By Dr. Chen Chengyu
Since the 11 SKIES project was returned to the Airport Authority, public discourse has largely centered on the “70 billion loss” and “who benefited.” While these discussions certainly merit attention, if we stop there, we will miss a window of opportunity with even greater strategic significance. Once the Airport Authority assumes full leadership of the project, it can integrate it with the development of the Northern Metropolis, as well as cross-border synergies with Macau and the Greater Bay Area, into a comprehensive spatial strategy. This is not a remedy, but a strategic move. However, strategic moves come at a cost, and visions require funding. While proposing a strategic framework, this article also attempts to answer three fundamental questions: where will the money come from, what are the risks, and how can resistance be overcome?
I. Spatial Division of Labor: Linking International Gateways with Industrial Hubs
Over the past decade, there has been virtually no overlap between the development of 11 SKIES and that of Beidou. One is a commercial project next to the airport, centered on retail space leasing; the other is an industrial new town in the northern New Territories, focused on innovation, technology, and logistics. The two have operated independently, with little functional synergy between them.
Now that the Airport Authority has regained control, there is a possibility that this disconnect can be mended. Lam Tin-fuk explicitly stated that the project “will not be just another traditional shopping mall”; it will focus on large-scale entertainment and experiential facilities and “has the potential to develop into a platform for mainland enterprises to promote their products and services to international markets, while also helping international enterprises tap into the mainland market through engagement with tourists.” This statement highlights the core positioning of 11 SKIES: it is not a shopping mall, but rather a physical embodiment of Hong Kong’s role as a “two-way gateway.”
Beidu’s role is precisely complementary to this. The Transport and Logistics Bureau has submitted a document to the Legislative Council stating that it is actively studying different route options for the “southern extension” of the Hong Kong–Shenzhen Western Railway, including a direct connection to the airport or a transfer via Sunny Bay. The Highways Department and the Airport Authority are currently reviewing the technical feasibility and cost-effectiveness of these options. More than 80 expressions of interest have been received for the Hong Kong section of the Hong Kong-Shenzhen Western Railway. The government aims to open the line simultaneously in both cities by 2035 and does not rule out financing the project through real estate development on land outside the railway corridor.
This means that Beidu could serve as the “industrial hinterland” for 11 SKIES, while 11 SKIES would become a “showcase” for Beidu-based companies to reach the global market. Once the rail corridor is established, it will connect Qianhai, Hongshuiqiao, and the airport, forming a closed-loop “air-rail intermodal transport” network.
Quantitative Indicators and Rationale: It is recommended that the following target be set: “By 2030, the proportion of passenger traffic arriving at 11 SKIES via the Hong Kong–Shenzhen Western Railway or the Hong Kong–Zhuhai–Macao Bridge shall be no less than 25%.” This indicator is based on the approximately 30 percent visitor entry rate at Singapore’s Changi Airport’s “Jewel of Changi”; for Hong Kong, which is in its initial stages, the target is set at 25%. “The proportion of North District residents employed at 11 SKIES and SKYTOPIA shall be no less than 30%.” Based on the local employment commitment for the Hung Shui Kiu area and the current employment rate of approximately 25% for North District residents at the Science Park, a 30% rate represents a reasonable increase.
Contingency Plan: If the southern extension of the Hong Kong–Shenzhen Western Railway is not operational until after 2038, it is recommended that, in the short term, the “Airport Express plus shuttle buses” and “Hong Kong–Zhuhai–Macao Bridge cross-border buses” serve as the primary modes of transportation, with space reserved at Tung Chung East Station for seamless transfers once the railway opens.
II. Cross-Border Collaboration: Macau Acts as a Traffic Amplifier, but We Must Prevent “Traffic from Passing Through Without Entering”
The Macao Government Tourism Office has launched the “Fly to Macao” promotion for three consecutive years, offering free bus service to international travelers visiting Hong Kong from January 20 to December 31, 2026. Upon arrival at Hong Kong International Airport, travelers need only complete the necessary procedures at designated counters within the restricted area to receive a free one-way bus ticket, allowing them to board a direct bus at the SkyPier Transit Building via the Hong Kong–Zhuhai–Macao Bridge to Macau. Meanwhile, the Hengqin Pre-clearance Cargo Terminal at Macau International Airport has a total floor area of approximately 97,600 square meters and is designed with an annual logistics handling capacity of 300,000 metric tons. Construction is scheduled to be substantially completed by the end of 2026, with the facility set to officially begin operations in the first half of 2027.
