Source: Hong Kong Government special administrative region
LCQ1: Developing Hong Kong into an aircraft parts processing and trading centre
Question:
It is expressly pointed out in the 2026-2027 Budget that the Government will promote the development of Hong Kong into the first aircraft parts processing and trading centre in Asia, and the Airport Authority Hong Kong (AA) is also prepared to provide professional services such as aircraft dismantling and parts recycling to further enhance Hong Kong’s status as an international aviation hub. In this connection, will the Government inform this Council:
(1) whether the Government and AA will set up a task force to conduct dedicated studies on ways to develop Hong Kong into an aircraft parts processing and trading centre in Asia, so as to formulate appropriate complementary policy measures, and, in the course of formulating such measures, whether considerations will be given to setting aside sites near the airport for use as hangars or centres for handling spare parts;
(2) whether discussions have been held with the relevant Mainland authorities to explore the possibility of striving to build Hong Kong into the hub for maintenance and repair of China’s domestically-produced aircrafts, with a view to supporting China’s domestically-produced aircrafts in “going global”; if not, whether it will expeditiously initiate such discussions; and
(3) of the strategies and measures put in place by the authorities to proactively encourage and attract more companies engaged in trading of aircraft parts and components and the related transactions to establish their bases in Hong Kong, and to actively promote greater participation of local companies, so as to develop a comprehensive and mature ecosystem for aircraft parts dismantling and trading?
Reply:
President,
The “National 15th Five-Year Plan” published by the country in March this year explicitly supports Hong Kong in consolidating and enhancing its status as an international aviation hub. The Chief Executive announced in last year’s Policy Address the introduction of a leading European aeronautic services company to operate in Hong Kong, providing professional services such as aircraft dismantling and parts recycling. This year’s Budget further reaffirmed our goal to develop Hong Kong into the first aircraft parts processing and trading centre in Asia.
Aircraft dismantling and parts recycling is a specialised aviation business encompassing various aspects, including aircraft parts maintenance, inspection, certification, value-added services and logistics. Against the backdrop of a rising number of retired aircraft and delays in the delivery of new commercial aircraft globally, the aircraft dismantling and parts recycling market in the region is poised for significant growth as most components of retired aircraft can be reused after refurbishment.
In addition, we further enhanced the existing tax incentives related to aircraft leasing through the Inland Revenue (Amendment) (Aircraft Leasing Tax Concessions) Ordinance 2024. These incentives facilitate the development of leasing business for specific aircraft parts such as engines, thereby generating synergy with aircraft dismantling and parts recycling business to form a complementary value chain.
My reply to the various matters in the question is as follow:
(1) and (3) The Hong Kong Special Administrative Region Government (Government) and the Airport Authority Hong Kong (AA) have maintained close contact with local and overseas industry players to keep abreast of market developments in aircraft parts processing and trading businesses. The AA has, from time to time, received enquiries from relevant companies, including aircraft leasing companies, aircraft maintenance companies and aircraft parts trading and investment companies. In addition, the AA has recently met with local and overseas industry institutions and organisations to understand the supply chain landscape and industry needs. These industry insights facilitate further study and formulation of appropriate policy measures, and support actively efforts to promote, co-ordinate and participate in ecosystem design, land use arrangements, investment promotion and industry channel co-ordination.
Hong Kong’s unique advantage in bridging the Chinese Mainland and overseas civil aviation regulatory regimes is conducive to developing aircraft parts processing and trading businesses. Coupled with its traditional advantages, such as its status as a free port, efficient logistics and robust legal system, Hong Kong can expand its professional role in aircraft parts certification, thereby bringing together relevant market participants to form a mature ecosystem of aircraft parts dismantling and trading.
On attracting investment, the Financial Secretary has established the Steering Committee on Preferential Policies for Attracting Industries and Investment (Steering Committee) to lead relevant policy bureaux, departments and public organisations in formulating packages of preferential policies including land grants, land premiums, financial subsidies and tax incentives to attract high-value-added industries and high-potential enterprises to set up in Hong Kong. The Steering Committee will customise preferential policy packages for relevant enterprises taking into account the enterprise’s industry and its technology level, as well as the potential economic contributions and employment opportunities it can bring to Hong Kong. Invest Hong Kong will use the policy packages flexibly during negotiations with enterprises on settlement details, then report to the Financial Secretary for approval.
Meanwhile, the AA will continue to engage and proactively reach out to various industry stakeholders to promote and brief them on relevant developments. The Government will also assist companies interested in operating relevant businesses in Hong Kong, with a view to expanding the scale of industry in Hong Kong and fostering an ecosystem with a complete value chain.
(2) Leveraging Hong Kong’s distinctive position of enjoying strong support of the Motherland and being closely connected to the world, we has been capitalising on our strengths in terms of geographical location, flight connectivity, free trade and logistics infrastructure etc.
Hong Kong attaches great importance to the development of home-developed aircraft. The Civil Aviation Department has maintained close co-operation with the Civil Aviation Administration of China to actively participate in the research and certification processes of home-developed aircraft. Hong Kong has adopted a multi-pronged strategy to position the Hong Kong International Airport (HKIA) as a base for commercial flights of home-developed aircraft outside the Chinese Mainland. It also encourages the industry to proactively explore ways to leverage Hong Kong’s strengths as an international aviation hub to support sustainable development of home-developed aircraft through platforms and co-operative arrangements established by Hong Kong and the country.
In terms of aircraft maintenance, HKIA has sufficient capacity to support ground handling and maintenance services for home-developed aircraft. There are around 40 maintenance professionals from local maintenance organisations who are qualified to provide service for the C919 aircraft.
In terms of co-operative arrangements, in April this year, the Chinese Mainland, Hong Kong and Macao authorities updated the Cooperation Arrangement on Joint Maintenance Management. Building on the existing mutual recognition of aircraft maintenance and training organisations as well as maintenance personnel licenses, the scope of mutual recognition has been extended from aircraft maintenance and training organisations located in the three places to cover relevant overseas organisations approved by the authorities of three regions, with a view to strengthening maintenance capabilities across the three regions and promoting sharing of manpower training resources.
With more flights operated by the C919 aircraft to and from Hong Kong, Hong Kong will continue to enhance its maintenance capabilities and manpower training, providing comprehensive technical and manpower support to facilitate home-developed aircraft’s entry into the international market. We are committed to serving the country’s needs with Hong Kong’s strengths, thereby propelling the country’s civil aviation industry toward new milestones.
Issued at HKT 12:10
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