Asia Pacific airports - Where to next for the world’s fastest growth airport sector?

Transcript

Brendan Sobie:I was just saying how we have a very diverse panel. It's 2 airports, 2 different markets, everybody living in a different country. So it's— Asia is, of course, a very diverse market itself, and there's a lot of activity in the airport space in Asia Pacific at the moment. A lot of construction, a lot of PPP transactions. It's really exciting.

Alan Polivnick:Thank you.

Brendan Sobie:time period for the airport sector. I'll start with Chapman. Congratulations on the award.

Chapman Fong:Thank you so much.

Brendan Sobie:Hong Kong had a great year, obviously, with the 3rd runway, hosting routes recently, but of course you're still recovering from those 3 years that everybody can't stop talking about. Start by providing a little bit of an introduction to Hong Kong at the moment.

Chapman Fong:Yeah, thank you, Brandon. Actually, we had just commissioned our 3rd runway system end of last year. And actually, we started our project in 2016, starting the first reclamation, and then we completed the whole reclamation 2 years back. And then we have to reconfigure our center runway, and then we complete everything, have the 3 runway system commissioned end of last year. So that brings us to a capacity up to 120 million passengers and 10 million tonnes of cargoes.

Alan Polivnick:Wow.

Chapman Fong:But when the time we did the planning back to 2011, we foresee we were handling around 80 million in this year, 2025. That's why we start the planning, start the reclamation, all the stuff. But of course, when we— before COVID in 2019, we are handling around 75 million at that time. So we are actually quite urgent to catch up, but then we have COVID. So that hard hit the whole industry. And now we are still kind of in the recovery mode. Probably by the end of this fiscal year, we will be handling 63 million. And then now our capacity is kind of ahead of the demand now. But we are very confident for Hong Kong because of the growth in mainland China. We are at the centre of the whole Asia. We have very good catchment area in the Greater Bay Area. We have Shenzhen, we have Guangzhou, we have Macau and Zhuhai, and we see the growth actually is pretty promising for these 2 years, and we expect by the end of next year we will be able to reach back to the pre-COVID level.

Brendan Sobie:Yeah, so we can stop talking about the pandemic finally, hopefully. But I mean, we'll talk about capacity ahead of demand later on when we're talking about alignment, but Yeah. Because, you know, when you build something like a runway or a terminal, it's always going to be ahead of demand. It's always hard to time things perfectly. Christine, you know, Cebu is one of the first privatized airports— well, it was the first one in the Philippines, one of the first ones in the region. Now you have a portfolio of 2 other airports, recently adding regional airports. It's quite an exciting place to be, the Philippine market generally. Cebu in particular is a vibrant hub and a portfolio of 3 airports. Perhaps you can provide some introduction to the portfolio.

Christine Villanueva:Well, that's right, Brendan. 2025 is a very remarkable year for us. We started as Aboitiz Operating Airports Group with just 1 airport in 2023, which is the Mactan-Cebu International Airport, the 2nd biggest airport in the country, Philippines. In 2024, we got into the PPP bid for Laguindingan International Airport, which is in Mindanao, the southern region in the Philippines. Then very recently this year, the 3rd airport came into our portfolio, which is the Bohol-Panglao International Airport. The 3 airports combined comprise about 25% of the total traffic. for Philippines. I think it's a good sign that we're developing regional airports in the country so that progress doesn't just concentrate in the capital and decongest the traffic as well in Manila. So far, so good. Cebu, particularly, has always been labeled as proof that PPP works. We hope to apply the same concept to the 2 new airport acquisitions. There are several more up for PPP bids, we were informed, regional airports that are already in the lineup, so there could be more in the future. Who knows?

Brendan Sobie:We'll talk more about the PPP environment later on in the panel. Certainly, a very exciting space to be in, in the Philippines. destination, a fantastic destination. Cebu also has this great modern international airport terminal that opened shortly before the CAPA event in 2019. I think several of us were at that event. It was a fantastic event, fantastic airport. Perhaps you can provide your perspective. You're involved in a lot of infrastructure projects in the region, so you have an interesting and different perspective on where we are in the airport space in Asia.

