Hong Kong Discounts Airport Fees For Cargo Shipments

Hong Kong International Airport is the largest airport in the world for cargo and it wants to stay that way. Amid a serious slump in cargo volumes, the airport authority is now allowing airlines to rebate a portion of their terminal handling charges to freight forwarders and offering to cover 20% of any fee reduction.

The abatement of terminal handling charges will go into effect on April 1 for one year, after which it will be reviewed for possible extension, the airport authority said Dec. 11. 

Hong Kong-based Cathay Pacific is the first airline to sign up for the rebate program. The airline said customers will save HK$0.3 per kilogram for general and special cargo. The discount will apply to the group's four airlines — Cathay Pacific, Cathay Dragon, AHK Air Hong Kong and HK Express — and range from 18% to more than 20% compared to fee levels.

Whether forwarders pass on any of the savings to their customers remains to be seen.

"Over the years, the airport authority has been working closely with airlines and business partners to enhance air cargo facilities and services, making HKIA the leading global air cargo hub. The new initiative will help maintain the cost efficiency of the industry and strengthen our cargo volume growth, ultimately reinforcing HKIA's competitiveness," Cissy Chan, executive director for commercial, said in the news release. 

Last year, HKIA handled 5.1 million tons of cargo, but political unrest and the U.S.-China trade war have taken a toll on air traffic in 2019. For the first 10 months of the year, cargo volume is down 7% to 3.9 million tons compared to the same period in 2018. Cargo throughput fell 5.5% in October to 428,000 tons, including a 2.6% decline in exports. And on a rolling 12-month basis, cargo throughput dropped 6.4% to 4.8 million tons, according to airport figures.

Year-to-date cargo exports from Hong Kong to New York's JFK Airport are representative of the overall slump in cargo business at HKIA.

The terminal concession will also help forwarders mitigate fees for new air cargo security requirements set to begin in January, the Hong Kong airport authority said. HKIA is implementing the increased cargo inspections to bring the airport into compliance with a new regulation from the International Civil Aviation Organization. The mandate for greater cargo screening was originally scheduled to begin in November, but was delayed two months to give the industry more time to adjust as it copes with financial challenges associated with the weak market.

The new security plan requires airlines and ground handlers to physically inspect a quarter of all shipments from known consignors between January and April, with inspection levels gradually stepping up to 100% of shipments by March 2021.

The Hong Kong Civil Aviation Authority is also permitting forwarders to use approved cargo inspection facilities at off-airport locations to keep airport facilities from becoming overwhelmed by the extra workload.

The International Air Transport Association, which represents airlines, has long complained that major airports take advantage of their dominant market position by charging excess fees. It says airport fees increased 36% between 2000 and 2015, while airfares fell 40%. Airlines collectively spent $89.3 billion in airport charges.

Image by Andy Leung from Pixabay