HK to gain, not lose, from direct cross-strait flights

PUBLISHED : Friday, 04 July, 2008, 12:00am
UPDATED : Friday, 04 July, 2008, 12:00am

'Hong Kong stands to lose about HK$192 million a year when about 1.11 million people travelling between the mainland and Taiwan bypass the city as a result of full direct cross-strait flights, says the Hong Kong Tourism Board.'

Business, July 3

Nonsense. We stand to gain, not lose.

Let's start this off with a few facts about Taiwan travel. Yesterday 54 flights from Taiwan, the bulk of them from Taipei, landed at our airport. This comes to 13.9 per cent of 389 aircraft arrivals from all points of origin yesterday.

It's a very high number. In contrast there were only 11 aircraft arrivals from Tokyo and metropolitan Tokyo has a population of about 33 million as against all of Taiwan's 23 million.

Obviously, the reason for this discrepancy with a roughly comparable market is that most air passengers from Taiwan do not actually visit Hong Kong. They pass right on through to the mainland. They come through here only because they cannot yet fly directly to the mainland. If they stop here at all, it is only briefly.

The Tourism Board itself has the figures to confirm this. Although flights from Taiwan account for almost 14 per cent of flight arrivals, visitors from Taiwan account for barely 7 per cent of visitor arrivals.

And when you examine the visitor arrival figures more closely you find that 70 per cent of visitors from Taiwan stay less than one day against an average for all visitors of 40 per cent. Those who do actually stay at least one night stay fewer nights than others from elsewhere do. Visitors from Taiwan account overall for less than 4 per cent of total visitor spending.

Now let us assume that Beijing grants full cross-strait air travel privileges to Taiwan and every inhabitant of Taiwan who is now forced to transit through Hong Kong will be able to fly direct.

We shall also assume that 15 of those 54 daily flights arriving here at present from Taiwan represent real natural tourism business for us, which is being mighty optimistic, and 39 flights, 10 per cent of total daily arrivals at our airport, represent the Taiwan transit business.

We can actually double that figure to 20 per cent of daily flight arrivals because the Taiwanese travellers who transit our airport on the way to China transit it on the way back home, too.

We are also talking of generally smaller aircraft for this transit trade, each of which takes up the same one full landing slot that a large aircraft takes up, this at an airport that is fast reaching its limit of daily flight capacity.

Put it another way. Get that Taiwanese transit trade out of the way and we could see up to a 30 per cent increase in the airport's passenger capacity for travellers who actually come here because they have business to do here or really do want to stop over, people who will actually spend real money here.

Call that an optimistic projection, if you will, but even half of that 30 per cent would be a big increase in passenger capacity at the airport and we could have it without having to spend billions on a new runway. We could get it with the same aircraft capacity we have now at the airport.

I call that a win for Hong Kong, not a loss.

But I also think that these people at the Tourism Board should have a chat with a real economist some day. That 'loss' of HK$192 million, which the board refers to - i.e. visitor spending that will no longer be spent here by Taiwanese visitors - is no loss anyway.

In the first place, it could only be loss or gain to our economy after deducting the cost of the associated imports and the repatriation abroad of the associated earnings.

That's the way it works when you tot up gross domestic product and the fact is that almost all the goods sold to these Taiwanese visitors are imported and the shop earnings mostly go abroad too.

But even what is left after this (and not much is) could only really be referred to as a displacement of economic activity, not as a loss.

If shop clerks no longer make their livings by selling cheap jewellery to Taiwanese visitors at the airport then they will make their livings by selling cheap clothes to Kowloon residents in Mong Kok.

A few of them may actually find themselves unemployed if they lose their jobs at the airport but it will be few indeed with the unemployment rate now down to 3.3 per cent.

What will actually happen to these people is a displacement of their existing jobs into other jobs, which happens to people all the time and is actually very healthy for an economy.

If they ever made me chief executive of Hong Kong, the first thing I would do would be to pass a law that says that no one from the Tourism Board may ever again use the words 'loss' and 'profit' in public.