Khair Mirza:Yep, thanks very much, Brendan. So Modalys is an airport-focused aviation consultancy, and what you'll find a little bit different from us is that most of our partners and project managers are former airport employees within airports. So we've come out and we now consult our clients who are airports or airport authorities and so on. So one of our products is an online database which tracks all the airport developments, especially in terms of M&A transactions, benchmarking of data in terms of things like non-aero revenues and similar kind of benchmark data points. So from where we stand, I think what we've looked at this year and next year is that, of course, airlines have all of that data, right, internal data. You have data showing whether your growth rate is at 5 to 10, 10 to 15, or in some places 15 to 20% clip. We tend to see from where the airport infrastructure availability angle is, is very much in line. And in some markets, of course, it's a little bit lower than what most airlines are experiencing because of constraints on the airport sector. So generally, I think in 2026 you'll see some bright spots. You know, we've heard over the last 1.5 days how the Philippines should be seeing a little bit less airport constraints now with changes in some of the airport managements and privatizations ongoing. So that's a good plus. And of course, you know, Brandon, you know yourself in Central Asia, unfortunately we don't have very many of our friends here from the Caucasus and Central Asia, but that's a region which is also growing at a good double-digit clip. So the economic base is really solid, and that additional slot freeing up, new airlines, and every— all these factors are aligning. So those are very, very good factors to experience very good growth. And not forgetting as well, not lastly, but not forgetting that India will continue to lead the way as well. So not just in terms of new airports freeing up for PPPs, but also virtual new airports in Mumbai, in Delhi, right, and also new terminals coming up. So these are some of the markets we see which are going to be the bright spots for growth. And obviously new terminals coming up, or expanded terminals in Hong Kong, in Australia. So a lot of growth, and maybe that's why, apart from Singapore, I think Southeast Asia is a little bit less bright compared to some of these other places or regions.

Brendan Sobie:Well, thank you. There's certainly a lot going on. You could talk an hour just on the projects in Asia because there's so many. Central Asia, thank you for mentioning Central Asia. There's new airport projects right now in Tbilisi and Tashkent, which I have a role in through Asian Development Bank. and expansion in Baku as well, new terminal in Baku, and then new airports opening in Vietnam coming up. Cambodia just this year opened a new airport in Phnom Penh. Of course, there's China and India as well. It's just, the list goes on and on. But, yeah, so Alan, perhaps you can provide a bit of background on your experience with the airport sector.

Alan Polivnick:Thanks, Brendan. I'm part of our global aerospace and infrastructure teams A lot of the work we do with airports is on building airports, funding airports, a lot of regulatory work. My view on this, I guess, is partly because we work not just in the region, but more broadly. I think there are 2 things that strike me about this. Firstly, in this part of the world, and echoing what was said before, airports are not seen as bad or a difficult issue. People here Governments are very welcoming of airports. Airports are still seen as sexy. They're a key part of national growth, national development. I mean, certainly, if you heard our keynote speaker from Changi Airport yesterday, it was very clear that the airport is a key part of the economy. It's a priority for the government, for the sector, and resources are being devoted to making sure that it remains a premier hub and a leading place to connect. The other part of this, and this is, I guess, where the investors come in too, is that People no longer see airports just as a place where planes take off and land. Airports are a place to do business. Airports have business parks now, there's accommodation, we see residential areas as well. So when investors now look at airports, and I think this is part of where PPPs are becoming much more attractive, is they don't just see a place with aerobridges and runways, they see a whole lot more opportunities around that. You know, are there areas we can do bonded warehouse and that sort of thing. And that, I think, is part of where the PPP discussion is probably going to go in a number of places in this region.

Brendan Sobie:Yeah, and PPPs, I mean, they also unlock a lot of opportunities to bring in best practices internationally, increase non-aeronautical revenues. There's a lot of good reasons for it. And it's— in Asia, I think we're very fortunate that we We don't have the roadblocks. I mean, it's never easy developing a new airport, of course, or expanding an airport, but compared to Europe or North America or some of the other regions, like we were saying, the governments are a bit more embracing of airports. There's a lot of things that can be done while maintaining the environmental sensitivities and meeting all the environmental requirements as well. So Asia is definitely the place to be from an airport perspective. Just the first question has to do with aligning the capacity and the demand and making sure that you have the capacity when the growth comes. So I think Hong Kong, Singapore now, getting ready for that. But is there still gaps in that? areas of Asia-Pacific that you see as, you know, still need to kind of accelerate or kind of improve? Because we've seen so many improvements in airport space in the last few years, but perhaps there's still more to be done where we still need a better alignment in terms of capacity and with the traffic forecasted— forecasted growth of traffic.

