My quick answer is yes!
Just today, The South China Morning Post ran a story titled, “HK risks losing out as airport fails to serve executive jet needs, industry warns.”
I’ve watched business aviation growth in the former British colony since 2001 when I launched a magazine called Elite Traveler (that I am no longer associated with) that was distributed aboard private jets and in private jet terminals. At that time, I visited the FBO (short for Fixed Based Operator, the terminals used for private jet passengers) to arrange distribution.
There were a few private planes, perhaps a half dozen on the tarmac and plenty of empty space. As I toured around the region, several friends who were running hotel companies commented to me that the private jet market in Asia was very small. The message was, while they understood the spending power of Ultra High Net Worth and Super Rich travelers, the market was too small to give much focus to it.
The story in SCMP quoted Mark Thibault, managing director of consultancy T3 Aviation, as saying, “Hong Kong (for private jet users) is really its own worst enemy. It is crowded. It’s expensive, and it’s becoming very, very difficult to maneuver a business aircraft in and out of Hong Kong.”
A Cathay Pacific Airways plane lands at Hong Kong International Airport. Government policies are negatively impacting private jet arrivals say industry experts.
(Photo credit should read DALE de la REY/AFP/Getty Images)
My last visit to Hong Kong was about 18 months ago, and I counted from the window of my commercial flight taxing to the runway about 50 private jets lined up wingtip to wingtip in the area allocated for parking. I also spotted about a dozen private jets parked at remote stands interspersed with commercial airliners.
While the Hong Kong-based aviation industry, including the principal tenant of Hong Kong International Airport, Cathay Pacific Airways, has been lobbying for a third runway, the airport is reaching its limits, so it becomes a question of priorities. The article included a quote from a Cathay Pacific spokesperson saying, “We believe immediate short-term measures must be taken to maximize the efficiency and economic benefits of HKIA by prioritizing the use of wide-body aircraft for new frequencies.”
One problem right now for private jets is at times there are no parking spots available. The current solution is they drop their passengers off, then the crew flies the plane to Macau, Subic Bay in the Philippines or Taiwan to park and wait for their occupants to leave Hong Kong. They then fly back and pick them up their passengers. Obviously, that adds costs in terms of landing fees, crew hours and puts extra cycles on the planes, meaning more maintenance costs. It of course needlessly adds to runway congestion, already a problem.
The SCMP reported there were 9,117 private aviation movements at HKIA in 2014 (There were about 2,700 in 2001). A movement can be a landing or take-off, so in terms of arrivals, you can cut that figure in half to 4,558. But, let’s say out of the arrivals, half are from business jet travelers who are based in Hong Kong and returning from trips, and half are from visitors to the city.
That would mean last year there were 2,279 arrivals of business jets by non-Hong Kong residents. If we want to assume a quarter of those were ferrying jets back to pick up passengers after flying somewhere to park, that would leave 1,709 non-resident arrivals with passengers, who were disembarking to spend money in Hong Kong.
Research I was involved with showed that when a private jet lands in a destination (with passengers) the average spending put into that destination is about $69,000, not including aviation related expenses. This means landing fees, fueling, catering and such are excluded.
The $69,000 refers to specifically hotels, dining, meetings, shopping and other visitor activities that business or leisure travelers partake. If you do the math and multiply $69,000 by 1,709, it means last year non-resident private jet travelers spent $117.9 million in Hong Kong.
According to the Hong Kong Tourism Board, the average visitor to Hong Kong spent $1,026.86 (HK$7,960) per stay in 2014. What this means is each private jet arrival is equivalent to the revenue generated by 67 regular visitors.
Charlie Mularski, a regional vice president of Universal Aviation, who serves as chairman of the Asian Business Aviation Association told SCMP, “We are seeing clients on road shows skipping Hong Kong because they find themselves having trouble finding slots and parking space to come in, or (having to) drop off and then relocate somewhere else.”
If we use narrow-body commercial airliners (as Cathay Pacific suggests) and estimate 180 filled seats (perhaps a bit high) and apply that one-third of arrivals at HKIA are transfer passengers connecting onto somewhere else, it leaves 120 as either local residents who are returning or visitors getting ready to spend money. For back of the envelope estimates, let’s use the same 50 percent division as I did with private jet arrivals.
