ow does Hong Kong International Airport (HKIA) stack up as a regional logistics center, now that relatively new Chinese airports, especially those at nearby Guangzhou and Shenzhen, have come of age and can provide similar services? More broadly, can HKIA hold its own as other global powerhouse air cargo centers – especially Singapore, Dubai and Korea's Incheon – vie for larger shares of the air transshipment business?
      These questions matter to companies locating regional offices in Hong Kong and manufacturing centers in China's nearby Pearl River Delta. And they matter to those who attended U.K.-based Insight Media Ltd.'s "Airports – Catalysts for Economic Development" (ACED) conference in Kuala Lumpur, Malaysia, last October. It was there that Dr. Jonathan Beard, managing director of GHK (Hong Kong) Ltd. (www.ghkint.com) made the case that Hong Kong's status as the region's pre-eminent airport city – and the competitive advantages that affords – are secure. But HKIA's south China origin/destination cargo, air-to-air transshipment within China and international transshipment business sectors face increasingly stiff competition.
      London-based GHK is an architecture and consulting firm with expertise in economic development, ports and logistics and other areas. Dr. Beard, who works in the firm's Hong Kong office, is a regular advisor to the Airport Authority Hong Kong on its Master Plan, benchmarking and competitiveness strategies.       Issues central to HKIA's competitiveness going forward, he stressed at ACED, are costs, both tangible (land and surface transportation, airport costs and air freight rate) and intangible (customs, security, cargo-handling efficiency); new infrastructure in the works and success thus far as a fledgling, next-generation airport city.
      "The difference in tangible costs is relatively small as compared with the significant advantage that HKIA enjoys in terms of intangible costs," vis-a-vis the South China air cargo centers, said Beard. A good example is Hong Kong's extensive flight connectivity and critical mass of logistics companies, forwarders and related cargo service providers. "Guangzhou and Shenzhen will take several years to close this gap."
      The Hong Kong Container Port enjoyed a similar intangible cost advantage over Yantian and other Shenzhen seaports 15 years ago. "But this has been eroded considerably to the extent that tangible costs are now an important driver of port choice," he relates. "The higher tangible costs through HK Port are now a key factor in why a significant volume of South China sea cargo routes via mainland competitor ports."       Infrastructure investments, both new and already in the works, will enhance HKIA's competitive position by making the airport, on Chep Lap Kok Island west of the central business district, even more accessible and even more effective as a driver of economic activity in the western sector of the delta. Chief among these projects is the long-delayed Hong Kong-Zhuhai-Macau Bridge, which when complete in 2014 will land to the east of Chep Lap Kok on reclaimed land.
      A Multimodal Gateway Economic Zone on new land near HKIA will provide on- or near-airport locations for companies that require one, and new logistics options for access to Hong Kong's hinterland and South China.
      And new cargo capacity is on the way as flag carrier Cathay Pacific readies a new cargo operation at its home airport, where it will service its own and perhaps third-party client cargo. Says Beard: "This will end the duopoly and system of regulation under which AAT and HACTL operate," referring to the two dominant logistics companies with major air cargo and freight forwarding operations at HKIA.
      Finally, HKIA management embraced the notion of the airport city when Kai Tak Airport in Kowloon could no longer service Hong Kong adequately and HKIA went from concept in 1989 to reality in 1998. Ten years later, the concept of the airport city is no less important. In fact, there is talk of reclaiming additional land to expand HKIA's footprint with a third runway. A marine terminal is being built at present, and conference and exhibit facilities are already in place at the airport.
      "But the point to note," says Beard, "is that the whole of Hong Kong is a freeport, and HKIA has excellent surface connectivity to most parts of Hong Kong. Therefore, it makes more sense to think of the whole of Hong Kong as an airport city. You do not have to be located on the airport island to derive the benefits offered by Hong Kong's freeport status, streamlined customs and low taxes."