Shenzhen subsidizing air cargo

Cargo airlines based at Shenzhen Airport and covering international air cargo routes will for the first year receive US$100 per tonne multiplied by the total amount of outbound cargo with a ceiling of $1.25 million per aircraft. The second-year subsidy will drop to $75 per tonne, and the third year to $50.

The subsidy for carriers not based at Shenzhen but operating international routes out of the airport will be calculated on every new cargo route launched by each airline. For all out-bound cargo lifted from Shenzhen Airport, these carriers will receive a subsidy of $62.50 per tonne in the first year with a ceiling of $1 million. The subsidy will drop to 75 percent in the second year and 50 percent in the third.

Domestic cargo carriers based at Shenzhen and launching new mainland routes will receive a subsidy of $62.50 per tonne in the first year with a ceiling of $625,000. This subsidy will also drop to 75 percent in the second year and 50 percent in the third.

Tobias Lubecki, a spokesman for Shenzhen-based carrier Jade Cargo International – a joint venture started in August last year between Shenzhen Airport, Lufthansa Cargo and DEG – was cautiously optimistic about the initiative.

“We have not yet received a full overview of the proposal and are working closely with Shenzhen authorities to obtain a firm commitment,” he said.

“A subsidy will be very welcome. An airline is a thin margin business, especially a young carrier expanding as rapidly as us.”

This is a smart move by the Shenzhen government and should succeed in attracting more carriers to the airport. The Pearl River delta is the center of Chinese manufacturing, the more lift available directly from Shenzhen, as opposed to routing through Hong Kong, the better. As China’s economy and infrastructure continue to improve and business there gets easier, Hong Kong’s status as the “gateway” to China will continue to diminish. Why hassle with trucking goods across the border (yes, there is still a “border” between China and the Hong Kong SAR) all the way to Hong Kong’s airport when it would be easier and cheaper to send them out from Shenzhen? I have already seen examples of ocean cargo being transitioned to Yantian instead of Hong Kong as increased sailings and capacity out of Yantian make it a more attractive option. Some logistics firms have also been transitioning more workload to their Shenzhen/Yantian offices or setting up offices there if they don’t already have one. The transition of more air cargo to Shenzhen is the next logical step.

Carriers taking advantage of Shenzhen air cargo subsidy

MOL Adds Call at Shenzhen

Shenzhen’s Yantian port booming

Shenzhen container throughput slows