic  
into account various aspects of Figure
Traffic Forecasts from Boeing and Airbus
HKIA’s market environment, such 3.13
as industry trends, regional market
dynamics, changes in policies and so CAGR 2009-2028 Boeing Airbus
on, IATA Consulting estimates that Asia Pacific Region
air traffic demand forecasts for HKIA Passenger 6.3% 6.1%
will fall within the range of 89 – 105
Cargo 6% 6.3%
million passengers and 8 – 9.8 million
China
tonnes of cargo by 2030, growing at
Passenger 7.6% 7.3%
respective CAGRs of 2.8% – 3.6%
and 3.7% – 4.6% between 2008 Cargo 6.6% 7.8%

and 2030. Flight movements will World

reach about 550,000 – 650,000, Passenger 4.7% 4.5%

growing at a CAGR of 2.8% – 3.6%. Cargo 5.2% 5%

The IATA Consulting analysis

included, among other things, a the next 20 years, global passenger already taken into account the recent
“reality check” of its traffic forecast and cargo traffic will each grow at financial and economic events of
against the projections of the global around 5% a year. Asia Pacific – 2008-2009. They also acknowledge
aircraft manufacturing industry, which driven by the Mainland – will see the traditional resilience of air travel
are considered to be particularly even higher growth, at about 6%, to external shocks and the strong
relevant. Traffic forecasts from both due to the region’s development long-term fundamentals of the
Boeing and Airbus indicate that over potential. These projections have industry.

HKIA MASTER PLAN 2030 21

 PRACTICAL MAXIMUM
CAPACITY OF HKIA’S
TWO-RUNWAY SYSTEM

According to the 1992 published maximised the value of each slot

New Airport Master Plan (NAMP), by deploying the biggest aircraft
Hong Kong International Airport (HKIA) possible. The opening of HKIA
was designed to handle an ultimate with two runways has provided
capacity of 87 million passengers, more runway capacity for airlines
8.9 million tonnes of cargo and to increase frequency, serve
376,000 air traffic movements new secondary destinations
(ATMs, also known as flight (especially on the Mainland) and
movements) per annum in 2040. deploy narrow-bodied aircraft (less
However, the latest base-case traffic than 200 seats) on routes that
demand forecast from International have yet to mature. The average
Air Transport Association (IATA) passenger load per aircraft as
Consulting by 2030 is 97 million a result decreased from around
passengers, 8.9 million tonnes of 200 at airport opening in 1998
cargo and 602,000 ATMs per year. to about 190 since 2000. For
The main reason for the discrepancy the same passenger throughput
between the 1992 NAMP and the of 87 million passengers, IATA
IATA Consulting estimates for annual Consulting forecasts that it would
ATMs is that many of the working entail 437,000 ATMs, instead of
assumptions adopted back in early 278,000 ATMs that were originally
1990s were based on the operating estimated in the NAMP.
environment of Kai Tak Airport which
at that time was highly constrained (b) The 1992 NAMP also assumed
and fully stretched – extensive use of wide-bodied
freighters (for example, B747F
(a) The 1992 NAMP assumed the of 100 tonnes) and lower than
forecast flights at HKIA would actual cargo tonnage carried
comprise a very high percentage by freighter at 45% of the total
of wide-bodied aircraft (84%), cargo throughput. As it turns out,
resulting in a high average the extraordinary growth of the
passenger load forecast of over cargo market in the last decade
300 people per aircraft. When (supported by the Government’s
Kai Tak exhausted its runway progressive liberalisation policies
capacity, it was natural that airlines on air services) and the rapid

22
 Figure
4.1 Single Runway’s Arrival/Departure Cycle under a Mixed Mode Operation

Total Cycle (Landing & Take-off) = 68sec + 54sec + 45sec = 167sec

4
RUNWAY RUNWAY

Two-Runway System
Capacity of HKIA’s  
Practical Maximum
68sec 54sec 45sec

Aircraft Landing Aircraft Take-Off

Note: The landing aircraft must be at least 3 nautical miles from the runway end when the departure begins and may not touch down before the departing aircraft has left
the runway.

development of express cargo recommended practices and arrivals). The Civil Aviation Department
services at HKIA has resulted in a other relevant factors such as the (CAD) has gradually increased the
much greater percentage of cargo traffic mix at HKIA. Accordingly, declared runway capacity from 40
traffic being carried by freighter two runways operating completely in 1999 to 61 in 2011. The length
(at 60%) and the greater use independently should theoretically of time taken is to allow sufficient
of medium-sized freighters deliver 88 ATMs per hour (44 ATMs time for CAD to familiarise its air
(for example, A300F of 55 tonnes), x 2). However, in reality, this is rarely traffic controllers with dual runway
thus increasing the overall ATMs the case. Due to different constraints, operations and gradually build up its
at HKIA. As opposed to 66,000 none of the runway capacity currently air traffic control capacity.
freighter ATMs carrying 8.9 million declared by airports in the region
with two runways could reach this In order to establish the practical
tonnes that were forecast in the
theoretical maximum. maximum capacity of HKIA’s
NAMP, IATA Consulting estimates
that 108,000 freighter ATMs two-runway system, National Air
would be required. Traffic Services (NATS), a leading
Practical Maximum provider of air traffic management
Runway Capacity of services based in the United Kingdom,
Theoretical Runway HKIA
was commissioned to study and
Capacity of the Two- identify measures required to further
HKIA started with a single runway raise HKIA’s runway capacity against
Runway System operation (South Runway) with different possible modes of operation
Under a completely unconstrained 34 ATMs per hour at the airport including –
environment and operating under a opening in 1998. Since the opening of
• Segregated operation – one
“Mixed Mode” (i.e. allowing both the second runway (North Runway)
runway exclusively for departures
landing and take-off), a runway can in 1999, the dual runway system has
and the other runway exclusively
deliver a maximum of 44 ATMs been operating under a Segregated
for arrivals;
per hour8, based on International Mode (i.e. South Runway dedicated
Civil Aviation Organization (ICAO) to departures and North Runway to

8
There can be 3,600sec (seconds) ÷ 167sec = 21.56 ≈ 22 cycles (i.e. 22 pairs of landing and take-off) per hour, thus 44 movements
per hour.

HKIA MASTER PLAN 2030 23

4 PRACTICAL MAXIMUM CAPACITY OF HKIA’S TWO-RUNWAY SYSTEM

• Mixed operation – both arrivals and was based on the historical flight expected to be reached sometime
departures are allowed on each movement pattern of a typical busy between 2019 and 2022 as indicated
runway. day and having taken into account – in Figure 4.2.

NATS concluded that given HKIA’s (a) Alternate closure of the

special circumstances (for example, two runways each night for about Latest Developments
terrain constraint surrounding HKIA 8 hours for routine maintenance;
To support HKIA’s continued growth,
including the Lantau Peak, Lo Fu Tau
(b) The matching of slot availability at we have committed HK$9.3 billion
and Sunset Peak on Lantau Island
HKIA and the destination airports; to the first phase of the Midfield
as well as Tai Mo Shan and Castle
Development which will enable
Peak, congested and complicated (c) Typical hourly fluctuations of a HKIA to optimally accommodate,
airspace management, the aircraft busy day; and in terms of both its terminal and
mix at HKIA, etc.) and to remain
apron facilities, approximately
fully in compliance with ICAO’s (d) Provision for recovery periods to
60 million passengers and 5 million
safety and minimum separation cater for operational delays.
tonnes of cargo per year. This
requirements, the practical maximum
The practical maximum daily is mainly to meet the additional
runway capacity of HKIA can only be
movements of 1,200 can be passenger and freighter aircraft
increased from 61 to 68 ATMs per
translated into the practical maximum stands demand in the interim, while
hour by 2015 regardless of the mode
annual movements of 420,000, taking maintaining HKIA’s high service
of operation. This has been verified
into account the historical seasonal standards. The project involves –
and accepted by CAD.
adjustment of flight movements by
(a) The construction of 20 aircraft
On the basis of 68 ATMs per hour, airlines as reflected in their flight
parking stands including
NATS assessed that the practical schedule published twice a year for
11 airbridge-served stands, as
maximum daily movements is about the summer and winter seasons
well as an “I-shaped” passenger
1,200 per day. This assessment respectively. The practical maximum
concourse at the Midfield;
annual movement capacity is

Figure
4.2 Forecast Air Traffic Movements to Reach the Two-Runway Capacity Between 2019 and 2022

ATMs/Year CAGR 2008-2030

700,000
3.6%
600,000 3.2%
2019 2.8%
500,000
Capacity of Two Runways
400,000

2022
300,000

200,000
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030

Low Base High

24
 Figure
4.3 Planned Midfield Development by 2015

4
Two-Runway System
Capacity of HKIA’s  
Practical Maximum
(b) An extension of the existing
automated people mover (APM)
system from Terminal 1 to the
passenger concourse at the
Midfield;

(c) Minor enhancement works on the

baggage handling system; and

(d) The building of a new cross-field

taxiway.

