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Viewing cable 07GUANGZHOU670, South China Airports: Capacity Shortage,
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| Reference ID | Created | Released | Classification | Origin |
|---|---|---|---|---|
| 07GUANGZHOU670 | 2007-06-12 07:28 | 2011-08-23 00:00 | UNCLASSIFIED//FOR OFFICIAL USE ONLY | Consulate Guangzhou |
VZCZCXRO2216
OO RUEHCN RUEHGH RUEHVC
DE RUEHGZ #0670/01 1630728
ZNR UUUUU ZZH
O 120728Z JUN 07
FM AMCONSUL GUANGZHOU
TO RUEHC/SECSTATE WASHDC IMMEDIATE 6148
INFO RUEHOO/CHINA POSTS COLLECTIVE
RUCPDOC/USDOC WASHDC
RULSDMK/DEPT OF TRANSPORTATION WASHDC
RUEAIIA/CIA WASHDC
RUEKJCS/DIA WASHDC
RHHMUNA/HQ USPACOM HONOLULU HI
UNCLAS SECTION 01 OF 04 GUANGZHOU 000670
SIPDIS
SENSITIVE
SIPDIS
STATE FOR EAP/CM AND EB/TRA
USDOC FOR 4420/ITA/MAC/MCQUEEN
TRANSPORTATION FOR A/S STEINBERG/GLATZ/RAO
USPACOM FOR FPA
E.O. 12958: N/A
TAGS: EAIR ECON CH HK
SUBJECT: South China Airports: Capacity Shortage,
Expansion, and Competition
REF: A) 07 Guangzhou 206
B) 07 Guangzhou 109
C) 06 Guangzhou 32347
D) 06 Guangzhou 32163
E) 06 Guangzhou 18105
F) 06 Guangzhou 16330
G) 06 Guangzhou 13550
H) 06 Guangzhou 11471
I) 06 Guangzhou 8841
(U) This document is sensitive but unclassified. Please
protect accordingly.
¶1. (SBU) SUMMARY: To meet the rapidly mounting demands of
passengers and cargo transportation, major civil airports
in the Pearl River Delta (PRD) region are gearing up to
upgrade their infrastructure and service. Fierce
competition is expected as both airports and airlines
compete for a bigger slice of an ever-growing pie. The
General Administration of Civil Aviation of China (CAAC) is
working to optimize air space utilization and is calling
for cooperation among the airports. END SUMMARY.
Mounting Demand and Conflicts in the PRD
----------------------------------------
¶2. (U) On March 18, 2007, an industry consultant told AFP
in Singapore that Asia will overtake North America as the
world's biggest aviation market by 2025. Airports in Asia
are operating at close to full capacity and investment is
urgently needed to upgrade infrastructure. The consultant
predicted that traffic growth will exacerbate capacity
shortages at many Asia-Pacific airports and it is vital
that new infrastructure be developed. On March 27, 2007,
Chen Wenyi, a senior official from CAAC Central and
Southern Regions also pointed to the growth in air traffic
in the PRD region (15-20 percent per year year from 2005 to
2010) and said that the five major civilian airports in the
region - Hong Kong International Airport (HKIA), Guangzhou
Baiyun International Airport, Shenzhen International
Airport, Macau Airport, and Zhuhai Airport - are working to
upgrade their operations. The five airports currently have
seven runways and could add four or five more.
¶3. (SBU) Currently, there are three separate air traffic
control centers in South China: Guangzhou, Hong Kong, and
Zhuhai. Four of the five airports - Hong Kong, Shenzhen,
Zhuhai, and Macau - are within a 65km radius; Guangzhou is
within 140km of the other four airports. Proximity of the
five airports creates operational challenges as aircraft
fly near or across sector boundaries and have to be rapidly
transferred from one air traffic control facility to
another. Most airspace within the PRD (and throughout all
of mainland China) is reserved for military use, thus
airspace available for civil aviation is insufficient to
accommodate expected air traffic growth in the coming years.
In order to avoid conflicts between flights that arrive in
Hong Kong and those departing from Macau and Zhuhai, Hong
Kong International Airport (HKIA) arrivals are required to
stay above 5,000 meters once entering Zhuhai's control area.
This creates problems for those planes flying into HKIA
from the north (over the mainland), as they are too high to
drop down and land at HKIA; as a result, they fly extra
miles to the south to descend safely to the HKIA runway.
