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Mr. LAM Sai-hung, GBS, JP
Secretary for Transport and Logistics
Secretary for Transport and Logistics
26 November 2022
We have a lot of encouraging news about our aviation industry recently: the third runway at Hong Kong International Airport was commissioned yesterday, achieving another important milestone towards the successful completion of a mega-infrastructure project, the Three-Runway System; the Airport Authority Hong Kong and the Zhuhai Municipal Government signed a Memorandum of Understanding earlier this month to deepen mutual cooperation, grow passenger numbers and further enhance competitiveness; the Hong Kong Business Aviation Centre is being expanded to bring more convenience to business travellers and help boost new passenger demand.
Photo shows (from left) the Chief Executive Officer of the Airport Authority Hong Kong(AAHK), Mr Fred Lam; Deputy Director of the Liaison Office of the Central People's Government in the Hong Kong Special Administrative Region (HKSAR) Mr Yin Zonghua; the Chief Secretary for Administration, Mr Chan Kwok-ki; the Chairman of the AAHK, Mr Jack So; Deputy Commissioner of the Office of the Commissioner of the Ministry of Foreign Affairs of the People's Republic of China in the HKSAR Mr Pan Yundong; and me, officiating at the Ceremony for the Commissioning of the Third Runway of Hong Kong International Airport yesterday.
The Transport and Logistics Bureau has also launched a trade consultation to gauge the trade’s views on enhancing the aircraft leasing preferential tax regime to attract more aircraft leasing companies to set up in Hong Kong and open up more new opportunities for the aviation finance and overall aviation industry.
The general public may not know how aircraft leasing activities are relevant to our economy. In short, it means that aircraft lessors (i.e. leasing companies) buy and own aircraft and lease them to lessees (i.e. airline operators) for a lease income over a certain duration. More and more airlines choose to lease, rather than own, their aircraft for many reasons, including cost savings, fleet flexibility, reduced delivery lead time for new planes etc. The global aircraft leasing market has grown exponentially over the past few decades, from 1% of the aircraft in use was leased in 1970 to 51% in 2021.
According to the Commercial Market Outlook 2022-2041 published by Boeing in July 2022, it is estimated that a total of over 41,100 aircraft will be delivered in the next 20 years, over 20% of which will be delivered to China. Financing this growth presents major business opportunities for the financial and other professional services in Hong Kong.
As a successful international financial centre, Hong Kong already possesses favourable conditions necessary for developing aircraft leasing business, namely, our sound legal and banking systems, well-developed and diversified capital markets, excellent aviation infrastructure and talents, and proximity to the Mainland market.
The Government introduced a regime in 2017 to provide global industry players with competitive profits tax concessions vis-à-vis those of other places. Since then, the aircraft leasing business has started to gain ground in Hong Kong. Seven of the world's top 50 aircraft lessors ranked by number of aircraft have set up their subsidiaries/operating arms in Hong Kong. We understand that aircraft lessors based or with subsidiaries set up in Hong Kong have leased around 95 aircraft to aircraft operators in the Mainland, Chile, Cambodia, Indonesia, Japan, Korea, Malaysia, Qatar and Vietnam etc.
To continue strengthening Hong Kong’s competitiveness in the global aircraft leasing industry, the Chief Executive announced in his 2022 Policy Address that we will develop Hong Kong into the preferred location for aircraft leasing in the region by further enhancing the aircraft leasing preferential tax regime. Through the trade consultation, we would like to gauge the trade’s views on our proposed enhancement measures in order to formulate effective and appropriate measures to attract more aircraft leasing operators to set up in Hong Kong and inject more new impetus into Hong Kong's role as an international aviation hub.
The consultation document and other details are available on the relevant website https://www.tlb.gov.hk/eng/publications/transport/consultation/air02/index.html. Consultation period will last until 19 December 2022.
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