With these enhancements, HKIA will

be able to meet the unconstrained
demand forecast of about 60 million
passengers and 5 million tonnes of
cargo per year by 2015. Beyond that,
we must explore other development An artist’s impression of the Phase 1 of Midfield Development.
options. The Master Plan 2030 has
evaluated different options to cater
for the “capacity crunch” beyond
2015. These are analysed in the
following chapters.

HKIA MASTER PLAN 2030 25

 OPTION 1:
TWO-RUNWAY
SYSTEM

Under Option 1, we have examined

to what extent airport infrastructure
and facilities at Hong Kong
International Airport (HKIA) could be
further enhanced to fully support
the practical maximum air traffic
movements (ATMs, also known as
flight movements) capacity of the
two-runway system (420,000 ATMs/
year), without compromising service
quality.

Capital Investment
By continuing the Midfield
development and further expanding
the following facilities, at an
estimated cost of approximately
HK$23.4 billion (in 2010 dollars) or
HK$42.5 billion (at money-of-the-day
[MOD] prices)9, including provisions
for design, project management and
contingency, phased over 15 years
between 2016 and 203010, HKIA’s
capacity could be increased to handle
a maximum of about 74 million
passengers and 6 million tonnes of
cargo annually.

9
The final construction cost of the capital projects will be increased from the current estimate based on 2010 dollars to the MOD
amounts, in line with the Tender Price Index (TPI) which is estimated to increase at the rate of 5% per annum from 2011 to 2014,
5.5% per annum from 2015 to 2020 and 3% per annum thereafter.
10
The cost breakdown is in 2010 dollars.

28
 Figure
5.1 Option 1 – Airport Layout Plan in 2030

5
Runway System
option 1: Two-
(a) Passenger terminal expansion (b) Apron and passenger concourse • extend the APM system to
(HK$6.9 billion) expansion (HK$8.3 billion) reach the new second
“I-shaped” passenger
• expand Terminal 1’s gross floor • expand the Midfield concourse, concourse at the Midfield
area by 14%, or 82,000 square including the addition of a
metres, to provide additional second I-shaped passenger (d) Baggage Handling System (BHS)
space required for more concourse enhancement (HK$2.1 billion)
check-in counters and roadside
kerb at departure level, baggage • add another 20 remote • develop additional baggage
reclaim carousels at arrival stands for freighters and make-up laterals and reclaim
level, immigration/customs/ another 20 airbridge-served carousels within the expanded
security processing facilities passenger aircraft stands at footprint of Terminal 1
and more room in general for the Midfield
• develop a new high-speed
circulation and amenities (c) Automated People Mover (APM) baggage system for the
• increase check-in counters at extension (HK$2.3 billion) Midfield passenger concourses
Terminal 2 from the existing 56
to 112

HKIA MASTER PLAN 2030 29

5 OPTION 1: TWO-RUNWAY SYSTEM

Figure
5.2 Base Case Constrained Air Traffic Movement Forecast

thousands
900
thousands 2015 2020 2025 2030
800 Unconstrained
Demand Forecast 347 421 509 602
700
Constrained
Demand Forecast 347 420 420 420
600
Lost Air Traffic
Movement 0 -1 -89 -182
500
400
300
200
100
0
-100
-200
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
Unconstrained Demand Forecast Constrained Demand Forecast Lost Air Traffic Movement

Figure
5.3 Base Case Constrained Passenger Traffic Forecast

millions of passengers
140
millions of
120 passengers 2015 2020 2025 2030
Unconstrained
Demand Forecast 57 68 82 97
100
Constrained
Demand Forecast 57 68 72 74
80 Lost Passenger
Throughput 0 0 -10 -23
60

40

20

-20

-40
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030

Unconstrained Demand Forecast Constrained Demand Forecast Lost Passenger Throughput

30
 Figure
5.4 Base Case Constrained Cargo Traffic Forecast

millions of tonnes
14
millions of
12 tonnes 2015 2020 2025 2030
Unconstrained
Demand Forecast 4.4 5.6 7.2 8.9
10 Constrained
Demand Forecast 4.4 5.6 5.8 6.0
8 Lost Cargo
Throughput 0.0 0.0 -1.4 -2.9
6

-2

-4

5
2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

Runway System
option 1: Two-
Unconstrained Demand Forecast Constrained Demand Forecast Lost Cargo Throughput

(e) Road network and landside In line with the growth of air traffic, Under this option, HKIA will be able
transportation facilities expansion relevant aviation support functions to cope with air traffic demand up
(HK$3.8 billion) may also need to be expanded, such to 2020 (base case) (see Figure 5.2).
as the air cargo terminal, freight Beyond that, HKIA would not be able
• undertake road network forwarding and logistics, aircraft to accommodate any more additional
improvement works maintenance, business aviation flight movements.
– approximately 6km of road centre, inflight catering, ground
support equipment maintenance, While runway capacity would
and 2km of viaduct and be reached in 2020 (base case),
ramp improvement works etc. Under this option, sufficient
area on the airport island (about the actual passengers and cargo
at the South Interchange, throughput would continue to grow
Chun Wan Road, Chun Yue 40 hectares) has been reserved for
these purposes. According to the nominally beyond 2020, up to HKIA’s
Road and Chek Lap Kok maximum handling capacity of
South Road current policies, these facilities are to
be provided through franchises and 74 million passengers and 6 million
• construct two multi-storey car franchisees would be responsible tonnes of cargo (see Figures 5.3 and 5.4).
parks comprising a total of for the capital investment involved. This is because of the natural
2,800 car parking spaces with Figure 5.1 highlights the planned changes in air traffic pattern when
coach staging developments under Option 1. the airport reaches its runway
capacity (for example, airlines’
• relocate existing Limousine tendency to switch to larger aircraft).
Lounge The implications of reaching runway
capacity are discussed in Chapter 7.

HKIA MASTER PLAN 2030 31

 OPTION 2:
THREE-RUNWAY
SYSTEM

The Need for a Third Under Option 1, we have explored

the practical maximum handling
Runway
capacity of HKIA under its existing
The fundamental basis of airport two-runway system. Without
capacity is air traffic movements a third runway, HKIA can only
(ATMs, also known as flight accommodate an annual maximum
movements). While we could of 420,000 ATMs and will reach its
continue to invest in and expand runway capacity sometime between
Hong Kong International Airport’s 2019 and 2022. To truly handle
(HKIA’s) terminals and their ancillary unconstrained demand up to 2030
support facilities, the runway capacity (which is forecast to be 97 million
puts a cap on the ultimate throughput passengers and 8.9 million tonnes
of the airport. of cargo) and possibly beyond, HKIA
needs to build a third runway.

32
 Figure
6.1 Proposed Three-Runway Alignment and Operating Mode

Copyright©CNES 2011, distributed by Spot Image

6
practical Maximum (c) The First (existing South) Airport

Runway System
option 2: THREE-
runway for both “arrivals” and
Runway Capacity Development Layout
“departures”.
Further to the practical maximum Configuration
runway capacity assessed for the Following the same considerations as
In terms of the alignment of the third
two-runway system as explained explained in Chapter 4, the practical
runway, NATS has investigated a
in Chapter 4, National Air Traffic maximum runway capacity of
total of 15 alignment options with
Services (NATS) has also evaluated 102 ATMs per hour could be
regard to operational safety, obstacle
the practical maximum capacity translated into practical maximum
clearances, environmental issues,
increase that could be achieved with daily movements of about
PRD airspace issues, air traffic
a third runway. NATS concluded 1,800 ATMs per day and practical
control procedures, runway usability
that the three-runway system could maximum annual capacity of about
and capacity. NATS concluded that
support a practical maximum runway 620,000 ATMs per year. There could
the best alignment for a third runway
capacity of 102 ATMs per hour with be potential to further increase
would be parallel to and north of the
the following arrangements – the runway capacity in future with
existing two runways.
enhancements in aircraft and air
(a) The Third (new) runway dedicated traffic control technology and Based on the recommended parallel
for “arrivals” only; management of the Pearl River Delta alignment of a third runway,
(PRD) airspace. 18 different airport layout options
(b) The Second (existing North)
runway dedicated for “departures”
only; and