The uncoordinated runway directions of the five airports
create overlapping and crossing arrival and departure paths
that further increase, perhaps dangerously so, air traffic
congestion in the region.
CAAC Calls for Cooperation Among Airports
-----------------------------------------
¶4. (SBU) To reduce air traffic congestion in the PRD
region, CAAC Vice Minister Yang Guoqing said that the
mainland will increase cooperation with the airport
authorities in Hong Kong and Macao. On March 15, another
senior CAAC official disclosed that a procedure, known to
the global aviation community as Reduced Vertical
Separation Minimum or RVSM, will be implemented by November
¶2007. This procedure reduces vertical separation standards
GUANGZHOU 00000670 002 OF 004
from 2000 feet to 1000 feet, increasing en route
capacity. Hong Kong is also studying how to optimize air
space utilization and reform air space
management. Proposals, including removing the 5,000 meter
"air wall" between Hong Kong and mainland China, are being
studied.
¶5. (SBU) CAAC officials commented that HKIA tops the market
with an excellent overseas airline network and outstanding
service, while Guangzhou Airport has the best
infrastructure and lowest operating costs. Shenzhen
Airport will focus on the cargo sector. Zhuhai can take
advantage of its cooperation with Hong Kong and serve as a
bridge between Hong Kong and the mainland. Located in a
popular tourist spot with many budget airlines, Macao
Airport can develop its international passenger sector.
Still, it is clear that there is one, possible two,
airport(s) too many for the area covered.
¶6. (U) Guangzhou's Nanfang Daily reported that on June 2,
representatives from five major airports in the PRD signed
an agreement in Hong Kong. They agreed to stand up a
coordination team and to restart the PRD A5 Forum after a
4-year suspension.
Airports Scale Up:
HKIA Integrating with PRD Aviation Sector
-----------------------------------------
¶7. (SBU) HKIA is the world's fifth busiest international
passenger airport and has the most active worldwide air
cargo operation. In light of Hong Kong's continued
economic integration with mainland China, HKIA is expanding
into the PRD region and serves as a gateway hub airport to
China. In October 2006, the Airport Authority of Hong Kong
(AAHK) moved more directly into the mainland aviation
sector by taking over the management of Zhuhai Airport.
AAHK is expected to ramp up its investment in the fast-
growing mainland aviation sector with a joint venture at
Hangzhou Xiaoshan International Airport.
¶8. (SBU) HKIA has invested HKD 4.5 billion (USD 577 million)
in construction projects at the central arrival concourse
at Terminal 1, in passenger capacity enhancements, and in
airfield improvements. The permanent SkyPier is under
construction and scheduled to open in 2008 to provide
cross-border ferry service to passengers. Passengers in
both directions can bypass customs and immigration
formalities, nearly cutting in half the current four-hour
transit time. To further streamline the transit process at
the border, AAHK joined with Cathay Pacific Airways and
Hong Kong Dragon Airlines to launch up-stream check-in
services at the Shekou ferry terminal for sea-air
passengers; passengers can obtain their boarding pass and
receive a guaranteed acceptance of carriage before arriving
at HKIA.
¶9. (SBU) HKIA is constructing ten additional cargo stands
and related taxiways to facilitate air freight movement;
the total number of cargo stands will reach 35 by the end
of this year. AAHK is also working with the Civil Aviation
Department to maximize runway capacity and conduct a
feasibility study on the construction of a third runway.
¶10. (SBU) Even with this development and expansion, Hong
Kong authorities have not agreed to further liberalization
of the U.S.-Hong Kong Air Services Agreement since 2002.
Guangzhou Creating World-Class Aviation Hub
-------------------------------------------
¶11. (SBU) Guangzhou plans to develop Baiyun Airport -
headquarters of China Southern Airlines - into one of the
key hubs in the Asia-Pacific region. Business expansion
has exceeded the design capacity of the airport's Phase I
operating plan. In 2006, passenger throughput was 26.2
million, and cargo throughput was 653,100 tons, ranking
third nationwide after Beijing and Shanghai. The airport's
Phase II operating plan, expected to be completed in 2010,
entails an investment of RMB 17.5 billion (USD 2.16 billion)
GUANGZHOU 00000670 003 OF 004
and includes the construction of a third runway, aprons,
two international cargo terminals, a freight transportation
hub for FedEx (ref A), and a tax-free zone for processing
and logistics.
