Research Report Is Uploaded Onto the Website of the Policy Innovation and Co- Ordination Office (PICO) for Public Reference

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Research Report Is Uploaded Onto the Website of the Policy Innovation and Co- Ordination Office (PICO) for Public Reference Public Policy Research Funding Scheme 公共政策研究資助計劃 Project Number : 項目編號: 2016.A4.032.17A Project Title : Maintaining Hong Kong aviation-hub position under the 項目名稱: ASEAN-China Air Transport Agreement (ATA) 在東盟─中國航空運輸開放協議下對維持香港航空樞紐 地位的政策建議 Principal Investigator : Dr YUEN Chi Lok, Andrew 首席研究員: 袁志樂博士 Institution/Think Tank : The Chinese University of Hong Kong 院校 /智庫: 香港中文大學 Project Duration (Month): 推行期 (月) : 21 Funding (HK$) : 總金額 (HK$): 481,491.00 This research report is uploaded onto the website of the Policy Innovation and Co- ordination Office (PICO) for public reference. The views expressed in this report are those of the Research Team of this project and do not represent the views of PICO and/or the Assessment Panel. PICO and/or the Assessment Panel do not guarantee the accuracy of the data included in this report. Please observe the “Intellectual Property Rights & Use of Project Data” as stipulated in the Guidance Notes of the Public Policy Research Funding Scheme. A suitable acknowledgement of the funding from PICO should be included in any publication/publicity arising from the work done on a research project funded in whole or in part by PICO. The English version shall prevail whenever there is any discrepancy between the English and Chinese versions. 此研究報告已上載至政策創新與統籌辦事處(創新辦)網站,供公眾查閱。報告 內所表達的意見純屬本項目研究團隊的意見,並不代表創新辦及/或評審委員會的意 見。創新辦及/或評審委員會不保證報告所載的資料準確無誤。 請遵守公共政策研究資助計劃申請須知內關於「知識產權及項目數據的使用」的 規定。 接受創新辦全數或部分資助的研究項目如因研究工作須出版任何刊物/作任何宣 傳,均須在其中加入適當鳴謝,註明獲創新辦資助。 中英文版本如有任何歧異,概以英文版本為準。 Project No. : 2016.A4.032.17A Maintaining Hong Kong aviation-hub position under the ASEAN-China Air Transport Agreement (ATA) 在東盟 – 中國航空運輸開放協議下對 維持香港航空樞紐地位的政策建議 Executive Summary Hong Kong’s aviation industry (about 7.6% contribution to Hong Kong’s GDP in 2013) is playing a very important role in Hong Kong economy. Facing the competition from airports in the neighboring cities, how to maintain the hub position of Hong Kong International Airport (HKIA) has become a pressing policy issue in Hong Kong. In 2014/15, South East Asia and Mainland China were the top two markets for HKIA (26% and 22% for South East Asia and Mainland China respectively, in terms of passengers.) Some recent developments for the two aviation markets pose threats as well as opportunities for HKIA and the aviation industry in Hong Kong. In 2015, the ASEAN started to integrate its aviation market within the 10 Member States. More importantly, an Air Transport Agreement (ATA) was also signed between ASEAN and China, which was implemented in 2011. However, Hong Kong was excluded in this Agreement. Abstract of the Research Overall, the empirical findings of this study regarding the impact of the ASEAN-China ATA on the three studied aviation markets are largely consistent with the prior literature: The ASEAN-China ATA and those designated routes of Chinese airports covered in Protocol 2 in the ATA reduced airfares, increased flight frequencies and air passenger volume of the ASEAN-China aviation market. In addition, the impact of the ASEAN- China ATA on airfares and air passenger volume of the ASEAN-Hong Kong aviation market are not substantial but flight frequencies or airline seat capacity between the ASEAN destinations and Hong Kong maintained growth during the study period. For the Hong Kong-China aviation market, fewer scheduled flights operated from Hong Kong to those designated routes of Chinese airports covered in Protocol 2. Layman Summary on the Policy Implications and Recommendations 1. Pressing needs to have strategic approaches to improve and maintain HKG’s role as mainland gateway and leading international air cargo hub; 2. Improving the coordination in the Multiple Airport Region at the Greater Bay Area (GBA); 3. Improving ground transportation to attract air travel demand from the hinterland of Hong Kong airport; 4. Increasing airport capacity and improving utilization efficiency; 5. Improving airport service quality; 6. More proactive air liberalization policy in the long run; 7. Having measures attracting visitors by air to Hong Kong and transit passengers 8. Cultivating more talents for Hong Kong’s aviation industry. 行政摘要 航空業(2013 年的 GDP 貢獻值約 7.6%)在香港經濟中扮演著非常重要的角色。 面對鄰近城市機場的競爭,如何維持香港國際機場的樞紐地位已成為香港迫切的政 策問題。在 2014/15 年度,東南亞及中國內地是香港國際機場的兩大市場(東南亞 及中國內地乘客分別佔總乘客量的 26%及 22%)。 這兩個航空市場最近的一些發展可能會為香港國際機場和航空業帶來威脅和機遇。 2015 年,東盟開始將其 10 個成員國的航空市場融合。更重要的是,東盟與中國簽 署了航空運輸協定(ATA),該協定於 2011 年實施,其覆蓋範圍不包括香港。 研究摘要 本研究關於《東盟 ‐ 中國航空運輸協定》對三地航空業影響的實證研究結果如下: 《東盟 ‐ 中國航空運輸協定》和《第二協定》所涵蓋的中國機場指定航線機票價格 下降、來回東盟及中國航班班次增加及航空客運量上升。此外,《東盟 ‐ 中國航空 運輸協定》對東盟 ‐ 香港航空市場機票和航空客運量的影響不大,東盟航點與香港 之間的航班班次及航空公司載客量在研究期間保持增長。至於香港 ‐ 中國航空市 場,從香港到《第二協定》所涵蓋的中國機場指定航線的定期航班減少。 研究項目對政策影響和政策建議的摘要: 1. 