Hong Kong $18 billion airport upgrade hit by over year delay

Hong Kong’s much vaunted HK$141.5 billion ($18.1 billion) airport expansion has been delayed until at least the end of 2025, according to people with knowledge of the matter, in a blow to the Asian financial hub’s post-Covid economic revival.

Originally due to the completed by the end of 2024, part of the second terminal development will now not be ready for another year at least, the people said, asking not to be identified because the information isn’t public.

The second passenger concourse won’t be ready until 2026, one of the people added. The delay hasn’t been announced by Airport Authority Hong Kong, which operates the city’s international airport, however it has been communicated privately to some key stakeholders.

Considering the upgrades involve one of the airport’s existing middle runways, all three take-off and landing strips aren’t now planned to be fully operational until the summer of 2025, the people said. The middle runway that’s under refurbishment is currently on track for completion, certification and testing by the fourth quarter of this year, one of the people said.

Representatives for Airport Authority Hong Kong said the expansion was progressing “steadily on all fronts with the target to complete” the three runway project by 2024 in an email response. They reiterated an earlier plan to phase-in the passenger facilities to be in line with the post-pandemic recovery.

Hong Kong’s Transport and Logistics Bureau said the Airport Authority Hong Kong is “continuing the remaining works at full steam according to schedule.”

The delay is another blow to Hong Kong, which is still recovering from the long shadow of its strict Covid restrictions. Weak consumer spending dogged by a lower-than-expected volume of tourists from mainland China and high borrowing costs that have dragged on investment have also hindered growth.

As recently as December, official documents provided to the city’s legislative committee on economic development and available publicly stated that “all the building and infrastructure works” for the third runway project will be complete in 2024. The briefing document did however caveat that “relevant passenger facilities” would only open “in phases in light of passenger traffic demand.”

Monthly passenger traffic at Hong Kong airport is still around 25% lower than prior to the pandemic. The airport’s biggest user, Cathay Pacific Airways Ltd., has said it aims to get back to full strength by the end of this year. Hong Kong’s biggest airline is struggling with staffing problems of its own — mirroring a wider industry issue.

Complex infrastructure mega projects are almost always inevitably hit by project delays and cost blowouts. Hong Kong hasn’t revised the cost of its airport project, which was last updated in 2015. Construction work at the facility took a hit during the pandemic. Prior to Covid, Hong Kong was one of the busiest airports in the world by international passenger traffic.

The cost of the expansion includes reclaiming 650 hectares (1,606 acres) of land from the sea — roughly the size of two Central Parks in New York. That has allowed a third runway to be built, which ultimately will sit alongside a second terminal passenger building and concourse, as well as all the associated infrastructure like baggage-handling systems and underground rail links.

By the time the expansion is complete, Hong Kong’s airport will be able to handle over 100 million passengers annually. The airport was approaching full capacity, with 71.5 million travelers in 2019, by the time Covid hit.