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Russell Barling

Phase II expansion, to be completed by 2006, will more than double firm's annual handling capacity to 1.5 million tonnes

Asia Airfreight Terminal (AAT), Hong Kong's second-biggest air-cargo firm, yesterday committed to a HK$1.75 billion expansion project as it targets a greater share of the increasingly valuable commodities trade flowing through Chek Lap Kok.

The phase II expansion, to be completed by 2006, will more than double AAT's annual handling capacity to 1.5 million tonnes.

'The expansion demonstrates AAT's confidence in Hong Kong ... and underlines our long-term commitment to support its growth,' chief executive Daniel Soh said at the signing ceremony yesterday.

While the fortunes of Hong Kong's seaport faded in the first quarter as rival south China terminals siphoned off a greater share of the region's deep-sea traffic, the volume and value of air cargo at the airport continued to surpass even the most bullish expectations.

The value of trade moving by air jumped a comparative 23.2 per cent in the first quarter to HK$249.85 billion, as lucrative express cargo continued to increase as a proportion of the overall cargo market.

While air cargo comprised just 1 per cent of Hong Kong's trade volume last year, it represented 30 per cent of the value - up three percentage points on the year before - illustrating the express sector's growing contribution.

The airport handled 55,210 tonnes of express cargo in the first quarter, up 23 per cent year on year.

Phase II at AAT, which depends on express for 30 per cent of its volumes, will provide more room for minority shareholder Federal Express, as well as general-cargo carriers such as Lufthansa and All Nippon Airways.

According to DHL Express, Asia's top  courier company by sales, the opening of its US$100 million dedicated express terminal at the end of the month will draw even more high-value trade to the airport.

Hans Bakker, the Airport Authority's commercial director, expects express products to make up 13 per cent of Chek Lap Kok's  tonnage by 2010, up from 8 to 9 cent last year.

'The express market is growing faster than the overall market,' Mr Bakker said yesterday. 'If you look back several years ago, no one could have predicted the volumes would grow at this rate. That's why the key word for successful airports is flexibility. Now all the express operators will have room to grow.'

Aside from the new terminals, the authority has begun a HK$120 million project to add five  aircraft stands dedicated to freighters, bringing the total to 26 by the end of next year. It eventually planned to build 40 stalls for freighters, Mr Bakker said.

Hongkong Air Cargo Terminals (Hactl), which controls about 80 per cent of the airport's freight, has been cashing in on the buoyant European market.

Provisional figures show Hactl's tonnage jumped 16.2 per cent year on year last month to almost  182,700 tonnes, as European consumers continued to take advantage of the euro's buying power.

Exports to Europe were up almost 29 per cent for the month, and 29.7 per cent year to date, to 162,648 tonnes. Overall, Hactl's volumes  in the year through May increased  16.1 per cent to 885,936 tonnes.

The authority and its cargo-handling tenants will spend HK$2.65 billion on the three projects just as Guangzhou prepares to launch its 18 billion yuan airport north of the border.

David Pang Ding-jung, the authority's chief executive, conceded yesterday that Guangzhou's airport would capture regional market share after its opening.



AAT signs for $1.7b air-cargo project