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            september 19, 2019

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Government subsidies for air cargo hubs in China squeezing HK airport


Government subsidies and restrictions on free-market competition enabling airports and terminals on the mainland to operate with lower cost structures are impacting Hong Kong airport's cargo business.
China's policy to develop new hubs in second-tier cities and incentives from Beijing gave them a competitive advantage, Swiss WorldCargo director and head of cargo for Asia, Todd Mawhinney, told the Payload Asia conference in Hong Kong.
"China is putting processes in place that are inhibiting free-market practice. They are abusing policies to subsidise certain businesses to bring cargo to their airports and terminals where it is not a free market," Mr Mawhinney was quoted as saying in a report by the Journal of Commerce.
Hong Kong's airport and terminals would have to look at the structures in place, if they want to compete on cost, but it would be difficult to match those costs being achieved in China, according to Mr Mawhinney.
"My customers complain that since the airport moved from Kai Tak (1998) to the new airport, the airport fees have gone up 27 per cent. If the government really wants to have a competitive business here, they need to step in and make policies that work," he said.
Hong Kong airport did, however, benefit from China's complicated customs procedures, making it easier for shippers to route cargo through Hong Kong instead.
Manager of cargo sales and distribution for Cathay Pacific, John Cheng, said the second-tier cities were becoming increasingly important in China. He noted that six years ago Shanghai constituted 80 per cent of Chinese export loads by air, but this has now dived to 30 - 40 per cent, he said.
"We can't rely on feeders from Shanghai only, so we need to operate lots of feeders to other cities, many of which actually operate as a loss," Mr Cheng said. He said the problem was that air cargo at centres such as Chongqing, Chengdu and Zhengzhou were dependent on large shippers and the volume they provided fluctuated in tonnage and in destination.

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