Comparative Analysis of Air Cargo Management and Operations

This report delves into the realm of air cargo management and operations, focusing on a comparative analysis of Hong Kong International Airport (HKIA) and Singapore Changi Airport. The report begins with an executive summary, highlighting the aviation services of HKIA since 1998 and CAI's involvement in asset management since 2004. It then proceeds with a structured analysis, examining business models, hub positioning strategies, and performance metrics over the past decade. The report is divided into three key steps: analyzing overall business aspects, scrutinizing factors affecting airport operations, and evaluating the business performance of both airports. It provides insights into logistics services, strategic positioning, and market performance, ultimately offering a comprehensive understanding of the air cargo industry's dynamics.

AIR CARGO MANAGEMENT AND OPERATIONS
1

Executive Summary
The report has been done on air cargo management and operations and two airports are known as
Hong Kong International Airport and Singapore Changi Airport. Hong Kong International
Airport had been giving aviation services to customers since the year 1998. CAI, a division of
Singapore Changi Airport had been mainly involved in every level of asset management since
2004. Hong Kong International Airport has been known as HKIA and it is the best in doing
cargo business in Hong Kong and in other countries too. CAI has been helping KFIA and other
airports to do business over the years. CAI has been dealing with the consulting services to
improve aviation facilities of global airports in future years.
2

Table of Contents
Introduction......................................................................................................................................4
Step 1: Analysis and critical reporting on overall business.............................................................4
Step 2: Analysis of the factors of airports.......................................................................................7
Step 3: Analysis of business performance of airports of the past decade......................................14
Conclusion.....................................................................................................................................15
Reference List................................................................................................................................17
3

Introduction
The report is based on air cargo management and operations with respect to two airports namely
Hong Kong International Airport and Singapore Changi Airport. The purpose of this report is to
highlight how business model and hub strategic positioning are happening in these airports over
the years. Hong Kong International Airport had been giving aviation services to customers since
the year 1998. CAI, a division of Singapore Changi Airport had been mainly involved in every
level of asset management since 2004.
There are three steps in this report in which this report is divided. Step 1 deals with the analysis
and critical reporting of Hong Kong International and Singapore Changi airport. Step 2 is dealing
with the critical analysis of Hong Kong International airport and Singapore Shnagi Airport. In
addition, this part mainly highlights how much the logistics services, factors affecting the air
cargo hub strategic positioning, and operations. Step 3 part mainly focuses on the performance
of these two airports for the past 10 years.
Step 1: Analysis and critical reporting on overall business
Comparison between Singapore Changi Airport and HKIA
Both Hong Kong International Airport (HKIA) and Singapore Changi Airport have its respective
business models and air cargo, hub positioning strategies in China to do successful business. In
this section, the comparison between (HKIA) and Singapore Changi Airport are done.
HKIA had replaced another airport known as Kai Tak Airport. One of the main features of the
successful business of this airport is its choice of location. It is located in a pivotal regional trans-
shipment centre. It is a traveler hub and acts as the gateway for destinations that are present in
Mainland China and in other parts of Asia. The business model of Hong Kong International
Airport is that it works as a public-sector infrastructure to the passengers since its establishment
in 1998. Hong Kong International Airport (HKIA) is hailed as one of the busiest airports in case
4

of international cargo. It is because in 2010, HKIA was able to do better handling of 4.1 million
tons of cargo and thereby it could successfully overtake a US-based airport called Memphis USA
(Hongkongairport, 2019). The business model of HKIA relies on the global network, extensive
use of connectivity to lead in the airfreight business. Due to this reason, this airport acts as a
global hub and main gateway in China. The airport is one of the main hubs of Oneworld
association and it is one of the major cargo hubs for another airline known as UPS Airlines.
A government body is known as Airport Authority Hong Kong mainly operates HKIA and it
provides a 24-day facility to customers as the main hub in Cathay Pacific, Hong Kong Express
Airways, Air Hong Kong (cargo carrier) and Cathay Dragon. In order to handle the growth of
passengers, the Airport Authority of Hong Kong had created a "push and pull through" strategy
for enhancing its links to new cargo and passengers. By making use of this strategy, HKIA had
adopted its markets in fast growing China, Pearl River Delta region in the year 2003 and started a
new station of Airport-Mainland coach. This coach station is of 2500 square feet, it has a waiting
lounge and even cushy bays for ten coaches. This coach station was built as a main
transportation hub strategies to do well positioning of the hub of HKIA for the future years. This
coach station was made back in the year 2007, which was relocated to level 3 of Terminal
number 2 in 2007 only. This relocation was done to do better aviation business.
Singapore Changi Airport has been awarded as the world's best airport in the world since its
establishment in 1981. The main goal of the owner of this airport is to improve the economic
condition of Singapore in the future years. Innovation is the main key that had affected the
business models of Shanghai Changi Airport so far. Due to this reason, in a span of just three
decades of airline services in China, it is possible for this company to witness a huge amount of
passengers. In short, the passenger traffic of this airport had grown from 8 million to over 60
million within just a span of three decades (Cai, 2019). Right now, this Changi airport is having
560 accolades for providing excellent service to the customers. The business models of
Singapore Shanghai Changi Airport are mainly focused not on innovation, but on improvement
in aviation service.
CAI is a part of Singapore Changi Airport and it was formed to improve aviation consultancy
services, management projects and global investments of other global aviation companies. All
these strategies had assisted these Singapore airlines to expand rapidly in these years. CAI is
5

