With more long-haul flights, Shenzhen Airport steps up pressure on Hong Kong
SHENZHEN, China/HONG KONG (Reuters) – Shenzhen, which has morphed from a low-cost manufacturing center into a booming “Chinese Silicon Valley” technology hub, is a rising threat to Hong Kong's regional domination in international air travel.
Shenzhen's airport has long been a busy domestic hub, with 38 million passengers flying within China last year, but moved fewer than 3 million on international flights.
Now, operator Shenzhen Airport Co. Ltd. says it aims to grow international air traffic to 15 million passengers by 2025 – a fifth of its total.
For sure, that's still below the 82 million passengers that Hong Kong will have by then, according to IATA Consulting projections - around 80 percent of whom will fly to and from destinations outside mainland China, if today's traffic trends analyzed by air travel data group OAG are maintained.
But Chinese airlines' cheaper labor costs, and better road and rail links mean Shenzhen could wrest some of the growth from Hong Kong in the years ahead.
Guangzhou, the capital of Guangdong province, which also includes Shenzhen, had 13.5 million international passengers last year.
Shenzhen's growth comes after the Chinese government upgraded it to an "international aviation hub" under its five-year plan in 2016, matching the status of Beijing, Shanghai and Guangzhou. Nearby Zhuhai and Macao airports were not upgraded.
Some analysts predict Shenzhen's gross domestic product will overtake Hong Kong's next year.
The rise of Shenzhen has posed something of a dilemma for Air China Ltd., majority owner of Shenzhen Airlines, but which also has a 30 percent stake in Hong Kong's Cathay Pacific Airways Ltd.
Air China has been wary of adding long-haul flights out of Shenzhen that could challenge Cathay, said three aviation industry sources who declined to be named as they are not authorized to speak publicly about the matter.
But the airline is concerned that rivals China Southern Airlines Co. and Hainan Airlines Holding Co. are stepping in to add international flights which the local government is encouraging to boost the economy.
China Southern now flies to Sydney, Melbourne and Moscow, while Hainan has added a Brisbane service from Shenzhen, where a new modernist terminal boasts a roof dome that floods the building with natural light.
"The airport here is new and looks good," said Zhao Jingqiang, an import/ export businessman who was checking in for a domestic flight with Shenzhen Airlines. "They just have too few international routes."
For its part, Air China has added flights from Shenzhen to Frankfurt and Los Angeles in what it calls "the first step of our international long-distance network coverage from South China."
Air China and Shenzhen Airlines did not reply to requests for further comment.
Sun Yu, Air China's deputy general manager of strategy and development, said earlier this year the airline will heed Beijing's plan to integrate Shenzhen, Hong Kong and other parts of southern China, and will discuss with its subsidiaries on how to cooperate.
A spokesman for Shenzhen Airport said shifting to an international hub would "help attract more international organizations, corporate headquarters and financial institutions to settle in Shenzhen."
With lower carrier costs and improved land connections with Hong Kong, Shenzhen is well placed to take some of the traffic growth that would otherwise be at Hong Kong, which is constrained by a lack of slots until a third runway fully opens in 2024.
Shenzhen Airport reported a 24 percent increase in international traffic in the first nine months of this year.