Chapman Fong:I would say, as you probably read from report from ACI, in the next 10 years, we're going to have $240 billion invested in airport infrastructure in the regions, and for handling up to 1.2 billion passengers here. And if you talk about whether there's still gap, actually, it depends on different areas as well. For example, mainland China, actually, they tend to build ahead of the demand. For example, in the area that Hong Kong is, in the Greater Bay Area, Guangzhou actually just commissioned their 5th runway today in the territory. And they're also planning a new airport, a 2nd airport. Shenzhen building a 3rd runway, which just completed their runway. And also in Shanghai, they are actually planning another airport. And they're building a 3rd runway. the 3rd airport, and Beijing already commissioned Daxing a few years back, which can handle 72 million. And for this part of the regions in Asia, actually, because the economic activity is so strong these days and traffic are picking up very quickly, and in this part of the region, actually, it's kind of playing catch-up. But we do see new airport projects in Bangkok, in Vietnam, and many other cities as well. So overall, you can see the momentum. Some area actually is getting faster, some area actually catching up. But just mindful about one thing is that when we look into— because Hong Kong now we have the third runway built, and we are very eager to get the airline flying back to Hong Kong. But there are actually another constraint from the airline perspective. Because they do have a supply chain issue, new aircraft delivery actually slower than expected, they become another constraint in the aircraft provisions for the airlines to fly. So maybe the other button is on the aircraft rather than on the airport.

Brendan Sobie:Yeah, that's an excellent point. Definitely the constraints at a lot of airports are ground handling, like not enough ground handlers, not enough manpower, and And of course, airlines don't have the aircraft with the delivery issues that they have. So it's kind of turned around where so many markets were complaining about the airport, not enough runway capacity, but maybe now it's not so much. I think Philippines is really good. I mean, it's a little bit different because Philippines, let's face it, was way behind and starting to catch up now, at least particularly Manila area, right? I mean, I know Cebu was ahead Relatively compared to the rest of the Philippines. But, I mean, the Philippine perspective, is it well aligned now, or you think there's still more that can be done given the growth in the Philippines and given it definitely was further behind compared to other markets in Asia?

Christine Villanueva:Yeah, well, everyone's talking about the growth opportunities in the Philippines, and we couldn't agree more. Now, of course, where there is traffic demand, as private operator, it provides you a good investment case, right? So you get to have organic traffic growth, and at the same time, there is inorganic traffic opportunities also that you can tackle. Now, the thing is, with the case of PPP, public-private partnerships, especially when you apply it to regional airports, If you do not have a national master plan, then you award these PPP projects or regional airports to different airport operators. Sometimes you do not get that holistic view or holistic approach on where you really wanted to take connectivity and aviation growth in the country. And each operator, each airport will be operating in silos. And sometimes there is an imbalance there. And you also see the public side trying to come up with airports in different locations because every local government unit or every island, every province would want their own airport. But nobody realizes that it's not that easy. It doesn't mean that if you have an airport, the airlines will follow. Or that traffic will grow, or that tourism will be— there will be a boom in terms of tourism. There are a lot of cases wherein, yes, the airport structure is there, but no one's flying. No passengers to serve. I think what we're missing is still the national master plan. We have our own master plans. And I think what's good for us, at least in the Aboitiz Operating Airports Group, is that since we now have 3 airports in our portfolio, it's a lot easier for us to come up with how to optimize our own network between the 3 airports, especially if we have more. But just imagine you have scattered players across the Philippines. Without a national master plan, then there wouldn't be a single vision there.

Brendan Sobie:Yeah, that's a very good point. A lot of my work is in the strategy and policy space in Central Asia, and it's complete lack of strategy. It's like there's— and everybody's just operating in silos. It's exactly the same issue. So especially these emerging markets, these pioneer markets, and that's where it's most important because that's where you have like double-digit growth. Kyra, I don't know if you have any thoughts on that. thoughts on where the gaps are?