even involved in the form of a strategic investor and industry partner. Based on cargo traffic and
the number of international passengers, Singapore Changi Airport is one of the biggest
transportation hubs in Southeast Asia. Changi Airport Group mainly operates it and it is a home
base of Singapore Airlines, Singapore Airlines Cargo. It is one of the busiest cargo airports in the
entire world as it is handling 2.150 million tonnes of cargo in 2018 (Cai, 2019).
On the other hand, a new fast-speed ferry terminal had started its operations in 2003 in the
month of September and this ferry is known by the name of SkyPier. The passengers, who arrive
at SkyPier have to board buses to reach the terminal point and passengers arriving from other
countries can ride of ferries to return to the PDR. HKIA has four ports and consists of Shekou,
Macau, Humen, Shenzhen, and some other countries (Hongkongairport, 2017). In 2007, this new
transportation hub had started to serve other ports, such as Fuyong Dongguan's Humen, Zhuhai,
Znogshan and Macau were opened to operate in 2007. However, in 2009, SkyPier Terminal had
opened its operations on a permanent basis. This terminal had been designed in a perfect way to
do accommodation of total of 8 berths. The facilities of baggage handling and transfer were
some of the facilities that are given to passengers and the added advantage of this terminal is it is
directly linked to the system of airport mechanical people transporter.
The baggage and cargo services have improved the air cargo hub positioning strategy and
business model of HKIA over the years. Hong Kong International Airport had been able to
handle 3 million tonnes of cargo on an annual basis. Hong Kong Air Cargo Terminals partial
handles the cargo department. The Hong Kong Air Cargo Terminals Ltd is one of the two main
cargo terminals at the airport of HKIA. Its headquarter is super-terminal 1 and it is of a size of
3,530, 000, square feet (Hongkongairport, 2017). The super terminal 1 is hailed as one of the
second biggest stand-alone facility of the air cargo in comparison with the west cargo handling
area of another airport known as Shanghai Puddong international airport.
The difference between Singapore Changi Airport and Hong Kong International Airport is that
the former gives a high amount of cargo services to the partner airports and consulting services
via CAI. However, the later makes use of "push and pull strategies" to increase connections to
get new cargo and passenger traffic in the future years (Hongkong airport, 2017.
6

Current market performance and strategic positioning
In 2014, CAI's airport management services had increased due to their successful 6-year contract
for managing and operating KFIA in Saudi Arabia (Cai, 2019). KFIA stands for King Fahd
International Airport. The collaboration with KFIA and CAI had improved Saudi Arabia's
aviation industry to restore its market share of the aviation sector. Singapore Changi Airport has
its current market performance and strategic positioning by using innovation, managing for
decades the partner airports of CAI had made Singapore airlines to meet its goals. In addition,
the focus is given on ways to make better aviation services and cargo services while utilizing the
business models in Singapore Changi Airport (Cai, 2019). In addition, this airport also offers
other services to the global airport and national airports to improve its aviation services. The
services offered are traffic forecasting, network strategy, airline development and so on
(Changiairport, 2019).
Hong Kong International Airport is leading the cargo business, a focus city of multiple airlines; it
contributes a hefty amount of money to the economy of Hong Kong. It mainly employs 65,000
employees in the airport and in distinct branches. In 2015, HKIA had done great business and
witnessed a huge amount of passengers amounting to 68.5 million in total (Aero, 2017). Due to
this reason, HKIA had the label of busiest airports worldwide and had its place in the 8th
position based on passenger traffic. In 2007, this airport had started constructing a two-storey
North Satellite Concourse (NSC) and it was opened in the December month of 2009
(Hongkongairport, 2019). It was created for narrow-body aircraft. It gives aeroplane services to
45 destinations.
Step 2: Analysis of the factors of airports
Key logistics and value-added capabilities
The Hong Kong International Airport is famous in the world for providing beneficial aviation
services to both national and international customers. There are mainly five key logistics services
that are given by HKIA and they are aviation petroleum service system, aircraft catering, and
aircraft continuation. In addition, the other key logistics services incorporate ground support
7

