This post continues our feature on the development of dual-airport systems in Beijing and Chengdu.
A new model for complementary airport systems
Air cargo logistics providers operating in major Chinese cities aren’t strangers to running cargo operations through multiple airports in Chinese cities. However, the development of the “one city, two airports” complementary airport model in Beijing and Chengdu will vary from those formerly established in the Pearl River Delta and Yangtze River city-clusters. The difference is this – formerly, one airport in the model would for the most part handle international operations and the other would handle domestic operations.
In the Yangtze River region, Shanghai’s Pudong International (PVG) handles international flights, and Hongqiao (SHA) mainly handles domestic and regional flights with limited international flights; in the Pearl River Delta, international cargo flows are moved through Hong Kong (HKG) and Shenzhen (SZX), while domestic cargo moves through and Zhuhai Airport (ZUH) and other smaller regional airports.
In the new variation of the dual-system airport model emerging in Beijing and Chengdu, there will be no overall division of operations, as each airport will instead host both international and domestic operations. Within this model, the Civil Aviation Administration of China (CAAC) will be assigning carriers to airports.
The CAAC released a statement regarding the assignment of carriers in Beijing to either Beijing Capital International (PEK) or Beijing Daxing International (PKX) airports in January. Under the new transfer strategy, China Eastern and China Southern Airlines will move to PKX.
Guangzhou-headquartered China Southern plans to develop its third cargo hub at PKX, complementing existing hubs at CAN and PVG. The carrier is building both domestic and international cargo handling facilities, which are slated to open with the airport later this year. China Southern’s domestic cargo terminal will have an annual handling capacity of 400,000 tonnes, while the international terminal will be able to process 200,000 tonnes.
A number of other carriers, including PKX include Capital Airlines, Spring Airlines, Juneyao Airlines and China United Airlines, will also be required to transfer operation to PKX. Carriers that will continue to operate out of the existing PEK airport include Air China and its affiliate carriers, most Star Alliance carriers, Hainan Airlines and its affiliate, Grand China Air.
Domestic carriers, foreign carriers and carriers based in Hong Kong, Macau and Taiwan that have not yet been assigned an airport will be given the opportunity to select a preferred base, or may choose to operate flights at both airports. China Postal Airlines has already said it plans to relocate most of its operation to Daxing but has received special designation as the only Chinese carrier with permission to operate flights at both airports. SF Airlines currently operates a hub at the existing airport and has not said whether it is planning any changes in its Beijing air operations.
The CAAC expects airlines to begin transferring to the new airport once it commences operations, likely ahead of the IATA Winter 2019/20 schedule. CAAC added that all transfers will be required to be completed within five seasons.
In Chengdu, Tianfu Airport will serve local cargo operations but is also intended to attain a sizeable international presence. Four carriers – Air China, Sichuan Airlines, China Eastern Airlines and Lucky Air – have already committed to developing bases at Tianfu International Airport. Air China and Sichuan Airlines have announced their plans to operate out of both airports. China Post will also construct a facility at the new airport. The CAAC and other carriers currently at Chengdu Shuangliu (CTU) have yet to announce whether they will expand or transfer their operations to the new airport.
The new arrangement of operations at PEK, CTU and soon-to-open Tianfu and PKX airports is due to the position of these major cities’ airports in overall national development plans. These airports have been designated by the Chinese government as “national aviation hubs,” with Chengdu’s new Tianfu Airport in particular receiving attention as the soon-to-be leading western gateway to Europe, as part of China’s Belt and Road policy. PEK, CTU, PKX and Tianfu’s role in facilitating international linkages will be supported by the continued development of smaller airports – which China plans to double the number of to 450 by 2035 – that will serve as linkages to domestic and regional destinations.
While the division of operations between airports from the former model has not been applied to the overall organization of PKX and Tianfu in relation to their dual-system counterparts, this does not necessarily mean that carriers are abandoning the previous model of operation. Just as Turkish Cargo has divided its operations in Istanbul to conduct its belly hold services at Istanbul New Airport (ISL) and freighter services at Istanbul Atatürk Airport (IST), some Chinese carriers have stated they, too, will divide their operations between the dual-hub airports in Beijing and Chengdu.
