Hong Kong International Airport

Hong Kong International Airport to introduce charge for putting luggage onto carousel

Ground handling companies currently unload luggage from the hold of aircraft onto carts and put them on conveyor belts but Airport Authority has decided to outsource this – and pass on the cost

PUBLISHED : Friday, 29 June, 2018, 2:28pm
UPDATED : Monday, 09 July, 2018, 3:38pm

The world’s most profitable airport, which has just announced it made record annual gains, is to introduce a fee for each piece of baggage unloaded from planes onto conveyor belts – a move that could cost passenger airlines HK$40 million (US$5.1 million) or more a year.

Two sources told the Post that the operator of Hong Kong International Airport, the Airport Authority, had informed them it would levy HK$1.32 per bag from July 6. With the new fee, airlines face paying two sets of baggage costs if they are still under an existing contract with their ground handling company.

Currently, airlines use these companies to handle all necessary duties under the wing of a plane once it arrives, such as unloading luggage from the hold onto carts and putting them on conveyor belts that lead to the baggage reclaim area.

The authority has decided to take the role of moving bags from the carts onto the belts by outsourcing this to workers – but passing on the cost to the ground handling companies who will pass this on to airlines. It said this would ensure bags got to travellers faster.

“Most airlines are resisting. The authority said they consulted with airlines but it was all heavy-handed,” one source said. “Initially they were going to [make this change] at no cost but a few months before implementation, they said it would cost HK$1.32 per bag.”

The Airport Authority said the fee was purely levied to meet the cost it would have to bear.

The fee per bag is relatively small but significant as the latest available figures from 2015/16 showed about 80,000 bags were loaded from and onto aircraft daily. That same year, 68 million passengers passed through the airport while last year, it moved 73 million travellers.

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The potential HK$40 million cost comes from the estimated number of arriving passengers exiting the airport, each assumed to have one bag in the hold. It could be more given that some travellers have more than one piece of luggage, including frequent fliers and those in premium economy with bigger allowances. Conversely, budget airline passengers may take hand luggage only.

The International Air Transport Association has been critical of Hong Kong for pushing up the costs of using its airport, including a continued annual increase in aircraft landing and parking charges, to fund the construction of its third runway that will be ready by 2024.

The authority said it conducted a review that showed baggage handling was not optimal because of the ground handling contractors’ “manpower supply and deployment issues”.

A spokeswoman said: “The objective of this new arrangement is to ensure sufficient manpower at each of the baggage reclaim belts, so that bags could be delivered efficiently to passengers.

“No revenue is generated for the AA as the sole purpose of the new arrangement is to enhance operational efficiency, that will in turn ensure the quality of service for passengers.”

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The Airport Authority declined to confirm the fee amount and gave a vague explanation that money would be clawed back from the airline’s contractors on a “cost recovery” basis.

It also denied that it would make money from the arrangement, and added it had already conducted consultations on this move for two years with airlines and baggage handling contractors.

David Bentley, chief airport analyst at CAPA Centre for Aviation, said: “I can’t see what the justification for the charges is. Hong Kong holds a monopoly position, unlike an increasing number of other major airports worldwide.”

HKIA on Wednesday unveiled record profits of HK$11.48 billion (US$1.46 billion) from advertising and retail licences and charging airlines higher fees.

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Last year, to raise revenue, the airport rolled out what it called a new speedier security screening process, with airlines paying HK$20 per passenger.

The airport has raised plane parking and landing fees by 27 per cent spread over three years since September 2016, linked to funding its HK$141.5 billion expansion, including its third runway.

For its new baggage handling service, the authority contracted local firm Express International Development to recruit workers. The company said it had hired the majority of the 200 staff needed, by offering them a salary of HK$11,500 a month including allowances.

Ground handling company Jardine Aviation said its starting salary was up to HK$14,000 a month.

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