Aviation, Talking Point

Ready for take-off

How will a new airport reshape Beijing’s aviation landscape?


The ‘starfish’: Daxing’s five-pier wheel-and-spoke design makes it quicker to get to departure gates

About 13 kilometres south of Tiananmen Square is Nanyuan (which means ‘south garden’ in Chinese). It was used as a military training ground by the emperors of the Qing Dynasty and in 1910 an aircraft shed was erected there as China’s Manchurian leadership came to realise the importance of airplanes to modern warfare. Imperial China’s final dynasty crumbled a year later, before it could establish its own air force. Yet what the Qing left behind turned into China’s first airport.

Nanyuan has an influential history: it was the first aviation school in Asia and was thus the place that helped to train the first generation of Chinese pilots. After the Communist Party seized power in 1949, the first squadron of its air force took off from Nanyuan, flying over Tiananmen Square as part of the People’s Republic’s first military parade. When Henry Kissinger arrived in Beijing on a secret mission in 1971 – to prepare for Richard Nixon’s groundbreaking visit – he also touched down at Nanyuan.

Nanyuan was turned into a civilian airport in 1984. Yet last week the 109 year-old facility closed its runway for good to pave the way for the opening of a new aviation behemoth on the outskirts of the capital: Daxing International Airport. Indeed, the unveiling of the new airport was one of the cornerstone events in the celebrations of the 70th anniversary of the founding of the People’s Republic this week. The new $100 billion hub is expected to launch another new era for China’s aviation industry.

Where is Daxing located?

Construction of the airport took just five years (and to give credit where credit’s due, where else could a structure of such enormous proportions be built in such a timeframe). However, the planning for the project took considerably longer – more than 20 years, in fact. The debate on where to put it started in 1993, Xinhua reported last week. The central government changed its mind 16 times before settling on the southern outskirts of the capital, not far from Hebei’s Langfeng City, in 2014.

Using Tiananmen Square as a focal point, Daxing is 47km from the urban heart of Beijing, compared with a distance of less than 30km from the city centre to the current hub, Beijing Capital International Airport (BCIA).

Daxing is also about 55km from the Xiongan New Area (a district earmarked as a high-tech hub, as well as the new home for much of Beijing’s city government; see WiC361). With nearly Rmb280 billion ($39.2 billion) earmarked for roads and railways going to Daxing, a journey from the southern parts of the city centre to the airport can be as brief as 19 minutes. According to Xinhua, the location was chosen partly because planners wanted to balance the development of southern and northern Beijing. Traditionally northern Beijing is a more affluent area (dating from the period when the Forbidden Palace went up in 1421) than the south. It also means Beijing has now joined an elite group of cities including Tokyo, London, New York and Paris with two long-haul international airports. At home in China, Shanghai had been the only claimant to dual-airport status, although Chongqing will join the group next year.

Yet the new hub has been designed for more than Beijing’s benefit. “Daxing is not just a new airport for Beijing. It is a new airport for Xiongan and for the Jing-Jin-Ji [a region comprising Beijing, Tianjin and Hebei, see WiC294],” Xinhua proclaimed.

How big is the new airport?

The Chinese for Daxing translates into “big renaissance”. No wonder then that at the opening ceremony last week – overseen by President Xi Jinping – officials hailed it as “a new, powerful source of national development”.

With a starfish-shaped terminal building designed by the late Iraqi-British architect Zaha Hadid, the airport spans 47 square kilometres in terms of its land area. At a size of about 100 football pitches, or approximately two-thirds of Manhattan, Daxing is the world’s largest airport, according to Chinese media.

It may soon become the world’s busiest as well. Hartsfield-Jackson in Atlanta has held that title in terms of passenger traffic since 1998, handling 107 million people last year. Daxing is designed to challenge for top spot, although just 3.5 million passengers are expected to pass through this year. Annual numbers are forecast to grow quickly, however, from 72 million by 2025 to more than 100 million by 2040.

Interestingly, it has been designed without shuttles or trains, and rather with piers that radiate out from the main building, which allows planes to park closer to the terminal. This wheel-and-spoke design is supposed to reduce travel times to a maximum of eight minutes from the airport’s centre to any of its departure gates.

Daxing is also likely to spur the growth of China’s aviation market. Citing figures from the International Air Transport Association, ThePaper.cn reported that China is going to emerge as the world’s largest aviation market within the next three to six years. By 2022, annual passenger throughput is expected to reach 980 million, surpassing the 950 million in the US.

In connectivity terms, mainland China’s biggest airports still offer fewer routes than rival regional hubs like Hong Kong and Singapore. Daxing will help the city of Beijing to stay at the centre of China’s aviation landscape but it also expects to become a major transfer hub, taking a fifth of its passengers on onward journeys by 2025. With four runways initially and eventually seven, the new airport will open up direct connections to plenty more cities around the world too, cementing the Chinese capital’s status as the region’s leading hub.

All civilian airports in China have to contend with a fundamental constraint: 70% of the country’s airspace is reserved for the military, cramping the operations of commercial aircraft. The restrictions significantly reduce the number of take-offs and landings that airports can handle, and they mean fewer options for departure and arrival routings in bad weather. Daxing isn’t going to get any exemptions from the rules, but the new runways will give airlines more access to the limited flight corridors available, allowing more take-offs and landings.