HKIA MASTER PLAN 2030 33

6 OPTION 2: THREE-RUNWAY SYSTEM

Figure
6.2 Option 2 – Airport Layout Plan in 2030

have been developed by AECOM (d) Surface access; and (at money-of-the-day [MOD] prices)11,
for airport facilities planning. This including provisions for design, project
(e) Environmental impact.
is to ensure that the different management and contingency, and
permutations of the location of the The final recommended airport layout phased over 15 years between 2016
passenger processing terminal, features a northward expansion as and 203012 as follows –
passenger concourses, and aircraft illustrated in Figure 6.2.
(a) Land formation (HK$38.9 billion)
parking aprons required to support
the third runway have been fully • reclaim about 650 hectares of
Capital Investment land north of the existing airport
evaluated before recommending the
most suitable airport layout. On the basis of the final island
recommended airport layout, our
The 18 airport layout options have (b) Third runway, related taxiway
consultants have worked out the
been evaluated against the following systems and airfield facilities
necessary airport infrastructure that
five major criteria – (HK$7.5 billion)
fully utilises the maximum runway
(a) Airfield efficiency; capacity (620,000 ATMs/year) and its • construct the third runway
costing. They have recommended • construct a dual parallel taxiway
(b) Passenger convenience;
an estimated capital investment and connect taxiways to the
(c) Cargo operations efficiency; of approximately HK$86.2 billion passenger concourses and
(in 2010 dollars) or HK$136.2 billion apron areas
11
The final construction cost of the capital projects will be increased from the current estimate based on 2010 dollars to the MOD
amounts, in line with the Tender Price Index (TPI) which is estimated to increase at the rate of 5% per annum from 2011 to 2014,
5.5% per annum from 2015 to 2020 and 3% per annum thereafter.
12
The cost breakdown is in 2010 dollars.

34
(c) Third runway aprons and • construct a new APM • construct four new multi-storey
passenger concourses depot to accommodate car parks near Terminals 1 and
(HK$14.0 billion) maintenance, storage 2 providing a total of 6,500 car
and other future needs, parking spaces
• construct 58 new passenger preferably underground
aircraft parking stands and to the immediate east • construct a multi-modal
of the reconfigured T2 for transport facility providing
• construct new passenger remote additional coach
concourses for the third runway convenient access by all
APM lines parking (110 spaces), taxis and
(d) Midfield Concourse and Freighter limousines staging areas,
Apron expansion (HK$4.5 billion) (g) Baggage Handling System (BHS) pre-booked taxis pick-up area
enhancement (HK$4.3 billion) (200 spaces), etc.
• construct 36 new remote
stands at the Midfield, extend • install a new high-speed As for the future expansion of aviation
both the Eastern and Western baggage system servicing support functions, sufficient land
Vehicular Tunnels to the third the third runway passenger (about 40 hectares) has been reserved
runway aprons and extend concourses along with the on the proposed reclamation in
the Concourse new baggage facilities under addition to the areas reserved under
T2 catering for departures and Option 1 (see page 29). This is for
(e) Reconfiguration of Passenger arrivals potential operational requirements to
Terminal 2 (T2) (HK$8.6 billion) locate aviation support functions near
(h) Road network and landside the new apron in future, for example,
• reconfigure T2 to accommodate transportation facilities expansion aircraft maintenance, ground support
both arrival and departure (HK$4.2 billion) equipment maintenance, navigation
processing facilities
• implement road network and meteorological installations,
(f) Automated People Mover (APM) improvement works in the airport rescue and fire-fighting and a
extension (HK$4.2 billion) passenger and cargo areas second operational air traffic control
tower. Franchisees and government

6
(approximately 21km of road
• extend the APM to connect departments concerned will be
improvement works and 4km of

Runway System
option 2: THREE-
the third runway passenger responsible for the capital
viaducts and ramps)
concourses with T2 investment involved.

HKIA MASTER PLAN 2030 35

 COMPARISON
BETWEEN THE TWO
OPTIONS

Chapters 5 and 6 discuss two very to an airport with great connectivity forecast, Option 1 can only meet the
different approaches in planning would benefit from a wider range of unconstrained demand for air traffic
the future development of Hong services and frequency. of Hong Kong up to 2020 (base case),
Kong International Airport (HKIA) in at which time the maximum runway
the next 20 years. They have their It is widely recognised that air capacity would be reached. Should
respective pros and cons. A detailed connectivity plays a crucial role that happen, the following changes in
comparison between the two in attracting foreign business. air traffic pattern would likely occur,
options against key considerations is Moreover, the availability of air as experienced by both Kai Tak and
discussed below. freight services further facilitates overseas airports such as Heathrow –
trade by enabling businesses to
operate in the most flexible and (a) Once all available slots were taken
Consideration 1 : time-sensitive manner. Global up, it would be impossible for
Air Connectivity connectivity is particularly important existing operators to introduce
to those sectors characterised new destinations or additional
Air connectivity is essential for by internationalised, high-value frequency on existing routes
Hong Kong to maintain its products and services, that are also except for substituting existing
attractiveness as an international dependent on mobile workforces flights. This will put a halt to the
business hub as well as and face-to-face relations. Among growth of our aviation network and
competitiveness on the global them are financial and business remove the room for introducing
economic and financial stage. services, which are the cornerstone competition on existing routes;
of Hong Kong’s economy.
Air connectivity is commonly defined (b) With slots at a premium, airlines
by the number of destinations served As Hong Kong’s air connectivity may deploy bigger aircraft, use
and the frequency of flights along increases, it in turn makes available slots for lucrative routes
each of those routes. The better Hong Kong more attractive to instead of the less profitable ones.
HKIA is connected to the world, the foreign investment and increases This would gradually reduce the
greater the frequency of services it the potential for business efficiency, frequency of less profitable routes
could offer, resulting in more reliable ultimately generating a virtuous cycle and may eventually eliminate them
air services and a lower threshold of connectivity and economic growth. from our network. The reduction
for opening new routes. With every in frequency would result in longer
new flight it adds to its network, Hence, in comparing the two options, connecting time; and the shrinking
HKIA’s connectivity will be further air connectivity is one of the most network, in less choices and
enhanced. Passengers, particularly critical considerations. According higher prices on most routes. The
business travellers, who have access to International Air Transport higher yield origin-and-destination
Association (IATA) Consulting’s

38
 traffic may gradually replace (e) In the wider context, when HKIA 2030. Option 2 would ensure that
the relatively lower yield transit/ is saturated, the growth of our our connectivity is maintained and
transfer traffic. All these would hub airport would be halted developed in line with demand.
eventually render Hong Kong a and the economic benefits for Failure to do so would result in our
less attractive place for transit/ Hong Kong associated with connectivity being eroded over time
transfer traffic to hub through; that potential growth would relative to other neighbouring or
be lost. Hong Kong’s overall regional airports with expansion plans.
(c) When the runway is operating competitiveness in terms of
to its limits, there will be less its position as an international Adopting Option 1 now and then
flexibility to cope with operational business centre would be reverting to Option 2 at a later stage
delays or disruptions due to adversely affected. Hong Kong’s is not a viable proposition. Firstly,
weather or other unforeseen market share across the whole it would be very wasteful as part of
incidents. This will invariably spectrum of the logistics industry, the infrastructure built under Option 1
lead to longer flight delay and including freight forwarding and would have to be taken down to
deterioration of the overall airport insurance, would shrink as we make way for a different airport
experience; lose our edge to other airports layout under Option 2. Secondly,
with increasing connectivity. due to the long lead time required to
(d) Should all of the above happen, implement Option 2, any substantial
travellers who wish to use HKIA In this respect, Option 2 has a clear delay in implementing that option
would be pushed to consider advantage over Option 1 as the will mean that the capacity of HKIA
using other neighbouring airports runway capacity of a three-runway would be exhausted before the third
that provide services they system would be able to meet runway is built. During that period,
need, resulting in considerable Hong Kong’s unconstrained traffic traffic may be lost to other airports
inconvenience for travellers as a demand up to and possibly beyond with increasing connectivity and,
whole; and

7
the Two options
Comparison Between

HKIA MASTER PLAN 2030 39

7 COMPARISON BETWEEN THE TWO OPTIONS

once lost, would be hard to regain. a network of bilateral air services Express Line (WEL), which is
It is in the best interest of Hong Kong agreements. Therefore, currently under feasibility study
to ensure that sufficient capacity at flight movements that we cannot by the Government, may provide
HKIA is developed in time to cater for accommodate due to capacity an efficient mode of transport to
the anticipated demand. constraints cannot be funnelled allow seamless passenger flight
to other airports purely based on connections between the two
Relying on Neighbouring demand or at our wishes; airports, and to make it even more
Airports is Not an Option convenient for the GPRD’s travelling
(b) It would not be in the interest public to fly via HKIA internationally
Some advocates have argued that of most passengers who would
greater cooperation with Greater or Shenzhen airport domestically.
likely find using or transferring The project is subject to further
Pearl River Delta (GPRD) airports through another airport highly
(most notably Shenzhen Bao’an studies, including alignment options,
inconvenient; and patronage forecasts, the functionality
Airport) could possibly remove
the need for us to expand HKIA’s (c) Most importantly, relying on other of the railways, technical standards,
capacity. We, however, do not airports to meet our demand operational and service requirements,
believe that it is a viable proposition, would inhibit the growth of our etc. If and when the WEL is
for the following reasons – hub airport and thus adversely constructed, the benefit it brings
affect Hong Kong’s overall would equally apply to both Options.
(a) Air services to and from an competitiveness as a world city.
airport are regulated by individual This is an example of our cooperation
jurisdiction and governed It should be noted that the with other GPRD airports. We
internationally through Hong Kong-Shenzhen Western enhance consumer choice by making
smooth travel. A recent example is