Macau is emerging as a “satellite hub” for international passengers and cargo at Hong Kong International Airport. An international traveler arriving at Hong Kong International Airport can choose to enjoy the entertainment facilities at 11 SKIES before extending their trip to Macau via the Hong Kong–Zhuhai–Macau Bridge; a shipment of goods produced in the Greater Bay Area can be consolidated at the Hengqin Forwarding Terminal before being exported globally via Hong Kong International Airport’s international flight network.
However, the author must point out a potential risk: Macau’s “free bus tickets” may lead to a “drive-by” effect, where international travelers board buses directly from the airport’s restricted area to Macau without stopping at 11 SKIES. It is recommended to establish a seamless transfer route between 11 SKIES and the Sky-Sea Transit Building, and to discuss with the Macao Government Tourism Office the inclusion of a “11 SKIES Experience Voucher” as part of the free ticket promotion, thereby converting “transit traffic” into “staying and spending.”
III. Outsourcing Management: Modeled after Science Park and Cyberport, but the drawbacks must be addressed
The Airport Authority’s core competency is airport management, not the operation of commercial and entertainment projects. The 3.8 million-square-foot project involves tenant recruitment for the shopping mall, management of performing arts venues, operation of the marina, and coordination of hotel and dining services—all of which require professional teams. The experiences of Science Park and Cyberport provide clear benchmarks.
Since winning the facility management contract for Hong Kong Science Park in 2014, Fucheng Property Management Limited was further appointed by Cyberport in 2016 to manage over 120,000 square meters of high-tech facilities, including four Grade A smart office towers and a retail and entertainment mall. Its service team comprises professionals in asset management, technical services, quality and safety assurance, information technology, legal affairs, procurement, human resources, and accounting.
The author recommends that the Airport Authority adopt a three-phase strategy. Phase One (the first two years following the handover): The dedicated subsidiary will manage core strategic functions in-house, while infrastructure management, cleaning and security, and electrical and mechanical maintenance will be fully outsourced. Phase Two (Years 3–5): Introduce professional operators in areas such as venue operations, commercial leasing, and event coordination. Phase Three (after five years): The HKAA transitions into a strategic regulator and ecosystem builder.
However, outsourcing is not a panacea. Common issues with outsourcing in Hong Kong’s public sector projects include: high contract oversight costs; a decline in service quality due to contractors’ profit-driven motives; and time-consuming and dispute-prone contract negotiation and renewal processes. The success of the Science Park and Cyberport models hinges on the management companies retaining sufficient internal oversight capabilities. It is recommended that, while outsourcing in the initial phase, the Airport Authority simultaneously establish an internal contract management team of no fewer than 20 people, covering functions such as legal, financial, and technical review, and incorporate contract oversight costs into the project budget.
Accountability Mechanism: If the occupancy rate at 11 SKIES falls below 60 percent for two consecutive years, the Airport Authority must submit a special report to the Legislative Council’s Panel on Economic Development.
IV. Content-Driven Strategy: From Waiting for Customers to Attracting Them
Lin Tianfu put it very precisely: “SKYTOPIA represents a brand-new model for airport development, one that attracts travelers through commercial development to incorporate Hong Kong’s entertainment experiences into their itineraries, prompting them to specifically choose Hong Kong as a layover destination and thereby driving air traffic at the airport.” This is a virtuous cycle: new routes bring in new passengers; the entertainment experiences at 11 SKIES encourage travelers to choose Hong Kong as a transit point; and the resulting growth in passenger traffic reinforces Hong Kong’s status as an international aviation hub.