equipment maintenance and business aviation facility. All these services are elucidated in the
following ways:
a) Fuel service system: The effective aviation fuel provide system of Hong Kong International
Airport has two key elements and they are the on-airport fuel system and permanent aviation fuel
facility (PAFF). This fuel system is used by this company for at least 1,100 flights that are
taking off at the airport of HKIA on a daily basis. The On-airport aviation system (incorporates
12 storage tanks along with a total capacity of 220,000-meter cube. A receiving facility of twin-
berth at Sha Chau Island is given and it is able to accommodate barges of fuel o about 6,000 dwt
(Hongkongairport, 2019). This facility is incorporated in the first key logistic development and
other factors are an area of refueller calibration. The Airport Authority do the management and
operation of the first key logistic service known as on airport aviation fuel system. The second
key element is situated on the off-site from Tuen Mun's airport. PAFF incorporate oil tankers of
10,000 to 80,000 of ocean-going in a twin-berth jetty, 8 storage tanks with 264, 000-metre cube
capacity. In addition, PAFF is connected with two submarine pipelines with the airport through
Sha Chau. PAFF was developed since the December month of 2010, it is offering a stale, secure
and effective supply of fuel for the sustained development of HKIA
b) Aircraft catering: The three aircraft caterers at HKIA consist of a combined capacity of 198,
000 meals on a daily basis. It offers a wide range of in-flight catering services from in-flight,
assembly and operation dishes. The three franchises, such as Cathay Pacific Catering Services
(HK), Gate Gourmet Hong Kong and LSG Lufthansa Service Hong Kong offer total customer
satisfaction to every customer.
c) Aircraft maintenance: HKIA has high-class facilities in case of aeronautical engineering,
delivering advanced aircraft maintenance and so on. HKIA has 24 maintenance stand, one
compass calibration, and four aircraft base for maintaining plane models so that no issues in
planes can happen in future years. In addition, HKIA has three main franchises to maintain
aircraft and they are China Aircraft services, Hong Kong Aircraft Engineering and Pan Asia
Pacific Aviation Services (Hongkongairport, 2019).
d) Business aviation facility: The business aviation centre of Hong Kong (BAC) has a site area
of about 16000-meter square. BAC is filled with an excellent terminal and three hangars for
8

providing customers with effective one-stop services. The one-stop services incorporate flight
planning, security, customs, quarantine facilitation, passenger handling, administration, and
immigration and so on (Hongkongairport, 2019).
e) Ground support equipment maintenance: HKIA's owner and management team do take
efforts to ensure efficient and safe operations at their airport. HKIA's business partners include
Ground Support Engineering and Dah Chong Hong - GSE service of Dragonair Airport. These
two business partners do necessary repairing and maintenance services to the 10, 140 unit load
devices (Hongkongairport, 2019).
In the case of value chain activities, HKIA provides value chain activities to airlines by
providing cargos. The government body taking care of HKIA's logistics hub is changed and
approved by this government body. In 2018, Cainiao Network is a logistics department of
Alibaba Group and it was announced by them that they wanted to do a joint venture by investing
at least US$1.5 billion that is HK$12 billion. They wanted to invest such a hefty amount of
money to create a digital logistics centre at HKIA. Cainaiao Network's owner wanted to take
such a decision and create a value chain activity with HKIA as it is the busiest cargo airport.
Cainiao was supposed to lead this venture with Aviation Corporation of China national and YTO
Express. These companies would hold 51%, 35% and 14% stakes in this joint venture business
(Hongkongmaritimehub, 2018). A new logistics centre would be made in HKIA comprising of
state-of-the-art technologies, automated warehousing, environmental protection standards in
2023. This centre would handle above tens of millions of parcels per year to meet cross-border e-
commerce needs of international SMEs. This centre would bring 1.7 million tonnes of cargo to
HKIA (Hongkongmaritimehub, 2018).
Singapore Changi Airport' does exceptional business operations, concert and transportation have
assisted this company to gain the attention of enormous requests for aviation consultancy
services (Cai, 2019). In addition, national and international companies for getting the
consultancy services to approach this airport. Just to fulfil this demand of overseas airports, CAI
(Changi Airports International) was created in 2004. The airport management consultants are
making a huge difference in the airports in the entire globe (Huang et al. 2015). For instance,
KFIA got benefitted by doing a 6-year contract with CAI. Due to the assistance of CAI, the
passenger traffic of KFIA had increased by 110% from 2008. Moreover, in 2015, this airport,
9

