Despite these efforts, Hong Kong International Airport (HKG) continues to operate below pre-pandemic capacity levels. Cirium data indicates that seat capacity departing from Hong Kong in Q2 2024 is 29% lower than in the same period in 2019. HKG is grappling with significant reductions in flights across all regions, with the most pronounced declines seen in routes to Africa, Europe, and Australasia. These challenges may be attributed to various factors, including political instability, economic pressures, and increased competition from neighbouring airports. However, the primary obstacle remains the persistent shortage of human resources.
For instance, Cathay Pacific has revised its forecast for achieving full passenger capacity recovery, now aiming for the first quarter of 2025 rather than the end of 2024. This delay is attributed to a shortage of pilots and cabin crew. Additionally, ground handling service providers are grappling with staffing deficiencies, which are causing them to either reject flights from foreign carriers or impose excessively high service fees. These labour shortages are notably impeding the city’s connectivity and hindering its overall recovery within the global aviation industry. As a result, ticket prices are expected to stay high, with limited route options available to travellers.
The departing seat capacity of major GBA airports
On the other side, the seat capacity of other two major Greater Bay Area (GBA) airports, Guangzhou Baiyun International Airport (CAN) and Shenzhen Bao’an International Airport (SZX), have exceeded the pre-COVID levels, thanks to the strong domestic market recovery. CAN shows overall growth in flight and seat capacity, with particularly strong growth in the Asian markets. However, there is a notable decrease in flights to North America and Australasia. The available-seat-kilometres (ASK) indicates that the recovery of the inter-continental traffic at CAN is still lagging. SZX has seen significant growth, particularly in flights to Asia, Europe, and the Middle East, reflecting its increasing importance as an international hub. However, it also experienced a sharp decline in Australasia and North America.
The capacity in terms of available-seat-kilometres (ASK) of major GBA airports
Flight capacity by region from major GBA airports
Hong Kong is encountering intensified competition from within the Greater Bay Area (GBA), where international airlines are increasingly choosing direct routes to other regional hubs, potentially diverting traffic away from the city. To address this challenge, it is essential for Hong Kong to create a financially appealing environment for airlines to maintain their operations.
A key component of this strategy involves addressing the ongoing staffing shortages, including those for pilots, cabin crew, and ground handlers. The government’s Labour Importation Scheme for the aviation sector is expected to alleviate these resource constraints in the near term, thereby supporting Hong Kong’s competitive position in the region. CAN and SZX both demonstrated growth between Q2 2019 and Q2 2024, with CAN increasing by 6.85% and SZX by a significant 18.39%.
This suggests that both airports have been strengthening their positions as key regional hubs. The sharp growth in Shenzhen may indicate a strategic shift, potentially capturing market share from Hong Kong. However, both airports have seen a decline in flights to North America, reflecting the impact of geopolitical tensions. Overall, the expansion in these two GBA underscores their growing importance in the region, even as they navigate the challenges posed by shifting global dynamics.
AUTHOR
Lionel Olonga
Senior valuations analyst
Cirium Ascend Consultancy