Khair Mirza:I think what we're seeing in, let's say, just focusing on 2026 outlook, some of the gaps that we see, for example, now only slowly being overcome, maybe. For example, even if you look at Australia, which has been relatively booming, right, post-COVID, that again, one of those issues is potentially a lack of a national master plan. And based on our projections, Australia is only now seeing the benefits of multiple operators, although those operators have been there for a long time. So maybe not a conventional view, but the government insistence of a Western Sydney Airport has suddenly triggered, if you will, a quick spike in traffic in Sydney, interlinking of terminals, you know, and investments in terminals. So that's one example we feel that shows you how the lack of investment actually can manifest in slower growth. So That's spilling over now. If you look at 2026, if you look at 2026, just in terms of short-term forecasts in India, there's also a lack of a so-called national master plan to that extent. And the preference is for multiple operators to actually try to unlock growth where the public arm has been less keen or less able to invest in that airport infrastructure. So it's a little bit of a balancing act. You have on the one hand a need for some type of minimum of guardrails or guidelines of where the country wants to go to, but at the same time you have the challenge of whether there's sufficient airport infrastructure. And I think we heard as well this morning Cebu Pacific saying that for them as one single airline which was doing very well, they had challenges trying to find more capacity to fly to even Hong Kong, you know. So these actually, you need to kind of look for your spots and pick your spots, right? And there are so many different kinds of examples there which are contrary to each other. So Yeah, I think definitely we see a move towards more investment, more private operators being a positive that airlines can take advantage of, and also helping, probably collaboratively pushing for clearer ideas of where a country is headed in terms of policy, master planning, and so on as well.

Brendan Sobie:Yeah, the momentum is definitely in the right direction, but it's a very slow-moving field, this airport infrastructure. Always has been, always will be. There's always been going to be gaps.

Khair Mirza:Yeah, I mean, if I can add on, right, I mean, on the other hand, right, if you look at it from the airport's point of view, like Changi was here on the first morning, right, and if you kind of track, I mean, I don't think, I'm not sure whether any of our friends from Changi Airport are here, but if you kind of track what Changi Airport has been saying about Terminal 5, Okay, so what we do is we track. You need time to track what people say from day 1 till now. If you kind of track what Changi Airport has been saying about Terminal 5 from day 1, pre-COVID, to today, I think we all know that, you know, the original opening date was not 2030-ish now, you know. So it's little bit, I think, what Hong Kong went through as well. You know, the experience is the airport can plan with forecasts, with fleet expansion plans and so on by the airlines, but it's actually also the individual airlines which actually need to, if you will, deliver the projected growth. You know, so I mean, of course, maybe our friends at Hong Kong Airport are a little bit more, what do you call that, diplomatic, right?

Alan Polivnick:Yes.

Khair Mirza:But when major airlines in your airport actually go through substantive challenges, whether it's because of COVID or any other kinds of restructuring challenges, right, those kind of major infrastructure projects can go from, you know, we'll be adding 50 million passenger capacity in one terminal by 2025 to 2030-ish. And this is, we're talking about, you know, major best-in-class airport operators, right? So it is very challenging, I think, for airport operators to kind of deliver large-scale CAPEX programs.

Brendan Sobie:Yeah, and it's actually 2035-ish, not 2030-ish. But then there's places like Tbilisi and Tashkent that want to build a new airport within 5 years, greenfield. So it depends on where you look at. Alan, what are your thoughts?

