Is Hong Kong ready to reclaim its 'air hub' role?
Fitch Ratings said the city's lifting of travel restrictions paved the way.
Hong Kong's removal of its travel restrictions, and mainland China's reopening of its borders in January, would drive the city's strong rebound in its air traffic, says Fitch Ratings.
Recent traffic data at the Hong Kong International Airport (HKIA) showed that the city's passenger volume surged to the 3.1 million mark in April, recovering 54% of its 2019 level. The statistic was 25 times the same as last year.
The rating agency also said that Hong Kong is ready for the pent-up travel demands, as routes are beginning to resume gradually and traffic to revive despite economic headwinds and geopolitical tensions.
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Short-haul routes led the recovery, with faster growth and traffic to and from Southeast Asia, mainland China, and Japan. Near-term optimism from tourists will become high for the upcoming summer travel season.
"The "Hello Hong Kong" promotional campaign with air ticket giveaways and welcome packs launched by the government should further entice worldwide visitors and boost enthusiasm for travel," Fitch Ratings added.
However, the rating agency said that several challenges remained to hinder Hong Kong's growth prospects and its pace of recovery.
The city, along with others in the Asia-Pacific Region, had a slow air traffic recovery from the pandemic due to delayed border-opening policies, whilst the concentration on international routes made its aviation industry more vulnerable to travel restrictions.
Other risks, such as labour shortages, several routes that have yet to resume fully, soaring inflation, and higher air fares, may threaten HKIA's near-term plans to recapture its top international air hub role.
But, Fitch Ratings said that despite challenges, they expect Hong Kong's growth momentum in air travel "will spill over in the medium term, yet the full recovery will take time, with traffic coming back to 2019 levels only by the end-2024."