Hong Kong’s world-reputed aviation industry is expected to suffer losses of more than HK$600 million (US$76.48 million) caused by massive flight cancellations over the past two days with far-reaching hidden cost as escalating protests have taken a toll on its standing as a business hub.
Economists made the estimates as thousands of anti-government protesters crippled Hong Kong International Airport for a second straight day on Tuesday by swarming both the arrivals and departures halls to prevent passengers from checking in or clearing security. Some 180 flights were cancelled on Monday, followed by more than 400 on Tuesday. This was the first time in Hong Kong that the airport was forced to cancel flights through protests.
The impact was severe on one of the world’s busiest airports, which handles 800 flights a day, stranding tens of thousands of travellers trying to fly out of the city or scheduled to arrive. Many were furious at having to scramble for accommodation or alternative travel arrangements.
But the protesters have attempted to paralyse the economy to pile pressure on the government amid escalating violent confrontations between police and protesters.
Dr Law Cheung-kwok, policy director at Chinese University’s Aviation Policy and Research Centre, estimated that the aviation sector had suffered economic losses of more than HK$600 million caused by the air travel disruptions over the two days.
He said the direct economic benefits generated by the aviation sector accounted for about 3.5 per cent of the city’s GDP. “Including the indirect benefits such as travellers’ spending, the aviation sector’s economic contribution has made up about 8 per cent of Hong Kong’s GDP,” he said.
“Based on last year’s GDP at over HK$2.8 trillion, one day’s GDP is worth over HK$7.7 billion. Let’s just say that the airport has been disrupted for two half days. So the economic loss could amount to 8 per cent of one day’s GDP, which is over HK$620 million,” he said.
However, Law warned that the long-term damage to the industry would be immeasurable as Hong Kong’s reputation as an aviation hub was put at risk.
“This is something unprecedented at the Hong Kong airport. Even the 1967 riots didn’t cause this kind of damage. The ongoing protests have really taken a heavy toll on the aviation sector,” he said.
“If this political storm persists, international and local travellers would avoid using the Hong Kong airport for travelling or as a transit point. Foreign investors may also remove their capital in Hong Kong and relocate to other places. This will deal a severe blow to Hong Kong as an aviation hub.”
Iris Pang, an ING Greater China economist, said it was hard to measure the economic loss but the airport’s cargo business must have suffered to a certain extent.
In 2018, the city’s airport handled 5.1 million tonnes of total cargo throughput, which accounted for 42 per cent, or HK$3.71 trillion, of the total value of Hong Kong’s external trade.
The overall economic impact, she argued, depended on how frequent and aggressive the protests would turn out to be at the airport. “These two days were just the beginning. It won’t be the last time, since the protesters adopt an attitude that ‘if we burn, you burn with us’,” she said.
“If there are more protests at the airport, the impact will be exponential. Businessmen may avoid coming to Hong Kong for conducting business. Traders may halt ordering perishable goods as they can’t afford the loss,” she warned.
“If the protesters aim to cripple Hong Kong’s economy, I can only say that they have made a giant step forward,” she said.
This article Aviation industry expected to suffer losses of more than US$76 million after protests at Hong Kong International Airport ground flights for two days first appeared on South China Morning Post