儘快採取戰略方法來改善和維持香港作為大陸門戶和領先的國際航空貨運樞紐 的地位; 2. 改善大灣區機場群的協調; 3. 改善地面交通,以吸引香港機場腹地的航空旅行需求; 4. 提高機場容量,提高利用效率; 5. 提高機場服務質素; 6. 長遠而言,應採取更加積極主動的航空開放政策; 7. 採取措施吸引遊客乘飛機前往香港及以香港為中轉站; 8. 為香港航空業培養更多人才。 Prepared by Dr. Andrew Yuen Chi Lok (Principal Investigator) Department of Decision Sciences and Managerial Economics, CUHK Business School, The Chinese University of Hong Kong Prof. Michael FUNG Department of Decision Sciences and Managerial Economics, CUHK Business School, The Chinese University of Hong Kong Dr. LAW, Cheung Kwok Hong Kong Institute of Asia-Pacific Studies, The Chinese University of Hong Kong Prof. Alan Khee-Jin Tan Faculty of Law, National University of Singapore This research project (Project No. 2016.A4.032.17A) is funded by the Public Policy Research Funding Scheme from Policy Innovation and Co-ordination Office of the Hong Kong Special Administrative Region Government. The authors are grateful to all the participants at the Transport Economics Workshop, organized by the Department of Logistics and Maritime Studies, the Hong Kong Polytechnic University and at the 2018 Annual Conference of the Air Transport Research Society (the Society) in Seoul, South Korea. Finally, the authors are thankful for the research assistance of Ms. Phoebe Yuen and Mr. Sumair Hussain. Contents Section 1 Introduction .................................................................................................. 1 Section 1.1 Hong Kong ............................................................................................... 1 Section 1.2 China ..................................................................................................... 14 Section 1.3 ASEAN ................................................................................................... 27 Section 2 Objectives of the study ................................................................................ 38 Section 3 Interaction among the Regional Aviation Markets ....................................... 39 Section 3.1 Interaction between Hong Kong and China Aviation Markets ............... 39 Section 3.2 Interaction between Hong Kong and ASEAN Aviation Markets .............. 44 Section 3.3 Interaction between China and ASEAN Aviation Market ....................... 52 Section 4 Overview of ASEAN‐China ATA .................................................................... 56 Section 5 Impacts of ASEAN‐Chinese ATA on Hong Kong’s Hub Competitiveness ........ 59 Section 5.1 Literature Review .................................................................................. 62 Section 5.2 Methodology and Data ......................................................................... 64 Section 5.3 Research results and findings ................................................................ 67 Section 5.3.1 Empirical Analysis ........................................................................... 67 Section 5.3.2 Discussion ....................................................................................... 75 Section 6 Policy Implications and Recommendations .................................................. 79 Section 7 Details of the Public Dissemination ............................................................. 84 Section 8 Conclusion ................................................................................................... 85 References .................................................................................................................. 90 Section 1 Introduction During the fourth ASEAN-China Summit held in Singapore in November 2000, China first brought up the initiative to strengthen transport cooperation between ASEAN and China. The framework was later agreed upon as well as China proposing to establish an ASEAN-China Transport Ministers Meeting mechanism back in November 2001 during the fifth ASEAN-China Summit. In September 2002, the first ASEAN-China Transport Minister meeting was held, resulting in the common consensus of furthering ASEAN- China transport cooperation. Later in 2004, a Memorandum of Understanding was signed between Member Countries of ASEAN with China, stating and agreeing upon enhancing cooperation in all means of transportation, mainly Maritime and Aviation transportation. For Aviation transportation, primarily to increase Air Service Agreements between member countries of ASEAN with China and increased cooperation between national airlines including utilization or resources and business management (ASEAN, 2004). Section 1.1Hong Kong (a) Importance of Hong Kong’s Aviation Sector to Hong Kong Economy Hong Kong’s aviation industry (about 7.6% contribution to Hong Kong’s GDP in 2013) plays a vital role in the Hong Kong economy. Facing competition from airports in the neighboring cities, maintaining the hub position of Hong Kong International Airport (HKIA) has become a pressing policy issue in Hong Kong. In 2014/15,
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