¶12. (SBU) Baiyun Airport is looking to foreign investors
for capital input and advanced management ideas. Several
overseas airport operators - including companies based in
France, Singapore, Hong Kong, and Germany - have reportedly
approached Baiyun to discuss possible partnerships. On
March 23, Baiyun Airport confirmed that it was in
partnership talks with the Frankfurt-based Fraport AG, and
both sides had agreed to cooperate.
¶13. (U) On March 22, Guangdong Airport Group, Guangzhou
Airport Customs, Guangzhou Baiyun Entry-Exit Frontier
Inspection Office, and the Guangzhou Entry-Exit Inspection
and Quarantine Bureau signed a strategic cooperation
agreement to initiate more than 30 "innovative" services,
such as 24-hour passenger clearance service, a Credible
Enterprises System, simplified customs procedures, a multi-
point declaration policy, and a visa-free transit policy.
¶14. (SBU) Guangzhou city is making Baiyun Airport the
commuter transportation hub for highway, railway, metro,
light rail transit (LRT), and China Railways Highspeed (CRH)
train. Guangzhou's Metro Line 3 will be connected to the
airport by 2009; 12 regional highways linked to the airport
by 2010 will put any PRD city within a two-hour drive; and
a new railway station at the airport will be linked to
passenger transport and freight services by 2020.
Shenzhen International Airport Focusing on Cargo
--------------------------------------------- ---
¶15. (SBU) International cargo traffic at Shenzhen Airport
rose by 83 percent in January 2007. Cargo throughput will
likely grow an additional 25 percent in 2007, potentially
surpassing Baiyun Airport in cargo handling volume. The
Shenzhen municipal government has promised to support the
logistics industry by providing a RMB 10 million (USD 1.3
million) subsidy per year for new international cargo
routes.
¶16. (SBU) FedEx and Asiana Airlines will open new routes
from Shenzhen this year, and two Chinese private cargo
airlines will set up bases at Shenzhen Airport. To cope
with increasing demand, the airport is accelerating its
expansion, including a sea fill project, the construction
of a 3,600m long runway, and a new terminal. Airport
management expects the expansion to be completed in 2008
and should satisfy anticipated transportation needs through
¶2020.
Zhuhai to Develop with Hong Kong's Help
---------------------------------------
¶17. (SBU) AAHK took over the management of debt-ridden
Zhuhai Airport last year, completing a series of
renovations of airport facilities, and beginning work on
Hai Tian Pier, scheduled to open by 2008; ferry service
will be provided to airports in Hong Kong, Macao, and
Zhuhai. Airport management announced that the first
international cargo route from Zhuhai to Manila will open
this year. Two new airlines have also been invited to
operate domestic routes from Zhuhai. For now, Zhuhai
Airport will be used mainly for cargo business. However,
the Zhuhai municipal government recently announced its
intention to build a strong aviation industry, integrating
flight training, aviation conferences and exhibitions, and
aircraft maintenance facilities.
Macau International Airport
---------------------------
¶18. (SBU) Macau International Airport Company (CAM)
announced March 29 that passenger volume in 2006 was
4,976,093, cargo throughput was 220,572 tons, and 51,409
aircraft movements were recorded. Total operational
revenue for 2006 reached MOP 573 million (USD 71.6 million),
GUANGZHOU 00000670 004 OF 004
a growth of 21.1 percent compared to 2005. Gross profits
amounted to MOP 223 million (USD 27.9 million), a 72.3
percent growth over the past year. CAM has invited
Netherlands Airport Consultants to create a five-year
expansion plan for Macau International Airport (MIA). The
plan will focus on infrastructure expansion, including a
new apron, new hanger, and increasing the length of the
runway from 3,360m to 3,860m. MOP 4 billion (USD 500
million) will be invested to complete the expansion by 2011.
COMMENT: Tremendous Growth and Competition
------------------------------------------
¶19. (SBU) Enormous growth opportunities and increasing
competition in civil aviation exist in the PRD region.
Airports' capacity shortage and air traffic congestion will
continue to hinder the development of regional civil
aviation in the near term, while expansion plans will
attract major investment in the sector. Demand will expand
as the economy continues to grow at more than 12 percent
per year in the PRD region.
¶20. (U) This cable was coordinated and cleared with
Consulate General Hong Kong, Embassy Beijing, and the
Federal Aviation Administration.
GOLDBERG