Macau has shown surprising growth of near 25 per cent in the first quarter - the fastest in Greater China. Its growth is attributed to two major factors: new low-cost airlines flying into Macau and rapid growth in traffic to and from the mainland.

Shenzhen's disappointing 5 per cent growth may be an early indication that it is now losing traffic to its revitalised nearby rivals (Guangzhou, Hong Kong and Macau) - a contrast to its early days following its 1991 opening when it took traffic growth from those airports.

But a bigger surprise is Guangzhou's relatively slow 13 per cent growth. As a new airport which opened last year, it has no capacity limits - unlike its predecessor.

Within the wider region, Hong Kong is faring much better. If current growth rates are maintained, Hong Kong should overtake Bangkok and Seoul,

although market realities are likely to prevent this. Bangkok experienced slow growth because of a tsunami-related slowdown in January and February, which was corrected starting March (when growth was 13 per cent). Seoul's decline came from its domestic passenger count.

Also looking weak is Singapore. Although its 6 per cent growth is better than some, this was boosted by faster growth in passengers travelling on low-cost airlines - as seen in data for Macau and Kuala Lumpur. Singapore is home base to three new airlines: Jetstar Asia, Tiger and Valuair. Without them, Singapore probably would have seen a decline.

backpacker boon

Hong Kong is becoming a stopover for travellers moving between England and Australia, which up to now has mainly been the domain of airlines which transit through Bangkok and Singapore.

Australia's flagship airline Qantas added three flights per week on the Sydney-Hong Kong-London route after a new aviation agreement between the SAR and Australia was signed last year.

More are planned; the fourth transit flight is due to start in November and three more are expected in the following months - enough to provide a daily service from April next year.

This is expected to boost Hong Kong through an unexpected market: backpackers who usually travel via Southeast Asia or the United States. The new Qantas route through Hong Kong is expected to provide more opportunities for travellers from Australia heading to Europe and from British passengers going to Australasia.

Backpackers travel on low budgets at their destination but tend to have spending patterns similar to other travellers when they stop over en route.

Last year's Hong Kong-Australia aviation agreement increased the limit to 55 weekly flights from 35. Starting next April, it is due to increase again to 70 per week.

Qantas currently operates 26 flights each week on the Australia-Hong Kong route, with an additional three flights by its Australian Airlines subsidiary.

But that limit is just to the four main cities - Perth, Melbourne, Brisbane and Sydney. Flights to other cities (such as Adelaide, Cairns and Darwin) are not included in the 70-flight ceiling.

This will mean that fares will continue to fall on some Australasia routes. At the very least, they will not start increasing.

Qantas hopes that its flights into Hong Kong will also boost the number of its passengers flying on to the mainland, where the airline has been slow to add direct flights - despite rapid growth of Chinese travellers in Australia.

Compiled by Murray Bailey, research director and editor, Travel Business Analyst