KFIA was named as the Most enhanced airport in the Middle East and KFIA got other rewards
too (Cai, 2019). Singapore Changi Airport gives logistics services to other airports by using their
department of CAI. In addition, other services are also present that attract owners of big aviation
companies to take necessary services from this airport.
This is not the only list of the activities that Singapore Changi Airport is involved with so far.
There are value chains activities that this airport is engaged with to improve its performance and
expand its aviation business in future years. CAPE had been overseeing expansion of airport
infrastructure including runways, aircraft pavements, airfield drainage, and taxiways at this
airport since 2007. In 2011, CAPE was actually engaged in doing the replacement of the Budget
Terminal with a new terminal named T4 (Heisig et al. 2016). In 2012, new value chain activities
were done by this airport. In 2012, CAI had invested money in four airports of Southern Russia
only. Among the four airports, one airport is Sochi International Airport, which was a host
airport for 2014 Sochi Winter Olympic and in Paralympic Games. CAI had closely worked
together with the operator in order to set up operational initiatives so that the airport can become
prepared for the Games (Filieri and Lin, 2017).
Needs of shareholders and supply chains
Singapore Changi Airport understands the importance of airports as both a significant public
transportation and a commercial entity. CAI offers experience, facts, skills to assist partner
airports for delivering a high-class travel experience to customers (Campbell and Park, 2017). It
can be done if the airport's commercial potential is optimized by CAI. CAI, a branch of
Singapore Changi Airport give sustained shareholder services to shareholders to fulfil their needs
and improving the supply chain.
10

Figure 1: Services offered to the shareholders by CAI
(Source: Cai, 2017)
The services that shareholders can get from CAI include distinct services for improving traffic,
planning, commercial and retail development, airport service quality, traffic development, airport
service quality and so on. In addition, general airport improvements including blueprinting
concept, self-check-in counters were introduced for an uplifting experience of passengers (Pick,
Sarkar and Johnson, 2015). For instance, Sochi and Anapa Airports had inaugurated a brand new
VIP terminal, a terminal for passengers for increasing demands of passengers so far
(Changiairport, 2019). CAI has a confirmed track record, which states that it had served over 20
countries and above 50 airports of different shapes and sizes. On the other hand, Sochi and
Krasnodar Airports had improved the commercial space for offering a better shopping
experience to passengers. The active participation of CAI had assisted Sochi International
Airport to get above 10 million passengers in 2017 and it was doubled as compared to 2012 (Cai,
2017).
Sochi got consecutive awards in 2015, 2016 and 2017 for its better performance (Tondeur et al.
2017). Other airports that performed well after getting service from CAI are Samui Airport,
Tancredo Neves International Airport, and King Fahd International Airport. In addition, Brunei
International airport and Kazi Nazrul Islam airport of India had remained beneficial clients of
this airport (Cai, 2015). Apart from having a sufficient customer base, Singapore airport is
11

known as one of the busiest cargo airports in the entire globe as it handled in 2018, 2.150 million
tonnes of cargo. On the other hand, the total amounts of commercial aircraft movements were
increased by 3.4% from 2017 to 386,000 in 2018 (Holmström, 2018).
The passengers are the ones, who take services from Hong Kong International Airport now and
then to do their business meeting, education conference and so on (Hongkongairport, 2019).
There are passenger services that are offered to the passengers and they are airline lounges,
airport courier service, airport ambassador, automated people mover. In addition, other services
incorporate caring corner, battery, children play and TV areas, recharge service, baggage
measuring gauge, baggage packing and wrapping service and so on (Véron and Wolff, 2016).
The passengers in HKIA can get ample amount of chance to do shopping in the stores such as 7-
Eleven, 1010, 759 Kawaiiland, 759 Store, Apm Monaco., Balenciaga, and Backers Experience
and so on. The customers can get a chance to buy beneficial products in discounted rates at the
airport (Hongkongairport, 2019). The option of doing dining with partners and families are
present in the airport premises so that passengers do not get a negative aviation experience in
future years. The air cargo positioning strategies are one such reason for which mostly the
passengers choose HKIA (Copeland, 2015). The "pull and push strategies" and the motto of
meeting the needs of customers from time to time have enabled this airport to grow (Branstetter,
2016). On a comparative basis, HKIA is not as better was Singapore Chagni Airport as the later
has a department of CAI, which offer consulting services to other airports. Due to having better
performance in case of cargo and not in case of doing a business partnership or joint ventures,
HKIA has been approached by Cainiao Network of Alibaba Group to do create a new logistics
centre.
12