40
the Hong Kong-Shenzhen Airports In the context of HKIA – In estimating the relevant economic
Link, which is a service to make it contribution components of airport
more convenient to travel via HKIA or (a) “Direct” contribution refers investment, ESA has quantified the
Shenzhen Bao’an Airport. Such efforts to employment and income direct value added (VA) impact of
are however different from directing generated by the aviation sector airport-related activities, as well as
to other GPRD airports traffic which in Hong Kong, including the direct those indirectly generated VA impact
would have chosen Hong Kong due operation of the airport, such arising from a change in airport
to market forces if there had been as airlines, air cargo terminal activities. ESA has also adopted a
sufficient capacity at HKIA. operators, catering operators, set of VA “multipliers”15 for selected
aircraft maintenance and other sectors related to the airport in its
services operators, and Airport calculations and estimated the VA
Consideration 2 : Authority Hong Kong (AAHK), etc., generated from additional spending
Economic Benefits as well as non-aviation businesses due to the income projected from
at HKIA, including retail, food and the direct and indirect impacts
Experience overseas has shown that beverage, hotels and convention mentioned above.
investment in airports provides very and exhibitions;
handsome economic return and that To ascertain whether an investment
airports produce significantly higher (b) “Indirect” contribution refers is worthwhile, analyses were
economic impact than other transport to employment and income conducted based on two widely
infrastructure to the local economy13. generated by the suppliers of used investment analysis tools:
In order to understand precisely the goods and services to the direct Economic Net Present Value (ENPV)
economic implications of expanding activities of the aviation sector and Economic Internal Rate of
HKIA, Enright, Scott & Associates in Hong Kong and non-aviation Return (EIRR). However, based on
(ESA) was tasked to conduct an businesses at HKIA, such as the options presented for analyses,
Economic Impact Analysis to utilities suppliers, fuel suppliers, Option 1 involves leveraging mainly
assess the potential impact of such construction and cleaning on existing assets to serve additional
an investment on Hong Kong’s companies, food and retail goods demand, and Option 2 involves heavy
economy. suppliers, etc.; and investments in building up new
(c) “Induced” contribution refers assets to serve additional demand.
In general, an investment’s
to the employment and income Given the significant difference in
economic impact is measured by
generated by the spending of investment profiles and the noted
its direct, indirect, and induced
income by the direct and indirect shortcoming of EIRR (that it tends
contributions to the economy,
employees on local goods and to favour projects with short-term
usually expressed in terms of
services, such as spending of paybacks at the expense of projects
“value added”14 and percentage 7
airline employees, utilities supplier with longer paybacks regardless
contribution to gross domestic
the Two options
Comparison Between

employees, AAHK employees, etc. of the overall value generated by

product (GDP) in a certain year.
the project), ESA recommended to
use ENPV as the tool to assess the
relative merits of the two options.

13
According to Economic Impacts of Hub Airports, a report commissioned by British Chamber of Commerce in July 2009, the wider
economic benefits of hub airports can be two to five times that of rail.
14
“Value added” is defined as the value of gross output less the value of intermediate consumption (the value of goods and services
used up in the course of production).
15
The VA multipliers comprise the sectors’ own ability to generate VA and the spillover effect to other sectors. The multipliers relating
direct plus indirect VA to gross output or business receipts were provided by the Economic Analysis and Business Facilitation Unit of
the Hong Kong SAR Government as broad working assumptions for the current economic impact analysis. These are produced based
on the observed linkages between sectors and the resultant pattern of intermediate consumption, import leakages of the various
economic activities, gross margin of external trade and the ratios of VA to gross-output and business receipts for the affected sectors
in recent years. As these impact estimates are largely judgmental, they should only be taken as working assumptions for the current
economic impact analysis, and should not be regarded as “official estimates” of the Government.

HKIA MASTER PLAN 2030 41

7 COMPARISON BETWEEN THE TWO OPTIONS

Figure Economic Impact of Option 1

Cost and Benefit Flows of Option 1
7.1 (Two Runways)
in HK$ billion
ESA estimates that the direct, indirect
80 and induced contribution of HKIA to
ENPV = HK$432 Billion Hong Kong’s GDP in 2030 under this
60
option would be HK$120 billion16,
40 equivalent to around 3.3% of
Hong Kong’s GDP forecast for 2030
20
(compared to 4.6% in 2008). Direct
0 employment would be increased from
62,000 in 2008 to 101,000 in 2030.
-20
Indirect and induced employment
2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030
would be increased from 124,000 in
Benefits (Direct + Indirect + Induced) Construction Costs Net 2008 to 143,000 in 2030.
Note: ENPV is calculated based on 50-year return (till 2061) and discount rate of 4% which is used generally for
Government infrastructure projects. Benefits are measured in value added. For simplicity, graph illustrates With the given construction
cash flow up to 2030 only.
Source: Enright, Scott & Associates Ltd costs under this option17, and the
corresponding stream of additional
traffic up to 2061 (a 50-year life
Figure span is assumed for infrastructure),
Cost and Benefit Flows of Option 2
7.2 the ENPV18 is estimated to be
in HK$ billion
HK$432 billion19.
80
ENPV = HK$912 Billion The foregone economic benefits due
60 to constrained passenger and cargo
throughput will in turn translate into
40
lower economic contribution of the
20 airport and its associated industries,
and the ripple effect would ultimately
0
affect the GDP growth in Hong Kong.
-20
Economic Impact of Option 2
2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

Benefits (Direct + Indirect + Induced) Construction Costs Net

(Three Runways)
Note: ENPV is calculated based on 50-year return (till 2061) and discount rate of 4% which is used generally for ESA estimates that given the
Government infrastructure projects. Benefits are measured in value added. For simplicity, graph illustrates
cash flow up to 2030 only. higher construction costs under
Source: Enright, Scott & Associates Ltd this option20, the direct, indirect
and induced contribution to Hong
Kong’s GDP in 2030 would be
HK$167 billion21, equivalent to

16
In 2009 dollars.
17
Cost details are in Chapter 5.
18
ENPV refers to the difference between the present value of the future economic benefits from an investment and the present value
of the investment amount.
19
In 2009 dollars.
20
Cost details are in Chapter 6.
21
In 2009 dollars.

42
 Figure
7.3 Summary of the Economic Impact Analysis

2030
2008 (Actual) Option 1 Option 2
(Two Runways) (Three Runways)
Economic contribution (Direct + Indirect + Induced) HK$78 billion HK$120 billion HK$167 billion

% of GDP 4.6% 3.3% 4.6%

Direct employment 62,000 101,000 141,000

Indirect + induced employment 124,000 143,000 199,000

2012-2061
ENPV – HK$432 billion HK$912 billion
7
the Two options
Comparison Between

around 4.6% of the Hong Kong’s Summary HK$912 billion and is a “front-loaded”
GDP forecast for 2030 (compared to investment that is projected to
Figure 7.3 provides a summary of the
4.6% in 2008). Direct employment generate a much higher value added
economic impact analysis.
associated with HKIA would reach in the long term.
141,000 and indirect and induced Option 1 is no doubt a less
employment would increase to about Between the two options,
expensive option in terms of capital
199,000 by 2030. The ENPV up to Option 2 brings a substantially
investment and would bring about
2061 under Option 2 is estimated to higher economic contribution in
an ENPV of HK$432 billion. Option 2,
be HK$912 billion22. the long term (a difference of
however, has a projected ENPV of
HK$480 billion in ENPV) and

22
In 2009 dollars.

HKIA MASTER PLAN 2030 43

7 COMPARISON BETWEEN THE TWO OPTIONS

Figure
Breakdown of Airport Island Employment in 2010
7.4

Managerial
5.2%
Manual/Low-Skilled
19.5%
Professional
17.9%

Skilled
57.4%
Source: HKIA Workforce Survey 2010
Definitions: Manual/Low-Skilled: Jobs involving simple and routine tasks carried out often with some physical
effort and help of hand-held tools. Skilled: Jobs requiring special knowledge and skills acquired through training
in order to perform well. Professional: Jobs requiring qualifications and knowledge of a specialised field.
Managerial: Jobs which are responsible for the management of a section, department, division or a company in
the achievement of organisation objectives.

