Hong Kong’s third runway: Game-changer or HK$140 billion white elephant?
Hong Kong Free Press
The third runway system, the latest expensive adornment to Hong Kong International Airport, came into full-time operation in November. This should be distinguished from the third runway itself, which opened in 2022.
During the ensuing two years, one of the older runways was closed for “maintenance,” which might arouse suspicions that the extra runway was perhaps not urgently needed.
Nevertheless the opening of the new system was greeted with unrestrained joy. “The three-runway system has been hailed as a ‘game-changer’ for the city to enhance its status as an international aviation hub,” reported the South China Morning Post from the official opening.
A China Daily writer described the new system as “more than a runway; it’s a bridge to new economic vistas that will invigorate the city’s future.”
Certainly it’s more than a runway. It could be regarded as a suitable commemoration for the Capital Works Fund, a curious financial arrangement inherited from the colonial era.
The basic idea was that income from land sales could not be depended on, and should accordingly not be relied on to cover the government’s running costs. Instead it should be put in a special pot, to be drawn on only for infrastructure projects which would be one-off bursts of expenditure.
This bit of fiscal puritanism may be compared with the present arrangement under which the proceeds of the sale of bonds (which will have to be repaid some day) are treated as income. But let us leave the financial technicalities aside. Basically we were presented with a government looking at a large pile of money which could only be spent on infrastructure projects.
Call me a cynic if you will, but I would expect that to produce a growing enthusiasm for expensive and elaborate projects, with an increasing likelihood of white elephant production. Bridges, railway lines, reclamation of whole islands… is this starting to look familiar?
All of these projects will be defended as contributing to Hong Kong’s future prosperity and status as some kind of hub. Let me dispose of two points before we get to the airport itself.
Firstly, as Simon Kuper and Stefan Symanski point out, economists firmly believe that people respond to incentives, and economists certainly do. No plan for a sports facility or festival ever comes without a glowing prediction from an economist of the future wealth it will generate for the hapless taxpayers who are invited to pay for it. So it goes also for infrastructure projects.
The third runway can probably claim some sort of record in this area, as it was justified by a prediction of HK$455 billion in economic benefits – spread over the next 50 years. You can see that far ahead? J.K. Galbraith said: “The only function of economic forecasting is to make astrology look respectable.”
Secondly let us be wary of a promised “boost for tourism.” If you are a tourist-attractive island which can only be reached by a small and uncomfortable ferry (as the Isle of Skye once was) then building a bridge will attract a lot of the formerly discouraged and will boost tourism (as it did).
If you are a coastal European city with the usual kit – city walls, cathedral, town hall, famous person’s birthplace – and cruise lines are by-passing your pathetic port, then constructing a cruise terminal may bring a new flood of people who used to miss you.
On the other hand if you are getting a million tourists a year, and your airport can handle two million, then upgrading it to a capacity of three million is not going to make the slightest difference. People are not going to visit especially to see the new airport. It is a means to an end.
And this brings us to the impact, or lack of impact, of the new runway. In 2015, an assessment of the situation was produced for planners and legislators. Keeping the airport as it was (Option A) implied a maximum annual capacity of 57 million passengers and 4.4 million tonnes of cargo. Making improvements but not extending them to a third runway (B) could raise this to 77 million passengers and 6.1 million tonnes. Option C – the third runway – would increase capacity to 102 million passengers and 8.9 million tonnes.
How much capacity did we actually use in 2023, the last full year? Ah, 43 million passengers and 4.2 million tonnes. In other words, comfortably within Option A.
The Airport Authority asserts that usage was depressed during Covid and will eventually recover. But is this inevitable, or even likely? Views differ. Since 2015, rival international airports have expanded in Shenzhen and Zhuhai. Passengers on shorter routes from Chinese cities can also consider the express rail link, which opened in 2018.
Spokespeople for the authority say that the airport is already busy again in rush hours. But these are not like land-based rush hours, caused by lots of people going to and from work at the same time. They are caused by airlines, for reasons of their own, all wanting to land and take off at the same time.
Catering to this urge is wasteful. Another way of looking at airport capacity is the number of movements it can handle. Because aircraft, once up, have to be kept two minutes apart, there is a fixed ceiling of about 30 movements an hour per runway. Clearly with three runways you can hope to handle 90 movements an hour, which is an improvement.
But here again we seem to be meeting a non-existent need. In 2018, the last year before various interruptions culminating in Covid, the airport handled 427,000 movements. In 2023 it handled 276,000. This year so far we have 298,000. Clearly the figure is still rising, but has a long way to go before it catches up with the number achievable with two runways alone.
Given that the government is now running a huge deficit and is no doubt contemplating something painful in the way of increased taxes and lower benefits, it is quite understandable that the “line to take” is not that they blew HK$140 billion to provide some extra convenience to airlines.
So roll up for the new epoch, which will either feature massive financial losses or mass tourism. Are we having fun yet?
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