Chen Meibao, Secretary for Transport and Logistics, clearly stated that the goal is to increase the number of international destinations from the current 220 to 240 over the next five years. By 2025, Hong Kong International Airport had successfully added or resumed service to 30 global destinations, with approximately 140 airlines operating out of Hong Kong. The new passenger traffic generated by these destinations requires amenities like 11 SKIES to retain them.
The author proposes establishing the “SKYTOPIA Content Introduction Special Mechanism” to introduce no fewer than five international- or national-level entertainment IPs annually. The scope of recruitment should not be limited to Western operators but should also include cultural and creative enterprises in the Greater Bay Area. Regarding funding sources, it is recommended that 1% to 2% be allocated from the Airport Authority’s annual capital expenditures to serve as a dedicated fund for content acquisition, with operators required to co-fund the initiative through a “matching grant” arrangement. It is also recommended to set a target that “by 2030, at least 15% of passengers transiting through Hong Kong International Airport will visit or spend time at 11 SKIES.” This target is based on the approximately 20 percent stay rate at Jewel Changi Airport; setting the target at 15% for Hong Kong is a realistic goal.
V. The Accommodation Landscape: From a Single High-End Option to a Multi-Tiered Experience
SKYTOPIA’s current accommodation plans include only two hotels, both of which are positioned in the mid-to-high-end market. The Regal Aerospace City Hotel features 1,208 guest rooms, while the Bay Resort Hotel offers approximately 300 rooms. Together, they provide a total of about 1,500 rooms, meeting the needs of high-end travelers and business travelers in transit, but they completely fail to cater to young travelers, budget-conscious travelers, and in-depth travelers seeking unique experiences.
Hong Kong’s reputation for high hotel prices has become a structural bottleneck in the development of its tourism industry. Some Legislative Council members have pointed out that Hong Kong’s high hotel rates are a heavy financial burden for young people from various regions with modest incomes. This suggests that “high prices” are not necessarily the problem; rather, “unjustifiably high prices” are the real issue.
The author recommends introducing three types of specialty hotels in addition to the two existing ones: an aviation-themed hotel (200 to 300 rooms, with some rooms facing the runway, priced 30% to 40% lower than the Bay Resort Hotel); cultural and arts boutique hotels (150 to 200 rooms, in collaboration with local and Greater Bay Area artists, priced 20% to 30% lower than comparable downtown properties); youth hostels and shared accommodations (300 to 500 beds, priced at 200 to 400 Hong Kong dollars per night, modeled after the “Qihang 1331” youth hostel in Kai Tak).
In terms of financial feasibility, the total investment for the three categories of hotels is estimated at approximately HK$1.1 billion to HK$1.5 billion, which can be shared through a joint venture between the Airport Authority’s capital expenditures and private operators, with direct public funding limited to less than 30 percent.
With regard to the bidding process, the author recommends that the Airport Authority not use “housing price levels” as the sole evaluation criterion, but instead introduce a diverse set of indicators: Uniqueness of the experience (30%), affordability (20%), local employment and procurement (20%), and synergy with other SKYTOPIA projects (30%). A seaside resort hotel catering to yacht owners, an aviation-themed hotel catering to families and aviation enthusiasts, a cultural boutique hotel catering to art lovers, and a youth hostel catering to budget-conscious travelers—the accommodation ecosystem formed by these four types of establishments is precisely the kind of supporting infrastructure a true “airport city” should have.
VI. Institutional Design: From Case-by-Case Responses to Clear Rules
One of the lessons from the 11 SKIES incident is the lack of quantifiable risk warning mechanisms and exit strategies in long-term contracts. This is precisely the core issue the author criticized in “The ‘Selective Response’ of the Five-Year Plan”: without the constraints of quantifiable rules, “strict fiscal discipline” remains nothing more than a slogan. The 11 SKIES project serves as yet another example of the absence of quantitative rules in public finance: a guarantee contract signed for a 40-year term was substantially rewritten when the other party faced financial difficulties, without triggering any review under quantitative fiscal rules, without a mechanism to ensure that options could actually be exercised when needed, and without the intervention of independent audit oversight. Drawing lessons from this, the author believes that when advancing the aforementioned synergy strategy in the future, three institutional arrangements are worth considering.
