China has just concluded its sixth aviation exposition called Air Show China in Zhuhai.
     No western countries had any military hardware for display, although
     Russia displayed an entire squadron of fighters, missiles, airliners, and cargo aircraft.
     People’s Daily reports that about $3 billion in aircraft business was transacted at the event.
     Next Air Show China is set for November 4, 2008 in Zhuhai.
     Zhuhai Airport can use the attention.
     After six years of negotiation, Hong Kong International Airport (HKIC) and Zhuhai Municipal Government finally reached an agreement this past summer that HKIC will take over the operation of Zhuhai Airport for two decades effective September 2007.
     Zhu-Kong Airport Management Group, a joint venture of HKIC and Zhuhai Government, in which HKIC owns a majority 55 percent share, was granted the operating rights for Zhuhai Airport and will exclusively operate Zhuhai Airport as an independent profit center.
     HKIC’s twenty-year control of Zhuhai Airport is only the first step; in the following years, HKIC will gradually buy shares of Zhuhai Airport depending on the airport’s performance, and will have partial ownership of the airport.
     Zhuhai Airport, the first airport of China wholly invested in by local government, had been the largest and most advanced airport of China for several years after its completion in 1995, with gross investment of USD750 million.
     However, the airport has been a nightmare for Zhuhai Government in the past ten years.
     Passenger volume was projected at 12 million a year, but the actual number remains about 750,000, only 6 percent of its capacity.
     The air cargo business has not fared much better.
     Currently with interest payments on investment, Zhuhai Airport has been running at a heavy loss, a great burden to Zhuhai Government.
     During a telephone interview with Mr. Du Zhuo, president of Zhuhai Airport, Mr. Du told FlyingTypers:
     “Zhuhai Airport faces great competition from Guangzhou Airport, Shenzhen Airport and Macao Airport.
     “Rapid growth of other airports and increasingly intense competition have forced Zhuhai Airport to adopt a new strategy and introduce a strategic partner.
     “Through this cooperation, Zhuhai Airport will get capital, technology, advanced management expertise and mass businesses, which will lead the airport to a sustainable growth and improve its competitiveness.
     “Our cooperation with Hong Kong Airport is just the case.
     “The two airports perfectly complement each other.
     “Hong Kong Airport will bring what Zhuhai Airport needs urgently.
     “We are very confident of this cooperation, expecting a grand new Zhuhai Airport within three to five years. Meanwhile, Hong Kong Airport will gain spaces for its further development.
     “The first thing that Zhu-Kong Airport Management Group will do is to build a dock connecting the two airports.
     “Location of the dock has been selected, only hundreds of meters from the runway of Zhuhai Airport.”
     During a telephone interview with FlyingTypers, spokesman of HKIC, China Department said.
     “Ten more senior managers from HKIC will start work in Zhuhai Airport before the end of this year, with a majority of former staff remaining.
     “But management of the airport will be restructured in the way of HKIC.
     “In the long term, Pearl River Delta is more than enough to support development of three to five airports.
     “A well developed Zhuhai Airport will help to improve the competitiveness of the whole region and expand the market.”
     About the air cargo business in tomorrow’s Zhuhai Airport, the spokesman said:
     “There has been a lot said about HKIC’s supposed plan to position Zhuhai Airport as an all-cargo airport, or transfer part of air cargo business from HKIC to Zhuhai Airport.
     “But this is not our plan.
     “As one of the center cities of the region and a famous tourism destination, Zhuhai itself has much air cargo business to develop.
     “Zhuhai Airport will set passenger transportation as a base of our air cargo business.
     “So, Zhuhai Airport will continue as an airport, endeavoring to develop both air cargo and passenger businesses.”
     Although both Mr. Du and HKIC avoid talking about the effect of this deal on the surrounding airports, Guangzhou Baiyun Airport, Shenzhen Airport and Macao Airport, insiders note the impact will be significant.
     “HKIC’s cooperation with Zhuhai Airport will break the fragile balance among existing airports of Pearl River Delta, with Shenzhen Airport, which relies on air freight transportation and as the closest to Zhuhai Airport, being most affected,” Mr. Zhao Yang, senior consultant of AMT said.
     “The building of the bridge connecting Zhuhai, Macao and Hong Kong has greatly improved conditions for the development of Zhuhai Airport.
     So in the long term, Baiyun Airport’s goal to be a major international hub will also be affected by this deal.
     “When the bridge comes into service, Zhuhai Airport and Hong Kong Airport will get closer and cooperate better,” Mr. Zhao said.
(David)