What will happen to BCIA?

Beijing’s incumbent international airport is already the world’s second busiest. The problem is that it is running at its full capacity. It was built in 1958 with assistance from the Soviet Union, but it has undergone more than a dozen expansions, with the latest major makeover adding a new runway in time for the Beijing Olympics in 2008.

The rapid growth in passenger traffic since then has stoked up the pressure for new capacity in the Chinese capital, however. The congestion is getting worse: despite being the world’s second busiest airport by passenger volume, BCIA ranked only fifth by take-offs and landings in 2017, the New York Times reported, or a third fewer movements than the world leader Hartsfield-Jackson Atlanta.

Of course, BCIA is also notorious for flight delays – with only 71% of its flights taking off on time last year. Daxing has been designed to divert a large share of its traffic. Currently BCIA handles more than 100 million travellers a year, but the plan is to reduce that flow to about 82 million passengers within five years.

This isn’t terrific news for investors in the Hong Kong-listed BCIA. When the Civil Aviation Administration of China (CAAC) announced its “One City, Two Airports” planning blueprint for BCIA and Daxing in January, shares of BCIA plunged 16% in one session. Just days before Daxing’s soft opening last month, Hong Kong infrastructure investor NWS Holdings (a unit of property conglomerate New World) also disclosed that it had sold off a 6.4% stake in BCIA at a 4.4% discount to the market price. NWS had acquired a strategic stake in BCIA in 2013 but it no longer owns a share in the airport.

How about the Chinese airlines – which airports will they fly from?

Daxing’s opening also means a redistribution of interests among China’s big three state-owned airlines. Previously the trio has been acutely territorial in commercial terms, with Air China dominating in Beijing, China Eastern in Shanghai and China Southern in Guangzhou. That mix is set to be disturbed. Citing the CAAC’s “One City, Two Airports” blueprint, China News Weekly noted that Air China will stay on as the dominant carrier at BCIA, while China Eastern and China Southern will move most of their Beijing services to Daxing.

Aviation planners see the new set-up as a way of shaking up their sector. The trio will all have ample room for expansion. Of the three, Air China is probably the least advantaged by the move, however, because its previously entrenched position in Beijing will face a new threat. “Obviously China Eastern and China Southern will be allowed a bigger slice of the cake, which is growing larger,” China News Weekly commented. “Air China has been allowed to ‘monopolise’ the old ‘Beijing airport’ but in reality it is having to cough up the entire ‘Beijing market’.”

China Southern, whose hub in Guangzhou gives it a strategic foothold in the south, probably gains most from the new access to the new hub in the country’s north. In the past it has been blocked from flying its A380 fleet from Beijing, after objections from Air China, the airline that’s traditionally been regarded as China’s flag carrier (see WiC168). Now China Southern has a new chance to take the fight to its rival and it announced last year that it would be investing Rmb10 billion in a new short-haul carrier called Xiongan Airlines, which will operate out of Daxing as part of its ‘dual hub’ strategy for Beijing and Guangzhou.

China Eastern has also been frustrated by restrictions on its operations out of Beijing, Caixin reported earlier this summer, despite coming under pressure to be more accommodating in its own hub in Shanghai.

“In Shanghai, the airspace is more open… and that’s why Air China has some good routes there,” a China Eastern employee complained to the magazine. “However, China Eastern hasn’t received the same treatment in Beijing.”

In the meantime, there have been intense negotiations on who gets to fly in and out of Daxing, and when. The original plan was for each of China Eastern and China Southern to get 40% of Daxing’s capacity, but China Eastern has traded a quarter of its Daxing quota with Air China in exchange for keeping its lucrative Beijing-Shanghai route at BCIA.

What else is Daxing going to offer?

Back in the 1960s, the French cultural theorist Paul Virilio predicted that airport concourses would replace central business districts as the focal points of urban and international interchange.

That hasn’t really happened. “Few meetings take place in airports. People flying in for even a few hours make great efforts to get away from them – even if it entails hours in traffic or at an anonymous airport hotel,” the Financial Times reported back in 2014 when the Daxing plan was just announced. “People dislike being in the airport. And the more they travel, the more they dislike them.”

However, Virilio’s theory has been catching on rapidly in major Chinese cities. The National Exhibition and Convention Centre, which opened in Shanghai in 2015, and Shenzhen’s new convention centre are both located in airport districts, the news website Huxiu pointed out. Daxing also comes with a state-of-art exhibition centre. “An airport can even become the new centre of a city. Of course it doesn’t imply a central business district in the traditional sense but a focal point for international exchange, commerce and high-end manufacturing,” Huxiu posited.

That may or may not prove to be the case, but one certainty is that Daxing will contribute to millions more Chinese tourists going abroad and spending their cash overseas. For the rest of the world that will be both good – retailers will be especially happy – and bad – popular tourism sites will likely be overrun (Venice has already announced a plan to charge short-stay tourists an entry fee). Coping with Chinese tourists will be one of the big trends of the next decade.

© ChinTell Ltd. All rights reserved.

Sponsored by HSBC.

The Week in China website and the weekly magazine publications are owned and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.