provides a significantly greater boost Between the two options, Option 2 Consideration 3 :
to local employment. One important would provide substantially more
Construction Cost
aspect of the economic analysis that direct jobs than Option 1 (141,000
deserves particular attention is the jobs under Option 2 vis-à-vis 101,000 The construction cost estimates
gradual decrease of HKIA’s economic jobs under Option 1). Further to the are supported by the preliminary
contribution as a percentage of ESA analysis, we have surveyed engineering feasibility assessment
Hong Kong’s GDP under Option 1 nearly 400 different companies conducted, with approximate work
(below the 2008 level). As Hong and organisations operating on the quantity measured to the level of
Kong’s economy continues to grow, airport island in 2010. Of the 65,000 design details available and costs
it is obvious that Option 1 does people employed, around 20% of the per unit of construction floor areas
not allow HKIA to grow in tandem employment belongs to manual/low- benchmarked with existing similar
due to its constrained capacity23. skilled jobs. According to returns projects on the airport island.
In addition, constrained capacity from the survey, it is anticipated
Option 2 costs considerably more than
is likely to affect air connectivity. that roughly 50% of the new jobs
Option 1 (estimated at HK$86.2 billion
Experience in Heathrow bears this created under both Options 1 and
vis-à-vis HK$23.4 billion in 2010 dollars or
out clearly: In 1990, Heathrow ranked 2 would be manual/low-skilled
HK$136.2 billion vis-à-vis HK$42.5 billion
second among airports in Europe, jobs. As Hong Kong is currently in
at money-of-the-day [MOD] prices) as
after Frankfurt, in the number of need of employment opportunities
the former entails a sizeable reclamation
destinations served, but as its for manual/low-skilled labour, the
and extensive airport ancillary facilities
capacity became constrained, it expansion of HKIA would contribute
required to efficiently integrate the third
slipped to seventh in 2010 behind towards filling this gap.
runway with the rest of the airport.
Frankfurt, Paris, Amsterdam, Munich,
Rome and Madrid24.

23
The comparison of the projected economic impact of the two options was made against independently forecast GDP figures.
Such figures have not been adjusted to take into account potential slower economic growth in Option 1 than in Option 2.
24
Strategy: Process, Content, Context, An International Perspective by Bob De Wit, Ron Meyer, 4th Edition.

44
The high construction cost of Option 2 (b) A provisional amount of 20% integrated fully with the rest of the
is attributed to the following factors – of the construction cost has airport infrastructure to sustain the
been included to cover uncertain same level of airport experience.
(a) The proposed reclamation falls on elements of this project given
a wide stretch of Contaminated its massive scale, the innovative The construction cost figures
Mud Pits (CMPs). In order to reclamation method adopted above would have to be updated
contain the CMPs in-situ, a on a large scale, and that in due course after the statutory
special reclamation method called only preliminary engineering Environmental Impact Assessment
“Deep Cement Mixing” would be assessment has been done process and preliminary design have
employed and this element alone hitherto; and been completed.
would cost HK$9.0 billion more
7
than conventional reclamation (c) The airport is a unique piece
the Two options
Comparison Between

methods. Moreover, unlike the of infrastructure that needs to Consideration 4 :

reclamation of the existing airport be designed to meet a whole Funding
island where a considerable host of stringent standards
Under the Airport Authority
amount of fill was obtained for safety, security, efficiency
Ordinance, we are required to
from the original island, the fill and service quality. It can only
conduct our business according to
for the proposed reclamation operate efficiently with specialist
prudent commercial principles. We
under Option 2 would have to automation systems such as
have maintained an efficient capital
be imported from the Pearl River baggage handling and automated
structure in line with comparable
Delta or beyond, which would people mover systems. All these
commercial entities. Leveraging our
drive up the land formation add up to the capital intensive
strong revenue base and superior
cost significantly; investment required, particularly so
credit rating, we operate with
for Option 2, where the operation
of the third runway has to be

HKIA MASTER PLAN 2030 45

7 COMPARISON BETWEEN THE TWO OPTIONS

a prudent level of borrowings Figure

Option 1 – Annual Capital Expenditure
(average year-end debt balance at 7.5
about HK$9.0 billion). This has helped
us achieve a financial rate of return in HK$ billion
8
on equity of 10.7% in the year ending
7
March 201125.
6

To ascertain our capability in 5

4 HK$42.5 Billion
undertaking the Master Plan 2030,
Total Capital
3
The Hongkong and Shanghai Expenditure
2
Banking Corporation Limited
1
has been commissioned as our
0
independent financial advisor to
2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030
evaluate the financial feasibility of
the development options under the
Master Plan 2030 and advise on our
prudent borrowing capacity based on
our cashflow projections. Figure
Option 1 – Annual Net Cashflow after Dividend
7.6
The cashflow projections under both
in HK$ billion
Options 1 and 2 are prepared on the
3
following assumptions –
2
(a) The final construction cost of the
1 HK$4.6 Billion
capital projects will be increased Cumulative
0
from the current estimate based on Net Cashflow
2010 dollars to the MOD amounts, (1) after Dividend

in line with the Tender Price Index (2)

(TPI) which is estimated to increase
(3)
at the rate of 5% per annum from
2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

2011 to 2014, 5.5% per annum

Positive Net Cashflow after Dividend Negative Net Cashflow after Dividend
from 2015 to 2020 and 3% per
annum thereafter;

(b) Our operating revenue will (e) We will continue to invest in The results of our operations for each
increase in line with traffic growth our committed capital projects, year based on the above-mentioned
based on IATA Consulting’s base such as Phase 1 of the Midfield assumptions show a trend of rising
case traffic forecast for this period; Development, and the routine profits. As depreciation is charged
replacement of fixed assets. before arriving at our profits, the
(c) Airport charges will be adjusted cashflow generated from our
in line with Consumer Price Index Cashflow Analysis – Option 1 operations is the aggregate of our
(CPI) movements (assuming 3% profits and the depreciation charge
Under Option 1, capital expenditure
CPI increase per year up to 2030); but less any increase in our working
to be incurred would amount to
HK$23.4 billion (in 2010 dollars) or capital. At the same time, expenditure
(d) The majority of our profits will be
HK$42.5 billion at MOD prices is incurred on the committed capital
distributed by way of dividends
between 2013 and 2030. The annual projects such as Phase 1 of the
to our shareholder each year at a
cash outflow of the capital expenditure Midfield Development and routine
similar rate as in previous years; and
is shown in Figure 7.5. replacement of fixed assets.

25
According to 2010/11 unaudited accounts.

46
Hence, such expenditure should Figure
Option 1 – Annual Funding Shortfall/Surplus
be deducted from our cashflow 7.7
from operations to arrive at the net
cashflow before dividend payments. in HK$ billion
Maximum funding
(8)
shortfall after dividend,
Under the Airport Authority peaking in 2030
(6)
(HK$37.9 Billion)
Ordinance, the Financial Secretary
has the power to request AAHK to (4)

distribute dividend after consultation

(2)
with the AAHK Board. We have
distributed about 80% of our profits 0

in past years by way of dividends.

2
We have assumed the same level of
2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030
distributions in the projections.
Annual Funding Shortfall Annual Funding Surplus

Based on the foregoing, the forecast

profits for the period from 2013 to
2030 under Option 1 will amount to Figure
Option 1 – Cumulative Funding Shortfall after Debt Financing
HK$101.6 billion after depreciation 7.8
charges of HK$68.2 billion and a
in HK$ billion HK$37.9 Billion
net increase in working capital of Pre-financing
40 Funding Shortfall
HK$6.1 billion. In the same period,
About HK$25 Billion
capital expenditure on committed 30 Cumulative Funding
Shortfall after Debt
capital projects and routine Financing
20 (HK$37.9 Billion –
replacement of fixed assets will HK$13 Billion)
About HK$13 Billion
amount to HK$79.5 billion. On the 10 Additional Debt
basis of the previous practice of (Less Interest
Expense)
0
payment of approximately 80% of
the preceding year’s profits by way (10)
of dividends, which will amount to
2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

HK$79.6 billion, the net cashflow

after dividend is forecast to amount to
HK$4.6 billion (representing
HK$101.6 + HK$68.2 – HK$6.1 – Based on the assumptions set out additional borrowing capacity of about
HK$79.5 – HK$79.6 billion). on page 46, our financial advisor has HK$17.0 billion over our average level
7
assessed our prudent borrowing of borrowings of about HK$9.0 billion.
the Two options
Comparison Between

When comparing the cash outflow

capacity on the assumption that As additional interest costs would be
required for the capital expenditure
we would expect to maintain a high incurred on these borrowings, the net
with the net cashflow after dividend,
investment grade standalone credit incremental cashflow available from
it is clear that there would be a
rating (at a minimum of A) so as to borrowings up to 2030 would amount
funding shortfall for most of the years
ensure our continued access to to approximately HK$13.0 billion
between 2013 and 2030. The annual
the debt market at a reasonable under Option 1. This amount would
funding shortfall is shown in Figure 7.7
cost26. The advisor considered that not be sufficient to meet the funding
and the total funding shortfall
the amount that we could borrow shortfall as shown in Figure 7.8.
between 2013 and 2030 is estimated
on this basis is approximately
to be HK$37.9 billion, peaking in 2030
HK$26.0 billion, representing a net
(see Appendix 1 for details).