Alan Polivnick:Just very brief. I guess I think I agree with Christine on the national plan. I think there are 2 things that we see in terms of airport projects for gaps. One is that I think governments need to get beyond the sort of figurehead national airport gateway thing and look at smaller airports, regional airports, A, because that's where there's a better spend on your national development, but also you're connecting second-tier cities much more effectively, much more efficiently. For example, if you look at Indonesia, look at the Philippines, it's mostly islands. They need to have a network of airports. I mean, I look at what the ADB is doing with airport development in Papua New Guinea. They have recognised that aviation is the way to move people and goods around that country, whether you are on the main island or on the smaller islands. So I think part of it is calibrating that. I think private investors coming in also want to see see that there are returns for investing in a smaller airport, a second-tier airport. The other factor here that is also important, and I think in addition to the OEM suppliers, which I agree with Chapman on, is air traffic rights, because it's all fine and good to build this massive new airport, but if your key market is India and your bilaterals are fixed and there are no more additional slots to get Indian carriers to fly to that airport, what have you done? It's not going to make money. It doesn't make any sense. And that, I think, is part of where we see investors asking questions. Some of that is actually about governments being bold and brave and opening up traffic rights, saying, OK, well, we're no longer going to want these restricted air traffic rights. We want to have unlimited access. If you want to fly from India to our airport, here you go. Now, it's not that easy because it's a two-way street. Sometimes it's multilaterals. But that's the other part of the business equation of building an airport if you're going to want that international traffic, and even domestic traffic. I agree with you, Christine. I think you've actually got to have a business case. Where we see the PPP investors coming in is they want to see the business case up front. An interesting example of how that hasn't quite worked out is Uta Pao Airport. We did quite a bit of work on Uta Pao Airport in the bidding and the construction, and that airport was predicted to have— you probably know the figures better than me, Brendan, but— 1.6 to 2 billion. Their main traffic was gonna be Russians and Chinese, and of course, neither are in Thailand in big numbers or big enough numbers these days. So, a lot of the people that were investing in that thinking, well, this is just a license to print money 'cause every year we're gonna get another million Chinese tourists in Thailand. That hasn't quite gone to plan. So now, of course, they're looking at, well, we're gonna rejuvenate the MRO thing that we were going to do that we put to the side. But I think that's part of where if you're not just looking at it as an airport, you do have other levers pull to keep the investors there and to have a business case.

Brendan Sobie:Yeah, and I looked at U-Tapao in 2019 as well, and the, um, yeah, just like you were saying, the, the thing is, is that you need the national policy. The 3 Bangkok airports, I mean, what, what cities have 3 massive airports? And then you have Suvarnabhumi with expansion, uh, and further expansion possible, and, uh, U-Tapao was always, uh, I always thought it was a little, uh, sketchy whether it's, you really needed the airport, to be honest. And I think It's coming to fruit post-COVID more now with the challenges there. For the next questions, I'm going to start with Alan and go the other way and segue into— combine the next 2 questions into one because they're related. We're running out of time. That was which models you see emerging for airport investment and how do you balance the public and the private? We already were talking about this, but try to get some insights on this.

Alan Polivnick:Certainly from where we sit, there are sort of several speeds at which you have PPP projects. Some, they only want the private sector involved for specialist airport management technology or skills. Others want a much broader range of expertise like construction. The big issue that the investors have in a PPP is control. What happens to this investment? I mean, Utapao is a good example where a number of the potential foreign consortium partners wanted to understand what happened if the project didn't complete, if they didn't get paid, who could they sue, what happens if you want to sue the Thai government in Thailand, are you ever going to get your money? Those are questions that they want to see answered. So I think that's a key part of it. Some countries, some transport agencies sell the projects much better than others. A lot of it is about what the investors want to see. And I think in terms of how that structure was, it's evolving because we are moving from these sort of big-ticket Suvarnabhumi-style airports to much smaller ones, a bit like the ones that Aboitiz have just added to their portfolio in the Philippines. You need a different model for those. You need to target different investors. There's a different financial risk there. Your return on investment is going to be slightly different. You're probably going to need a lot more non-aeronautical revenue than you will from an international So I think those are the factors that we see in terms of how these PPP models are evolving.

Brendan Sobie:Kai, what are your thoughts?

Alan Polivnick:Kai?

Khair Mirza:Sorry, I was reading the question.

Brendan Sobie:Yeah, we'll get to that when we finish, when we go through, don't worry. And please, please continue asking questions on Slido, we'll get to them in a minute.

