Q&A: Hong Kong International Airport CEO Fred Lam

The world’s busiest air cargo hub Hong Kong International Airport (HKIA) is expanding with work started on a much-needed third runway while construction of other infrastructure is in the pipeline.

Last year, the hub handled just over five million tonnes of cargo to maintain its place at the top of world freight rankings and the adding of another landing strip will certainly fuel further tonnage growth as it will provide more belly and freighter capacity.

The airport recently awarded the Alibaba Group with a tender to build a $1.5 billion logistics centre at HKIA to meet future demand for e-commerce so more freight is set to be handled than ever before in the years ahead.

Airport Authority Hong Kong chief executive officer, Fred Lam spoke to CAAS at last month’s Airports Council International (ACI) World Annual General Assembly in Brussels about development projects and current challenges.

How is construction of the third runway going?

We are expanding our airport with the new runway and also the other associated facilities and so far the construction work is going very smoothly and we have started full construction (in August 2016). We still aim to commission the runway by 2022 and then the rest of the construction programme by 2024.

How is HKIA dealing with capacity constraints and operating with only two runways?

The ultimate solution is the third runway so we are pushing very hard to complete that on time by 2022 and the full project by 2024, but for the time being we are also deploying some measures to further squeeze as much as we can out of the two runways.

For example we are now deploying more main time resources to cut down on the night-time maintenance (started two years ago) which helps. We open the runway earlier by 15 minutes so every day we can now we can increase movements by 16 aircraft which times by 365 days is quite a good number (of additional flights).

Also in terms of the runway last year we started to implement this new scheme to manage the noise issue. In the past during the night there was a restriction on the number of aircraft movements we could have.

We now have changed it so it not based on the number of movements but on the total noise level that the aircraft would generate during the night and the way to do that, once we the set the maximum, we then encourage the airlines to change their aircraft into quieter aircraft which they are keen to do anyway. This enabled us to also increase the number of night movements.

How is important is cargo to HKIA now and what trends do you see?

Last year we handled five million tonnes of cargo (up 9.4 per cent on 2016) – the most cargo handled by any airport in the world, which we have been for the last eight years now and we are the only airport with a cargo throughput of more than five million tonnes.

We have just awarded a tender to Alibaba to build a new e-commerce and logistics centre at HKIA which will have a capacity of 2.5 million tonnes. Cargo is very big for us and because Hong Kong is a very important trading hub in Asia.

The future we believe will be e-commerce and also in high value cargo like temperature sensitive products, pharmaceuticals products, food, wine and these kinds of goods. This is very consistent with the growth and development of Asian economies as people are beginning to be able to afford the high-end products.

Will the third runway provide capacity for freighters along with passenger routes?

There will be enough capacity to support both freighters and passenger/belly flights, but we also see the trend in the future will be to try to utilise more of the bellies of the passenger flights.

A lot of this e-commerce boom is because at Hong Kong we fly to about 220 destinations and in the future a lot of e-commerce will be about online shopping and small parcels. If you order something you don’t want to wait two months, you want it next day so I think the best way to reach that is to use the bellies of the passenger flights with high frequencies that reach out to a lot of cities and more than freighters could ever do.

I think that is why Ailbaba has chosen to put their global e-commerce platform in Hong Kong because they obviously see the advantage of the air network that we have at HKIA.

What are biggest challenges at HKIA?

Capacity is the biggest issue for us at the moment so we need to try to build this capacity as fast as we possibly can in order to capture the business opportunities.

The second biggest challenge we are now facing is the shortage of manpower as Hong Kong’s employment rate is very low and below three per cent and it is basically full employment and because our unions are very strong so it is very hard for us to import labour from outside of Hong Kong, so we do face an issue in getting enough people to work at the airport.

At the moment for the whole airport there are about 73,000 workers but we believe this number will go up to about 123,000 by the time we have finished building the third runway.

Where are we going to find people? It is a headache so that is why we have established an academy last year as we want to train more high school leavers who cannot get into college to also see the airport as providing a career for them. We have a problem with employing labourers but Hong Kong has no problem importing managers from around the around the world, so maybe we need to start doing that (for labourers).

How excited are you to host the next ACI Asia-Pacific/ World Annual General Assembly, Conference & Exhibition (WAGA) from 2-4 April 2019?

The timing is perfect for us as we have lots of projects going on and next year we hope we have the opportunity to share it with partners next year and to show off Hong Kong to a global audience.