26
In determining our prudent borrowing capacity, the financial advisor has applied a range of criteria which take into account the key
financial metrics analysed by rating agencies, lenders’ measures of AAHK’s ability to service debt and the robustness of AAHK’s
financial profile.

HKIA MASTER PLAN 2030 47

7 COMPARISON BETWEEN THE TWO OPTIONS

Figure
Option 2 – Annual Capital Expenditure
7.9

167
in HK$ billion
14

HK$ 12

10
BILLION 8
HK$136.2 Billion
contribution to 6 Total Capital
Hong Kong’s Expenditure
4
GDP by 3-runway
system 2

0
2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

Cashflow Analysis – Option 2 As described on page 46, our

net cashflow generated from our
Under Option 2, capital expenditure
operations represents our profits,
to be incurred would amount to
plus depreciation charges and
HK$86.2 billion (in 2010 dollars) or
changes in working capital less
HK$136.2 billion at MOD prices
capital expenditure on committed
between 2013 and 2030. The
capital projects and dividends to our
annual cash outflow of the capital
shareholder. On the assumptions
expenditure is shown in Figure 7.9.

48
set out on page 46, the forecast Figure
Option 2 – Annual Net Cashflow after Dividend
profits for the period from 2013 to 7.10
2030 under Option 2 will amount to
HK$102.7 billion after depreciation in HK$ billion
5
charges of HK$87.2 billion and
4
increase in working capital of
3
HK$4.6 billion. In the same period,
2
capital expenditure on committed HK$23.4 Billion
1
Cumulative Net
capital projects and routine
0 Cashflow after
replacement of fixed assets will (1) Dividend
amount to HK$83.0 billion. On the (2)
basis of the previous practice of (3)
payment of approximately 80% of
2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030
the profits of the preceding years by
Positive Net Cashflow after Dividend Negative Net Cashflow after Dividend
way of dividends, which will amount
to HK$78.9 billion, the net cashflow
after dividend is forecast to amount
Figure
to HK$23.4 billion (representing Option 2 – Annual Funding Shortfall/Surplus
7.11
HK$102.7 + HK$87.2 – HK$4.6 –
HK$83.0 – HK$78.9 billion). in HK$ billion
Maximum funding
(16)
shortfall after dividend,
When comparing the cash outflow (14) peaking in 2030
required for the capital expenditure (12) (HK$112.8 Billion)
(10)
with the net cashflow after dividend,
(8)
it is clear that there would be
(6)
a funding shortfall for most of the (4)
years between 2013 and 2030, (2)

with the exception of a few years 0

2
beyond 2025. The funding shortfall
2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

is also much bigger than that of 2030

Option 1. The annual funding shortfall Annual Funding Shortfall Annual Funding Surplus

is shown in Figure 7.11 and the

total funding shortfall would peak
at HK$112.8 billion in 2030 (see Figure
Option 2 – Cumulative Funding Shortfall after Debt Financing 7
Appendix 2 for details). 7.12
the Two options
Comparison Between

A similar approach to debt sizing in HK$ billion HK$112.8 Billion

120 Pre-financing
has been adopted in Option 2 as for Funding Shortfall
Option 1, resulting in a net additional 100

borrowing capacity of approximately 80 About HK$102 Billion

Cumulative Funding
HK$17.0 billion. After allowing for the Shortfall after Debt
60 Financing
related interest cost over a slightly (HK$112.8 Billion –
40 HK$11 Billion)
longer period, the net incremental
cashflow available from borrowings 20
About HK$11 Billion
would amount to approximately 0 Additional Debt
(Less Interest
HK$11.0 billion under Option 2.
2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

Expense)
This amount would not be sufficient to
meet the funding shortfall as shown in
Figure 7.12.

HKIA MASTER PLAN 2030 49

7 COMPARISON BETWEEN THE TWO OPTIONS

Funding the Two Options Consideration 5 : sustainable growth, we will rise to

these challenges by addressing the
The above analysis is predicated on Environmental Issues
environmental concerns. Should
the base case financial projections Care for the environment is at Option 1 be pursued, a review will
of AAHK and Master Plan 2030 the heart of HKIA’s long-term be undertaken based on guidelines
construction costs. It shows that we commitment to sustainable growth. as stipulated in the statutory EIA
cannot finance either of the options A voluntary Environmental Impact process to assess whether the
through our internal cashflows Assessment (EIA) was conducted proposed developments under
and external prudent borrowing and included in the 1992 New Option 1 will constitute material
capacity. While we may be able to Airport Master Plan (NAMP) – EIA. changes to the NAMP to trigger the
reduce the shortfall by reviewing our This was updated in 1998 to provide requirement for an EIA study and
existing revenue framework with a thorough evaluation of the potential environmental permit.
a view to increasing our revenue, environmental impacts associated
the magnitude of such additional with the ultimate airport development For Option 2, we commissioned
revenue sources would unlikely envisioned by the NAMP for the Mott MacDonald to conduct
be material within this time frame. two-runway operations at a preliminary environmental
Subject to views gauged on the way design capacity, with a range of assessment to assess the potential
forward for the Master Plan 2030, commitments made to ensure constraints associated with the
further discussion on how best to that environmental impacts would various alternative airport expansion
bridge the funding gap between be effectively mitigated over the layouts of the third runway. While
AAHK and the Government would operational lifespan of the airport. this preliminary assessment does
be necessary. We do not underestimate the not replace a full-scale statutory
challenges involved in both options, EIA and compliance with all legal
particularly in Option 2. In line with requirements, we must ensure
HKIA’s long-term commitment to that the final recommended airport
expansion layout under Option 2

50
 Figure
Proposed Land Reclamation in Relation to Contaminated Mud Pits
7.13

should minimise environmental the use of land on the existing airport with Vertical Drains” reclamation
impact as far as possible. In island, thus keeping the requirement method as it involves potential release
the course of the statutory EIA for new land reclamation to a of polluted mud and leachate. Our
process, we will be able to address minimum. The conceptual design consultants have recommended the
environmental concerns in detail. of the expanded airport layout plan “Deep Cement Mixing” reclamation 7
The following paragraphs briefly identifies that about 650 hectares of method which has the advantage
the Two options
Comparison Between

summarise the key findings of reclamation would be required. of minimising disturbance to the
the preliminary environmental contaminated mud. While this method
assessment of the recommended About 40% of the proposed needs to be further considered in
airport expansion layout under reclamation falls upon an area of subsequent detailed studies, including
Option 2. Contaminated Mud Pits (CMPs) – on-site trials, it has been widely
an area subject to substantial used overseas, particularly in Japan,
Hydrodynamics, Water disturbance in the past and considered where it is a well established means
Quality, Marine Ecology to be of low ecological value. This area of improving the integrity of the
and Fisheries was identified by the Government in soft ground and providing a robust
1991 as the preferred disposal site foundation for reclamation.
With the reclamation involved, for contaminated dredged sediment,
Option 2 is undeniably associated based on a Contaminated Spoil Hydrodynamic and water quality
with more environmental issues than Management Study. Reclamation models from Delft Hydraulics
Option 1. In planning Option 2, every in this area cannot be carried out have been used in a preliminary
attempt has been made to maximise through the conventional “Undredged assessment of the potential impacts