Khair Mirza:Yeah, in terms of where I see opportunities for PPPs, or, you know, what the impact of PPPs are moving forward, especially since we have an airline-focused crowd, right? I think what Alan mentioned is true. You'll find different airport models coming up. So longer term and not just shorter term, there will be different types of airport models coming up. So an airline that is a little bit more flexible, like for example, like Cebu Pacific, I think you'll find to be potentially a good airline partner. And they are of substance, you know, they deploy the right kind of metal to the airport market or the market. So that's a really good kind of partner. Or for example, yesterday we had Lion Air Malaysia. So the touch-and-run is very reasonable in terms of adapting the type of aircraft to the market dynamics that each destination is, or the airport. So like what Alan mentioned, there will be some airports that will have to rely on non-aero because to make the route work, they can't charge the airline a lot because the yields are not going to work too much. And then on the other end of the spectrum, of course, you have large hubs like Hong Kong. So Hong Kong is a completely different kettle of fish. Slots are at a premium, airlines who are doing well will want more seats. Airlines who are not doing so well do not want to give up their slots. So the airline has to kind of manage that dynamic, right? So I think what you'll find as well is that the airport operators are slowly evolving to accept that not every airport is going to be as large as Hong Kong or even Suvarnabhumi. Right, you know, and people like us who live our lives in airports, traveling to airports for work, I can tell you without a doubt there are certain large airports that we dread going through. Right, so if we use API which, you know, manages travel and we just say, look, I'm not flying through Airport A, I'm not flying through Airport B, and so on and so forth. Because you don't want to do your 10,000 steps in an airport, let me tell you that.

Brendan Sobie:Well, sometimes you don't have a choice depending on where you're going. But I mean, the question on public-private balance as well, I mean, if Philippines has gone so much into private, Where does that leave the government with this balance?

Christine Villanueva:I think PPP, it's an emerging model, but it's not yet fully established or institutionalized across the board. There are still a lot of nuances with concessionary agreements that we get with PPP. Like for the case of Mactan-Cebu International Airport, yes, we are PPP, but us as the airport operator takes care of the land side and the public part still takes care of the air side. We're even joking, okay, if we get a best airport award, who gets up on stage, right? Or who gets to display the award? We also see now the smaller regional airports wherein the government is very much willing to also include the air side. Now, the problem really is if you have, for example, a split in terms of responsibilities, if one is weaker than the other, and you're not in sync with regards to your vision and how you want it to grow the traffic and build up the infrastructure, then there's definitely imbalance there. I would say it's quite proven that the Private side can do it more effectively and efficiently. So if the public part doesn't match, doesn't match up to that, then that's definitely, definitely a big problem. And we also see, at least for Philippines, we see bundlings being done for the other regional airports. Like if there is a smaller feeder airport that no one wants to bid out for a PPP project, they go and bundle it out with a higher-yielding airport. But does it look appealing for a private operator? May or may not be. It really depends on the blueprint that the private operator is also trying to build. I think on the positive side, we are on our way there. There are a lot of good proof that PPP actually works, but whether it's fully institutionalized or it's foolproof, I think we have yet to wait and see.

Brendan Sobie:This bundling thing, investors usually don't like the bundling thing. You ended up with both airports anyway, Bohol and Cebu, so the recipe is there anyway. So it's like, why force it? It's definitely, I think, a good point.

Christine Villanueva:We remain optimistic.

Brendan Sobie:I mean, I give you the option of answering this question about the balance as well as taking the Slido question after that, or just taking the Slido question. Up to you, Chapman.

Chapman Fong:Yeah, I think the PPP model actually is a very powerful tool, particularly for these regions where the traffic demand is going so fast. Airport infrastructure is so expensive. You need actually a tool to capture capital investment in building all these infrastructures. Particularly for all the PPP experience, you see when the private enterprise coming in, they're not only bringing their capital investment, they're also bringing their commercial capability. They often run the airport, often run the airport more efficiently.

Alan Polivnick:Yeah.

Chapman Fong:That's why this is kind of a very good model. But as to your earlier questions about whether it's the best model, I don't think that's the best model because there will be many best models. It depends on the context, right? For example, I just shared my Hong Kong experience, also Zhuhai experience. For Hong Kong, we actually, a company actually formed, but 100% by, it's a corporation running on prudent commercial principle.

Brendan Sobie:Okay.

