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Guangzhou airport nears takeoff
By Alex Frew McMillan
GUANGZHOU, China (CNN) -- On a bright autumn morning, 10,000 workers are hammering the new Guangzhou Baiyun International Airport into shape. Construction is on track to finish in October 2003, the management says, with an eye to opening in July 2004. "I'm quite sure they'll achieve it," Ian Thomas, senior consultant with the Centre for Asia Pacific Aviation, said, with authorities willing to throw more resources to make that happen. The airport will dramatically increase the capacity of the existing Guangzhou airport, which hit full capacity last year. It's a sign of how business is booming in Guangzhou, capital of Guangdong province and home to 7.1 million. But it also highlights how the cities in the Pearl River Delta compete as much as they cooperate, observers say. The new capacity will make life tough for the five international airports in the region. "If you look around the region, two airports are fine. Five airports aren't going to be economically viable," Michael Enright, a professor of business administration at Hong Kong University, said. "And the question is for numbers three, four and five, are there niches that allow them to have a reasonable role and reasonable economics?" Up to 80 million passengers, long termThe Guangzhou airport will initially carry around 23 million passengers, an increase of two-thirds over the current airport, and will make a new home for China Southern, the largest airline in the country.
But the airport authority has grander visions for the hub's future, with a total of three phases boosting total traffic to 80 million passengers per year by 2030. It also continues China's fascination with large-scale engineering projects. The first phase, through 2010, will cost 19.6 billion yuan ($2.4 billion). To fund that, the airport authority still expects to go public with a 2 billion yuan A share stock offering before the end of the year. Beyond that, Guangzhou is spending between 40 billion and 50 billion yuan ($4.8 billion to $6.0 billion) over the next five years to boost transportation infrastructure and cement the city's role as regional capital. One of three hubsThe authorities in Guangdong portray the new airport as one of China's three air hubs. But that view neglects the international airports in Hong Kong and Macau. Coupled with the airports in Shenzhen and Zhuhai, there are five international airports within 75 miles (120 kilometers) of each other.
Those airports carried 59 million passengers last year, with the bulk going through Hong Kong, which handled total traffic of 33 million passengers. Guangzhou had 14 million travelers. The other airports struggled, with Shenzhen drawing 8 million visitors. Macau was well behind, at 4 million passengers, and Zhuhai is almost vacant, at just 0.6 million people. The current Guangzhou airport has hit its capacity and can't easily be expanded -- it will be knocked down to make way for a shopping center when the new airport opens. "The reason why we're building a new international airport is simply because the old airport is too small and cannot meet the city's needs," executive vice mayor Zhang Guang Ning said. More competition than cooperationThe Pearl River Delta around Guangzhou generates one-third of China's total exports. Guangzhou is becoming the heart of a region that will soon top 70 million people and is an increasingly important manufacturing center. (Dongguan joins China's assembly line) But analysts say the cities in the Pearl River Delta have not worked together on developing the region, to their detriment. "In general there's been more competition among jurisdictions than overt cooperation," Enright said. Guangzhou authorities concede they need to work better with other cities, particularly when it comes to airports. To remain viable, the airports will need to focus on niches, experts say. "Some of the other airports haven't really been developed to the extent that they're really viable," Thomas at the aviation center said. "Zhuhai has problems that they're going to have work their way through, and Macau is going to have to work its way through its options." Two likely winnersHong Kong is already positioning itself as a logistics hub linking Europe and North America with Asia, striking deals for greater access with Federal Express, UPS and DHL. And it already has the air-rights agreements necessary to act as a regional passenger hub.
"Hong Kong is being positioned as a hub airport, it has a much larger number of carriers serving it and variety of services," Thomas said. "It really has a competitive advantage over Guangzhou, and I think it's one the Chinese authorities will exploit." Those two will become the key airports, Hong Kong focusing internationally and Guangzhou domestically, experts say. The Shenzhen airport, near the ports in Shekou and Yantian, may be best off linking itself as an overflow for Hong Kong's cargo traffic. (Shenzhen props open China's door) But the future is less clear for it and the airports in Macau and Zhuhai. Enright and Thomas both said they will remain white elephants unless they partner with Hong Kong and Guangzhou. A regional rivalryTheir future may be even cloudier if the region falls behind a key rival. Andy Xie, an economist with Morgan Stanley, notes that the Pearl River Delta is being caught by the Yangtze River Delta (YRD) in economic might. "Over the next two decades, one of the two deltas will become the pre-eminent leader in China's economy," Xie wrote in a report. "The YRD has the advantage in geography." Only better use of Hong Kong's wealth and much closer cooperation between the governments in the Pearl River Delta can stave off its falling behind, Xie said -- cooperation not evident in planning the airports. Zhang, the Guangzhou vice mayor, said the rivalry between the two deltas is healthy and a sign of the new China. "It is a good for the two regions to compete with each other because the competition can lead to progress," he said.
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