Booming Travel Is Transforming Asian Airports Into Mini-Cities

The new Beijing Daxing International Airport, which cost 80 billion yuan ($11.3 billion) to build, will be one of the world’s biggest when it opens in September. The Chinese government wants the airport to be a magnet for businesses and an attraction for locals as well as travelers. “The airport paves the way for, and guarantees, Beijing’s long-term economic growth,” says Yu Zhanfu, a partner at consulting firm Roland Berger GmbH. Yu says he expects it to boost the city’s role as a connection point for domestic travelers and those flying abroad.

Daxing is one of many airport projects under way in Asia, collectively costing more than $100 billion, to accommodate a surge in travel fueled by the region’s rising middle class. The International Air Transport Association forecasts Asia’s travel demand to surpass that of North America and Europe combined by 2037. About two dozen airports are slated to open over the next six years in cities ranging from Beijing to Mumbai, while many existing airports are adding terminals or runways. Daxing will increase Beijing’s capacity for travelers by more than 70% and alleviate congestion at Beijing Capital International Airport, the world’s second-busiest last year with more than 100 million passengers. By year’s end, Shanghai will unveil a $3 billion, 83-gate terminal that will be separate from the airport’s main building.

The number of trips per person in China will increase 11% annually for two decades from 2018, reaching 1.6 billion by 2037, the IATA predicts, with growth in India reaching 10% a year and Indonesia 9%. That compares with 1% to 2% annual growth in the U.S. and the U.K.

Ng Mee Kam, director of the urban studies program at the Chinese University of Hong Kong, says governments are coming to view airports as destinations serving local consumers and businesses. “The airport is not just a transportation hub,” Ng says. “It’s becoming a city itself.”

Urban planners long have emphasized the roles airports can play in helping cities grow. Now they’re focusing on turning the facilities on the periphery of urban areas into economic centers themselves. Asia’s new airports, with their huge capacity and available surrounding land, give the region an edge in achieving that vision, says Max Hirsh, an assistant professor at the University of Hong Kong and author of Airport Urbanism.

Beijing’s new airport anchors a 50-square-kilometer (19.3-square-mile) economic zone that will include research and development labs, exhibition spaces, and medical facilities. It’s expected to handle 72 million passengers a year by 2025 and contribute 900 billion yuan to the regional economy, state-run media says. Emaar Properties PJSC, the largest publicly traded developer in the United Arab Emirates, plans to build an $11 billion mixed residential-leisure facility near the zone, U.A.E. state media reports.

At Singapore’s Changi Airport, the S$1.7 billion ($1.2 billion) Jewel Changi complex, a five-story glass dome that includes a shopping mall, gardens, and the world’s highest indoor waterfall, has become an attraction for locals since opening in April. The Singapore government expects to spend tens of billions of dollars in the next decade on airport expansion. That could boost Changi’s contribution to gross domestic product to 25% from the current 16% by the late 2020s, says Tan Khee Giap, an associate professor at National University of Singapore’s Lee Kuan Yew School of Public Policy. That includes employment and income generated directly (by the airlines and the airport operator, among others) and indirectly (by airport suppliers). “You cannot look at the development of the airport as just an airport development,” he says. “It should be considered a development for the country.”

Hong Kong is spending HK$141.5 billion ($18 billion) to expand the artificial island where Hong Kong International Airport is located, add a third runway, and build another terminal. The government says the project will generate benefits of HK$455 billion by 2061.

The city government last year also tapped New World Development Co. to build a HK$20 billion shopping-and-entertainment complex at the airport. The 3.77 million-square-foot Skycity, scheduled to open in 2023, will be the biggest mall in a city full of them.

New World wants to capitalize on Skycity’s location at the airport as well as a new 55-kilometer (34.2-mile) bridge and tunnel linking Hong Kong to Macao and the southern Chinese city of Zhuhai to make the complex a regional entertainment hub.

As Asian cities look ahead to the next quarter-century of air travel, many in the West are struggling to maintain old infrastructure. In London the government hopes to win approval in 2021 to build a £14 billion ($17 billion) third runway at Heathrow Airport—Europe’s busiest—nearly two decades after Tony Blair’s government proposed it. Critics have included Prime Minister Boris Johnson, who promised in 2015 to lie down in front of bulldozers to stop construction. The Port Authority of New York and New Jersey has proposed about $24 billion in spending to address the overcrowding and disrepair that make John F. Kennedy International, Newark Liberty International, and LaGuardia airports among the least-liked by travelers. “In Europe and North America, some of the biggest challenges are maintenance of things built in the 1950s that are falling apart,” says Hirsh. “Asia has an advantage: It’s not weighed down by old infrastructure.”

Asian airports are taking the lead in relying more on revenue from consumers, not airlines. Both the Singapore and Hong Kong airports generate about half of their revenue from retailing and other nonaeronautical activities, and South Korea’s Incheon International generates about two-thirds. That compares with the global average of 40%, according to the Airports Council International, an industry association based in Montreal.

It’s too soon to know whether the projections for increased air travel are overly upbeat. The U.S.-China trade war, regional political tensions, and slowing global economic growth could ground some potential flyers. “There will be duplication of facilities,” says National University’s Tan. “It can become a white elephant.”

At the same time, the impact of global climate change could curb the aviation industry’s growth. Many of Asia’s new airport cities are located in coastal areas, putting them at risk from rising sea levels and rainstorm-related flooding. Hong Kong’s airport, built on land reclaimed from the sea, is especially vulnerable, says Chinese University’s Ng. “Building bigger and bigger airports—and creating more and more greenhouse gases—will just heighten the problems we are facing,” she says. “We are on the path of no return, and we are not stopping. We are accelerating.”

©2019 Bloomberg L.P.