HKIA MASTER PLAN 2030 51

7 COMPARISON BETWEEN THE TWO OPTIONS

of the proposed reclamation on flow regime, although some local are located quite a significant distance
water sensitive receivers (WSRs) impacts are projected, for example from the proposed reclamation, along
and ecological sensitive receivers small increases in flow speed at the the North Lantau coastline. Preliminary
(ESRs) in the North Western western end of the third runway. assessment has also indicated that
Water Control Zone (WCZ). No significant change in the flushing despite a significant loss in soft
According to the assessment, capacity of the channel between the bottom seabed areas, the significance
during the construction phase, airport platform and North Lantau is of impacts will be low insofar as the
except for a marginal exceedance anticipated, nor in the major channel direct loss of marine lives living on
predicted at Sha Chau and Lung from Urmston Road to Ma Wan the seabed and intertidal flora and
Kwu Chau Marine Park which can Channel. As a result, no large-scale fauna is concerned – in particular
be addressed when mitigation changes in water quality within the given that much of the proposed
measures are applied, the predicted North Western WCZ are anticipated. reclamation footprint has been subject
suspended solids concentrations to substantial human disturbance in the
at all WSRs and ESRs resulting A desktop literature review has past (note: around 40% of the footprint
from the proposed reclamation are established a good understanding of is located above the CMPs) and is not
expected to be in compliance with both the physical and marine ecological known to be inhabited by species of
the Water Quality Objectives. As environments in the areas that could be conservation importance, other than
to the preliminary assessment for impacted by the proposed reclamation. Chinese White Dolphins.
the operation phase, the expanded In terms of marine ecology, most
airport footprint has been simulated ecologically sensitive areas (such as The preliminary fisheries impact
and is shown to have no significant coral sites, intertidal habitats of horse- assessment has looked into those
large-scale impact on the tidal shoe crabs and coastal sea-grass beds) areas sensitive to the proposed

52
 reclamation works, including the
marine fish culture zone at Ma
Wan and capture fisheries in the
North Western WCZ. Based on
preliminary water quality modelling
results, construction activities
are not expected to result in any
significant impact on the culture
fisheries at Ma Wan Fish Culture
Zone. However, the permanent loss
of water body would affect fisheries
resources and fishing operations,
Source: AFCD
as the proposed reclamation area
currently supports a medium-low
Figure fisheries production. The permanent
Chinese White Dolphins Sightings
7.14 loss in fisheries production is
preliminarily estimated to be around
0.08% of Hong Kong’s yearly
production (58,700-117,400 kg loss).
The mechanism for compensation
for capture and culture fisheries
impacted by reclamation and/
or construction works is well
established. Should Option 2 be
pursued, further discussions with the
Government and the affected parties
would be required.

Indo-Pacific Humpback
Dolphin
Potential impact on the Indo-Pacific
humpback dolphin (Sousa chinensis),
or Chinese White Dolphin (CWD),
is another important issue.
7
The local population of dolphins
the Two options
Comparison Between

in Hong Kong waters is estimated

to be about 100 – 200 individuals,
depending on the time of year27.
The Agriculture, Fisheries and
Conservation Department’s (AFCD)
current database (see Figure 7.14) on
CWD has been reviewed. The review
identified that CWDs are widely
distributed throughout northwest
Lantau, northeast Lantau, west
Lantau and southwest Lantau, while
they are rarely observed in the
Note: Density of Chinese white dolphins with corrected survey effort per [Link]. in waters around Lantau Island,
using data collected during 2002-2009. DPSE = no. of dolphins per 100 units of survey effort.
Source: AFCD 27
AFCD, 2007

HKIA MASTER PLAN 2030 53

7 COMPARISON BETWEEN THE TWO OPTIONS

Deep Bay, southeast Lantau and construction and the operation stages, by the International Civil Aviation
Lamma areas. CWD sightings (and extending to loss of habitat, disruption Organization (ICAO) and the
the areas of highest abundance) are of breeding and calving areas, and United States Federal Aviation
common in the waters east of disturbance of activities such as Administration (FAA), which indicate
Lung Kwu Chau, between Lung Kwu feeding and socialising. A range of areas of aircraft noise exposure
Chau and Black Point, near working methodologies, mitigation by using Noise Exposure Forecast
Pak Chau, around the Brothers and compensation measures (NEF) contours around an airport
Islands and throughout the west developed from other EIA studies and its flight paths. According to
Lantau area. Abundance is especially over the years have been considered the “Hong Kong Planning Standards
high along the stretch of waters effective in minimising such impacts. and Guidelines” (HKPSG), noise
between the Tai O Peninsula and All options for minimising, mitigating sensitive uses such as domestic
Kai Kung Shan. CWDs are much and compensating the potential and educational premises should
less frequently observed in waters impacts on CWDs would be fully not be located within the NEF 25
north of the HKIA platform, and in investigated in the course of the contour. This is in line with the
northeast Lantau waters. statutory EIA process. standards adopted by many
developed countries.
In broad terms, expanding the Noise Impact on Noise
existing airport island northwards Sensitive Receivers In 1998, we published NEF contours
would overlay a marine area of low that represented a projection of
CWD abundance. Nonetheless, Residential communities along the existing two-runway system
the reclamation could potentially the flight paths are subject to operating at its design capacity.
impact on dolphins during both the a varying degree of aircraft noise. We have also conducted a
We follow guidelines established preliminary projection of NEF

Figure
Preliminary Projection of Three-Runway NEF Contours for HKIA
7.15

54
contours for a three-runway layout indicate that it would not exceed has covered potential environmental
at design capacity. With newer the prevailing Air Quality Objectives issues involved and has explored,
aircraft producing less noise and (AQOs) for all air sensitive receivers albeit on a preliminary basis, possible
the introduction of new flight paths around HKIA. They also show that mitigation and compensatory
and flight procedures made possible our operations make a relatively measures. 7
by the three-runway system, the small contribution to the overall
preliminary NEF contours projected air quality of Hong Kong. We Option 1 does not involve any
the Two options
Comparison Between

for Option 2 do not differ significantly understand that the Government reclamation. Hence, comparatively
from the 1998 NEF contours. More is currently reviewing Hong Kong’s speaking, Option 2 will potentially
detailed NEF contour forecasts will AQOs and taking into account the create more environmental issues
be carried out in subsequent studies outcome of the Government’s than Option 1. We are committed
under the statutory EIA process. review, a detailed air quality impact to addressing the environmental
assessment will be conducted under concerns associated with both
Air Quality the statutory EIA process. Options. For example, in the course of
the statutory EIA process, we will fully
Our consultants have carried out
preliminary studies on the possible
Summary of Environmental investigate the environmental issues

air quality impact of the air traffic

Considerations in question to ensure that practical
and feasible plans are advanced and
movements (also known as flight It is worth noting that the preliminary their residual environmental impacts
movements) projected for 2030 environmental assessment are minimised.
under Option 2 and the results undertaken at this stage for Option 2

HKIA MASTER PLAN 2030 55

 THE TIME TO ACT IS NOW

The Master Plan 2030 is a very major gateways to China – stands

detailed study. We have tried to to benefit economically from the
cover as many issues as possible inevitable rise in demand for aviation
that are relevant to the future services. An expanded HKIA is the
About development of Hong Kong key. While Options 1 and 2 have their

10
International Airport (HKIA) to enable respective pros and cons, only the
the community to have an informed latter can fully meet Hong Kong’s
discussion, and hopefully leading to long-term needs.
an educated consensus on this very
In view of the vibrant aviation market,
YEARS important subject.
both globally and regionally, many
of construction HKIA is growing busier every day of our neighbouring airports have
lead time required and the time for making a decision laid out expansion plans to cope
for Option 2 on its future development is running with this rising demand in air travel.
short. Both Options 1 and 2 require Unless we put our act together, it is
long lead time for conducting further highly possible that our status as an
detailed studies and obtaining international aviation hub would be
regulatory approvals before works weakened. Traffic lost would be hard
can commence. Option 2, in to re-gain.
particular, requires a construction
If we are to seize the golden
lead time of about 10 years as shown
opportunity before us, create a
in Figure 8.1.
wealth of new benefits for
With economic activities forecast Hong Kong and retain our position as
to grow at an enormous rate on the the world’s premier aviation hub, the
Mainland, Hong Kong – one of the time to act is now.

