Cathay to buildown HK terminal
Cathay Pacific has been awarded a franchise to build and operate a new HK$ 4.8 billion (US$600 million) air cargo terminal at Hong Kong International Airport (HKIA) with Cathay chief executive Tony Tyler saying the move was key to boosting the competitiveness of HKIA as a cargo hub in the face of growing regional competition. A 20-year franchise agreement was signed between Cathay subsidiary Cathay Pacific Services Ltd (CPSL) and the Airport Authority of Hong Kong (AAHK) on 18 March for a common use cargo terminal.
Cathay will be responsible for designing, constructing and equipping the new cargo terminal which will have a designed annual air cargo throughput capacity of 2.6 million tonnes and will commence operation in the second half of 2011. But the latest cargo terminal plan is clearly a more diminutive version of what Cathay had planned nearly two years ago when it first proposed a new terminal to be build in two phases – the first to open in 2009 with an annual capacity of 2.5 million tonnes and the second to be completed by 2018 bringing capacity up to 5 million tonnes.
The new cargo terminal will be built in the cargo area at the airport, close to the existing cargo servicing facilities and will occupy a site area of approximately 10 hectares, according to a statement from Cathay.
Cathay Pacific Chief Executive Tony Tyler said: "We are delighted to have been awarded the franchise agreement to build and operate the new cargo terminal in Hong Kong. The facility represents a significant investment and commitment by Cathay Pacific that will strengthen HKIA’s position as the world’s leading air cargo and logistics hub.
"The new cargo terminal is planned to be a common use facility that will be open to all airline customers. The additional air cargo handling capacity and facilities provided by the new terminal will give HKIA a much-needed boost to contend with increasing competition from other airports in the region.
"We will be giving the market an additional choice and a differentiated service proposition. This is an important investment not just for Cathay Pacific, but will also contribute to the competitiveness of HKIA as a centre of international and regional air cargo.
"The addition of new capacity and more competition will stimulate an increase in cargo flights to HKIA," Tyler added.
Tyler added that Cathay Pacific’s long-term confidence in Hong Kong as a major airfreight hub is underlined by the airline’s investment in new freighters. The airline has a total of 18 freighters due for delivery over the next four years including 10 Boeing 747-8 Freighters, six Boeing 747-400ERF Extended Range Freighters, and two 747-400BCF Boeing Converted Freighters. There will be 30 freighters in the Cathay Pacific fleet by 2012.
Cathay said the new cargo terminal will be operated "at arms’ length" from Cathay Pacific Cargo by a separate management team in CPSL, a wholly owned subsidiary of Cathay Pacific.
AAHK statistics for 2007 indicated an overall 4.5 per cent growth in HKIA cargo throughput to 3.74 million tonnes and a 6.4 per cent increase in air traffic movements for cargo. Last year, Cathay Pacific and its sister airline Dragonair operated an aggregate total of 1.67 million tonnes of freight. This represented a 3.2 per cent increase from the combined freight handled by Cathay Pacific and Dragonair for the whole year of 2006, noting that the combined Cathay Pacific and Dragonair traffic figures were only consolidated fromOctober 2006 onwards.
"Despite a slowdown in air cargo tonnage growth worldwide, we believe that the long- term growth prospects remain good. Air cargo is a cyclical business: 2008 and 2009 are likely to be challenging but we expect a pick-up in growth during 2010-2012.
"It is important that we plan and develop the additional handling capacity in time to meet future growth needs," said Tyler.
In relation to the franchise agreement, Cathay Pacific has given an undertaking to AAHK that the airline will dispose of its entire 10 per cent interest in Hong Kong Air Cargo Terminals Limited (Hactl) before the operational commencement date of the new cargo terminal.
In a statement Hactl welcomed the new competition adding: "Hactl will continue to invest and maintain its consistently high levels of services and innovation for its customers, which has played a key role in HKIA becoming one of the world’s mostsuccessful air cargo hubs."