Chapman Fong:So you can consider me, Airport Authority, as a company, but we're 100% owned by the government. That means that they still hold the strategic control over the airport, but basically day-to-day running is all commercial. We're able to turn around the airport and getting almost 60% of income by non-aero. So we're making, before COVID we're making $1 billion profit. But at the same time, we also financing the whole third runway airport by our own financing.

Khair Mirza:Wow.

Chapman Fong:by lending money, by issuing bonds. Separately, we are also running Zhuhai Airport in mainland China. They are a very small domestic airport. When they gave us the concession for 20 years in 2006, it was an airport running only less than 1 million passengers, a domestic airport. When we get the 20-year concession, we turn around, see the potential of the asset and commercial value. handling around 13 million passengers and making a profit of $30 million. And now we're extending further 20-year extension. So they have a different model as well for running different scale of airport in different contexts, government regulatory context. So it's not a one-size-fits-all solution.

Brendan Sobie:Yeah, definitely not. And Changi as well, of course, also corporatised, and then they go into places like Clark, for example.

Chapman Fong:So there's a lot of different models out there as a good One more remark, and we'll see many other airports when they have the PPP, because the private company going to invest in the airport, they're commercial entities. The commercial interests may not always align with the government economic or social interests. For example, some company may not be willing to invest further as far as it can maintain the service level, but sometimes the government may want to kind of invest ahead, improve the service level further. So these are things we have to mind for as well.

Brendan Sobie:Okay, we only have a couple minutes before lunch. Instead of continuing the policy debate, which will just continue forever, we're going to take the Slido questions, which are more airline-focused, probably good for this crowd. Obviously, thanks for the questions. Um, first one's obviously yours.

Chapman Fong:Uh, what—

Brendan Sobie:while Cathay Pacific Group is a strong home carrier with substantial investment they are making with their fleet, is it enough to reach Hong Kong capacity goals?

Chapman Fong:I think Cathay actually is one of the best carriers in the world and constantly being the best way, the best airlines. But they're also facing supply chain issues. Actually, when you look into the annual book, they are waiting for the aircraft delivery by Boeing. So when 2 years back I asked them when it would go to deliver the 777, they said, okay, will be this year. And then last year, they will be next year. And I asked them this year, it will be 2 years later. So keep delaying. That's why they are trying their best, but they are under constraint. Of course, for Hong Kong Airport, we are more than just a base carrier. We wish to have more foreign carriers coming in to help fuel Hong Kong, because we do have a good catchment in the Greater Bay Area. We're also geographically quite strategic, being centre of Asia, able to reach basically half the population within 4 hours' flight. So in a way, we hope Cathay's success, because their success is our success, but we also want other carriers to come to use Hong Kong as their hub as well.

Brendan Sobie:Okay, and we're just about out of time. I'll just quickly take this last question. Again, it's a good airline-related question. Should airports provide low-cost carriers with special incentive to encourage new city pair development and stimulate traffic? This is, I think, Christine Vig. Cebu has a lot of low-cost carriers, very high reliance on low-cost carriers. This would be a perfect question for you, I guess.

Christine Villanueva:I don't think you can escape now from providing airline incentives, especially if you're a secondary airport. So unlike those wherein their main problem is to decongest, secondary airports regional airports needed to build up the traffic and also the demand to bring in the aircraft as well and improve connectivity. Yes, I think it is a growing practice, but at the same time also, this is something that secondary airports are asking the government side to also come up with a support mechanism because it is not just solely the job of the airport to bring in air activity and bring in passengers. The tourism side as well needed to do their part. It's not just a discussion between the airline and the airport. The government side should be involved as well.

Brendan Sobie:That's always the message. Tourism, airline, airport alignment is not always the best. I think it's pretty good in the Philippines, but some other markets, definitely room for improvement in Asia.

Christine Villanueva:We have room for improvement.

Brendan Sobie:Yes, I was being nice. Anyway, unfortunately, we've run out of time for this panel and for this conference. I'm sure everybody wants to have lunch, but I think we'll be around for any individual questions during lunch, because these are a lot of interesting issues, a lot happening in the airport space. And I would like to thank all the panelists for such a stimulating topic, and thanks for the questions from the audience as well. And thanks for staying with us until the end here. You all get a special reward. I don't know what it is, but I'm sure somebody something can be figured out.

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