Sichuan Airlines, for example, told Air Cargo Airports that it plans to operate all international and dedicated freighter flights at Chengdu Tianfu International Airport, while conducting belly-hold operations out of the existing CTU.
Air China Cargo will also be operating flights and warehouses simultaneously out of CTU and Chengdu Tianfu International Airport, but has no plans to separate their cargo and belly-hold operations between airports. So, the changing strategies of carriers will also be important to considering the changing flow of cargo when considering the impact of PKX and Chengdu Tianfu International Airport.
Anticipated shifts in cargo flows
Ultimately, PKX and Chengdu Tianfu airports will expand the available capacity for international freight shipments in and the redirection of cargo flows into the Jing-Jin-Ji and Chengyu areas, respectively. Upon becoming operational, each airport will also begin to impact the flow of cargo to its counterpart airport in its given city. To predict where cargo will flow, consider the geographical location of the airports within their city-clusters.
Beijing’s new PKX is in the southern Daxing district of Beijing, approximately 28 miles south of Tiananmen Square in central Beijing and 40 miles south of Beijing’s current PEK. Chengdu’s Tianfu International Airport will be in Jianyang, 40 miles southeast of downtown Chengdu, 45 miles southeast of Chengdu’s current CTU and 211 miles northwest of Chongqing.
Currently, most of the investment in Beijing’s logistics operations is focused in the northern and central parts of the city. As carriers and operations transfer to PKX, there will be a redirection of cargo and logistics flows to southern Beijing and its less-developed surrounding areas.
Eastern Airlines and China Southern Airlines currently have a market share of about 30 percent of cargo operations at PEK. With the transfer of these carriers and others to PKX, cargo volumes moving through PEK may initially drop. This will be beneficial however for logistics providers as there will be more room and slots for operations. This will allow operators at PEK the ability to upgrade and or expand their facilities at the airport. There is no clear determination of who will fill the empty space, but Air China Cargo and SF Express, which will both stay at PEK, told Air Cargo Airports that they will monitor and consider options for expanding their operations upon other carriers’ move to PKX.
Beyond driving economic growth south, PKX will also help to integrate Beijing-Tianjin-Hebei logistics networks. The Chinese government is supporting the integration of these areas through the construction of railways, highways and a new city in rural Hebei province, called Xiong’an New District. The government announced plans to build Xiong’an New District in 2017, which is located 31 miles south of PKX and has been designated as a Special Economic Zone (SEZ). Design plans for the city are still in early stages, but the government intends to develop the former agricultural and low-tech manufacturing area into a high-tech metropolis that will host a science and technology park, Chinese telecommunication giants, ship building companies and medical research centers. While the construction of Xiong’an New District is separate from PKX, it will serve as a central connection point within the city cluster and will provide multi-modal connection to Tianjin and Beijing via railways, highways and canals.
As with Beijing, Chinese government authorities also hope to steer economic growth out of Chengdu and its surrounding metro areas, which are short on space with no room for further expansion, to the less urbanized and less densely populated Jianyang.
While details regarding plans for development in Jianyang beyond the airport are yet to be determined, Chengdu Tianfu is expected to play a major role in increasing China’s accessibility to markets in Europe, Africa and the Middle East as a central node in China’s Belt and Road initiative. Currently, CTU has more than 50 international destinations in its network. This number will likely increase when Chengdu Tianfu opens, expanding the region’s international connections.
The CAAC has not yet released any statements regarding transfer strategies for carriers at CTU but will likely make an announcement regarding the issue within the next several months. Either way, providers can expect a shift to cargo volumes and opening of space at the CTU when Chengdu Tianfu opens.
In the end, both PKX and Chengdu Tianfu International airports will offer more options and space for cargo operations, which could generate massive revenues for whichever carriers establish themselves in the new airports or vacated spaces.