56
Figure
8.1 Estimated Implementation Programme of the Third Runway

Year 1 2 3 4 5 6 7 8 9 10 11
Board Endorsement

1.5 years Environmental Impact Assessment Stage

Board Approval of Project Scope
2 years Detailed Design
4 years Land Reclamation
3 years Construction of
Third Runway and Taxiways
Opening of Third Runway
Closure of Existing
North Runway 1.5 years
Construction of Third Runway Passenger Concourses and Aprons 3 years
8

Terminal 2 Reconfiguration 2.5 years

ACT IS NOW
THE TIME TO

Landside Works 2 years

Three Runways Available

for Operation

HKIA MASTER PLAN 2030 57

APPENDIX 1

Option 1: Summary Table of Cashflow and Funding Shortfall (Note 1)

Cumulative Cumulative
Expenditure Funding Funding
Funding
Cash Generated on Committed Surplus/(Shortfall) Surplus/(Shortfall)
Option 1 Net Cashflow Dividend Net Cashflow Surplus/(Shortfall)
from Our Capital Projects before Dividend after Dividend
(HK$ billion) Capex before Dividend (Note 2) after Dividend for the year after
Operations and Replacement (Note 3) (Note 3)
(A) (D) = (B) + (C) (E) (F) = (D) + (E) Dividend
(B) of Fixed Assets n n
(F) + (A)
(C) ∑[(D) + (A)] ∑[(F) + (A)]
i=1 i=1

2013/14 – 7.1 (5.0) 2.2 (3.1) (0.9) (0.9) 2.2 (0.9)

2014/15 – 6.2 (3.3) 2.9 (3.5) (0.6) (0.6) 5.1 (1.5)

2015/16 – 6.5 (1.4) 5.1 (3.8) 1.3 1.3 10.2 (0.2)

2016/17 (0.1) 7.0 (1.5) 5.5 (3.8) 1.7 1.6 15.6 1.4

2017/18 (1.6) 8.3 (4.1) 4.2 (3.8) 0.4 (1.2) 18.2 0.2

2018/19 (4.6) 8.4 (3.5) 4.9 (4.3) 0.6 (4.0) 18.5 (3.8)

2019/20 (3.7) 8.7 (7.1) 1.6 (4.4) (2.8) (6.5) 16.4 (10.2)

2020/21 (0.9) 7.7 (4.5) 3.2 (4.6) (1.5) (2.4) 18.7 (12.6)

2021/22 (1.1) 8.7 (4.0) 4.7 (4.7) 0.1 (1.0) 22.3 (13.6)

2022/23 (4.5) 10.4 (4.5) 5.9 (4.4) 1.5 (3.0) 23.7 (16.6)

2023/24 (7.1) 10.3 (3.6) 6.7 (5.0) 1.7 (5.4) 23.3 (22.0)

2024/25 (6.4) 10.4 (6.3) 4.1 (5.1) (1.0) (7.4) 21.0 (29.4)

2025/26 (1.9) 8.9 (4.5) 4.4 (5.2) (0.8) (2.6) 23.5 (32.0)

2026/27 – 9.8 (5.8) 4.0 (5.1) (1.1) (1.1) 27.6 (33.1)

2027/28 (0.1) 10.6 (5.0) 5.6 (4.4) 1.2 1.1 33.0 (32.0)

2028/29 (3.9) 11.9 (4.7) 7.2 (4.9) 2.3 (1.6) 36.3 (33.6)

2029/30 (5.4) 11.8 (5.1) 6.8 (4.8) 1.9 (3.4) 37.7 (37.1)

2030/31 (1.3) 10.9 (5.7) 5.2 (4.8) 0.4 (0.9) 41.6 (37.9)

Total
(2013/14- (42.5) 163.7 (79.5) 84.2 (79.6) 4.6 (37.9)
2030/31)

Note:
1 The above projections are presented for illustration purposes only and do not represent any forecast adopted by AAHK on its future business
performance. The actual outcome of the projections will depend on many factors which cannot be foreseen at this time, and which are
outside the control of AAHK.
The above figures are subject to rounding differences.
2 Dividend refers to payout based on 80% of the net profit of the preceding year.
3 Cumulative funding surplus/(shortfall) refers to the sum of preceding year’s annual funding surplus/(shortfall) and current year’s annual
funding surplus/(shortfall).

58
APPENDIX 2

Option 2: Summary Table of Cashflow and Funding Shortfall (Note 1)

Cumulative Cumulative
Expenditure Funding Funding
Funding
Cash Generated on Committed Surplus/(Shortfall) Surplus/(Shortfall)
Option 2 Net Cashflow Dividend Net Cashflow Surplus/(Shortfall)
from Our Capital Projects before Dividend after Dividend
(HK$ billion) Capex before Dividend (Note 2) after Dividend for the year after
Operations and Replacement (Note 3) (Note 3)
(A) (D) = (B) + (C) (E) (F) = (D) + (E) Dividend
(B) of Fixed Assets n n
(F) + (A)
(C) ∑[(D) + (A)] ∑[(F) + (A)]
i=1 i=1

2013/14 (8.2) 7.2 (5.0) 2.4 (3.1) (0.7) (8.8) (5.8) (8.8)

2014/15 (8.6) 6.6 (3.3) 3.2 (3.5) (0.3) (8.9) (11.1) (17.7)

2015/16 (9.1) 6.8 (1.4) 5.4 (3.6) 1.8 (7.2) (14.8) (24.9)

2016/17 (9.6) 7.3 (1.5) 5.8 (3.8) 2.0 (7.6) (18.6) (32.5)

2017/18 (10.1) 8.3 (4.1) 4.2 (3.8) 0.4 (9.7) (24.5) (42.3)

2018/19 (12.0) 8.4 (3.5) 4.9 (4.3) 0.6 (11.4) (31.6) (53.7)

2019/20 (12.7) 9.3 (7.1) 2.1 (4.3) (2.2) (14.9) (42.1) (68.6)

2020/21 (13.0) 8.7 (4.5) 4.1 (4.6) (0.5) (13.5) (51.1) (82.1)

2021/22 (11.9) 9.1 (4.0) 5.2 (4.7) 0.5 (11.5) (57.8) (93.5)

2022/23 (5.2) 9.1 (4.5) 4.7 (4.9) (0.3) (5.5) (58.4) (99.0)

2023/24 (5.4) 10.4 (3.6) 6.8 (3.6) 3.2 (2.2) (56.9) (101.2)

2024/25 (6.8) 11.7 (6.2) 5.5 (4.0) 1.5 (5.3) (58.2) (106.5)

2025/26 (7.0) 11.5 (5.0) 6.5 (4.4) 2.1 (4.9) (58.8) (111.5)

2026/27 – 11.0 (6.3) 4.8 (4.7) 0.1 0.1 (54.0) (111.3)

2027/28 (3.7) 14.1 (5.5) 8.6 (4.4) 4.2 0.5 (49.1) (110.9)

2028/29 (3.8) 14.5 (5.1) 9.3 (5.4) 3.9 0.1 (43.6) (110.8)

2029/30 (4.5) 15.4 (5.6) 9.8 (5.7) 4.1 (0.4) (38.3) (111.2)

2030/31 (4.6) 15.9 (6.8) 9.1 (6.0) 3.1 (1.6) (33.9) (112.8)

Total
(2013/14- (136.2) 185.3 (83.0) 102.3 (78.9) 23.4 (112.8)
2030/31)

Note:
1 The above projections are presented for illustration purposes only and do not represent any forecast adopted by AAHK on its future business
performance. The actual outcome of the projections will depend on many factors which cannot be foreseen at this time, and which are
outside the control of AAHK.
The above figures are subject to rounding differences.
2 Dividend refers to payout based on 80% of the net profit of the preceding year.
3 Cumulative funding surplus/(shortfall) refers to the sum of preceding year’s annual funding surplus/(shortfall) and current year’s annual
funding surplus/(shortfall).
Appendices

HKIA MASTER PLAN 2030 59

More details about the HKIA Master Plan 2030 are available in the
HKIA Master Plan 2030 Technical Report at [Link]
COPYRIGHT
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all text, figures, tables, graphics, drawings, diagrams, photographs and
compilation of data are protected by copyright. Airport Authority Hong
Kong (AAHK) is the owner of the copyright in this document. Reproduction,
adaptation, distribution, dissemination or making available of this document
to the public in part or in full, in any form by any means, without the prior
written authorisation of AAHK is prohibited. Copyright enquiries should be
addressed to AAHK.

DISCLAIMER
Airport Authority Hong Kong (AAHK) has prepared this Hong Kong
International Airport (HKIA) Master Plan 2030 (Master Plan) to outline
how HKIA could develop to accommodate future air traffic demand up to
2030. This Master Plan is based on certain information including forecasts
and assumptions which should not be used or relied upon by any other
person for any purpose. AAHK makes no warranty, representation or
claim whatsoever as to the accuracy or completeness of any of the
information in this Master Plan or the likelihood of any future matter
or development of HKIA. Nothing herein shall give rise to any promise,
assurance, commitment or expectation as to how HKIA would develop.
AAHK does not accept any responsibility or liability for any loss or
damage whatsoever arising from any cause in connection with this
Master Plan.

Designed by Yellow Creative (HK) Limited  Principal photography by Graham Uden

 HONG  KONG  INTERNATIONAL  AIRPORT  MASTER  PLAN  2030
AIRPORT AUTHORITY HONG KONG

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Hong Kong International Airport
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Telephone: +852 2188 7111
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Hong Kong International Airport Master Plan 2030

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