First, establish a “Cross-Border Air-Rail Intermodal Transport Coordination Platform.” Once the plan to extend the Hong Kong–Shenzhen Western Railway southward is implemented, it will involve three parties: Hong Kong, Shenzhen, and the airport. The government has already established a cross-border rail task force with Shenzhen; building on this foundation, a permanent cross-border coordination mechanism can be set up to uniformly plan ticketing, through-baggage services, and border clearance procedures.
Second, explore a “coordination mechanism for the Guangdong-Hong Kong-Macao airport cluster.” The free bus service offered by the Macao Tourism Bureau has already established an operational foundation for “multi-stop travel,” and the Hengqin forward cargo terminal has implemented a “single lock for cross-border cargo” regulatory model. Similar arrangements could be extended to Zhuhai Airport on the western shore of the Pearl River Delta, creating a synergistic effect among the “airport cluster” through the Hong Kong–Zhuhai–Macao Bridge.
Third, include the Airport Authority in the Audit Commission’s regular value-for-money audits. The Airport Authority is currently not covered by the Audit Commission’s regular audits. For the six-month period ending September 30, 2025, the AA’s net profit fell 18% year-over-year to 1.276 billion yuan. Due to the construction of the third runway, interest-bearing debt during the period totaled 144.1 billion yuan, while cash on hand stood at only 29 billion yuan, resulting in net debt of 115.1 billion yuan. The Director of the Audit Commission recently stated that expanding the scope of the Commission’s “radar network” could be explored. However, this reform faces substantial resistance: as a statutory body, the HKAA’s operational flexibility and need for commercial confidentiality create a tension with the Audit Commission’s requirements for public accountability. It is recommended to adopt a “phased inclusion” approach: In the first phase, projects involving public funds exceeding 5 billion yuan should be included in value-for-money audits, with coverage subsequently expanded to overall operations; simultaneously, a “Joint Working Group” should be established between the Audit Commission and the HKAA to develop an audit framework that balances advisory responsibilities with efficiency. It is recommended that the Finance Committee of the Legislative Council formally request the Audit Commission to submit a feasibility report when reviewing the 2026–27 expenditure budget.
Conclusion
As I noted in *Flood Control and Road Construction*, true strategic resilience does not lie in passively plugging gaps, but in proactively building a governance system capable of self-diagnosis, self-repair, and continuous evolution. Whether 11 SKIES can transform from a project in need of “stopping the bleeding” into a new engine for the internationalization and diversification of Hong Kong International Airport depends on whether we can replace a zero-sum mindset with a collaborative one, and replace ad-hoc responses with institutional design.
It bridges the gap between Beidu’s “industrial hinterland” and international markets; serves as a hub within Macau’s “one-trip, multiple-stop” model and the Greater Bay Area logistics network; and draws on the governance experiences of Science Park and Cyberport for institutional benchmarks in day-to-day management, provides content-driven momentum for an internationalization strategy focused on emerging market routes, and addresses the genuine needs of diverse travelers through a multi-tiered accommodation ecosystem ranging from high-end resort hotels to youth hostels.
When passenger conversion rates, employment self-sufficiency rates, and the proportion of cross-border intermodal transport are quantified as accountable metrics; when the Airport Authority’s operational data is included in the scope of regular audits; when the accommodation ecosystem shifts from a single high-end model to a multi-tiered experience; and when cross-border coordination is upgraded from ad hoc arrangements to a permanent mechanism, 11 SKIES is no longer merely about the success or failure of a single project, but rather a real-world exercise in Hong Kong’s public governance as it transitions from “case-by-case responses” to “institutional resilience.”
This is not the end of a transaction, but the starting point of a strategic restructuring of the sector. And any such restructuring requires us to simultaneously answer three questions: Where will the funding come from? Where do the risks lie? And how can we overcome resistance? This article attempts to provide some answers, but a more comprehensive solution requires the government—as it moves forward—to earn public trust through transparency, establish a foundation for accountability through quantifiable metrics, and ensure long-term resilience through institutional design.