This means 60 folks are visitors, and with an average spend of $1,026.86 per person (per HKTA statistics) they bring $61,611 to Hong Kong, 12 percent less than each private jet with visitors.
There are currently opportunities (and have been for years) to expand parking for private jets by relocating government air ambulance and rescue helicopters (which do not need runway access to land and takeoff). This would both help solve the parking problem for private jets and lessen the runway congestion at the airport caused by Hong Kong’s amazing growth.
Most importantly, it would mean easy access for time crunched global business leaders and investors who can continue to ensure Hong Kong’s leading place on the world map. The SCMP article had an unconfirmed report that recently Bill Gates couldn’t even secure a parking spot!
One problem right now for private jets is at times there are no parking spots available. The current solution is they drop their passengers off, then the crew flies the plane to Macau, Subic Bay in the Philippines or Taiwan to park and wait for their occupants to leave Hong Kong. They then fly back and pick them up their passengers. Obviously, that adds costs in terms of landing fees, crew hours and puts extra cycles on the planes, meaning more maintenance costs. It of course needlessly adds to runway congestion, already a problem.
The SCMP reported there were 9,117 private aviation movements at HKIA in 2014 (There were about 2,700 in 2001). A movement can be a landing or take-off, so in terms of arrivals, you can cut that figure in half to 4,558. But, let’s say out of the arrivals, half are from business jet travelers who are based in Hong Kong and returning from trips, and half are from visitors to the city.
That would mean last year there were 2,279 arrivals of business jets by non-Hong Kong residents. If we want to assume a quarter of those were ferrying jets back to pick up passengers after flying somewhere to park, that would leave 1,709 non-resident arrivals with passengers, who were disembarking to spend money in Hong Kong.
Research I was involved with showed that when a private jet lands in a destination (with passengers) the average spending put into that destination is about $69,000, not including aviation related expenses. This means landing fees, fueling, catering and such are excluded.
The $69,000 refers to specifically hotels, dining, meetings, shopping and other visitor activities that business or leisure travelers partake. If you do the math and multiply $69,000 by 1,709, it means last year non-resident private jet travelers spent $117.9 million in Hong Kong.
According to the Hong Kong Tourism Board, the average visitor to Hong Kong spent $1,026.86 (HK$7,960) per stay in 2014. What this means is each private jet arrival is equivalent to the revenue generated by 67 regular visitors.
Charlie Mularski, a regional vice president of Universal Aviation, who serves as chairman of the Asian Business Aviation Association told SCMP, “We are seeing clients on road shows skipping Hong Kong because they find themselves having trouble finding slots and parking space to come in, or (having to) drop off and then relocate somewhere else.”
If we use narrow-body commercial airliners (as Cathay Pacific suggests) and estimate 180 filled seats (perhaps a bit high) and apply that one-third of arrivals at HKIA are transfer passengers connecting onto somewhere else, it leaves 120 as either local residents who are returning or visitors getting ready to spend money. For back of the envelope estimates, let’s use the same 50 percent division as I did with private jet arrivals.
This means 60 folks are visitors, and with an average spend of $1,026.86 per person (per HKTA statistics) they bring $61,611 to Hong Kong, 12 percent less than each private jet with visitors.
There are currently opportunities (and have been for years) to expand parking for private jets by relocating government air ambulance and rescue helicopters (which do not need runway access to land and takeoff). This would both help solve the parking problem for private jets and lessen the runway congestion at the airport caused by Hong Kong’s amazing growth.
Most importantly, it would mean easy access for time crunched global business leaders and investors who can continue to ensure Hong Kong’s leading place on the world map. The SCMP article had an unconfirmed report that recently Bill Gates couldn’t even secure a parking spot!
Executives from business aviation commented to SCMP that private jets are last in priority behind wide-body and narrow-body commercial jets as well as cargo flights. Looking at the ROI, it would seem right away business aviation needs to move up the list.
(Doug Gollan - Forbes)
No comments:
Post a Comment