Hong Kong’s Economy Shudders as Its Airport Descends into Chaos

HONG KONG — Violence and disarray at Hong Kong’s modern, efficient airport have cast a fresh shadow over the territory’s status as a global financial and business capital.

Demonstrators largely retreated from the airport on Wednesday after two chaotic days in which hundreds of flights were canceled. Late Tuesday, protesters, police officers and passengers clashed in the same sleek terminals through which executives and financiers transit daily. But the anxiety created by the violence could linger, as businesses weigh their futures in a city once lauded for its stability.

“The airport is crucial, utterly crucial for Hong Kong,” said Tara Joseph, the president of the American Chamber of Commerce in Hong Kong. Business travelers, she said, have been canceling trips in significant numbers.

Many of Hong Kong’s most important industries — trade, finance, tourism — depend on ready access to the skies. If the antigovernment demonstrations this summer have tested the semiautonomous territory’s political union with China, then the airport disruptions have threatened something much more basic: the easy accessibility that makes Hong Kong such a valuable gateway to China for the rest of the world.

“People who didn’t have to come were starting to rethink their plans already,” Ms. Joseph said. The turmoil at the airport, she said, “is the icing on the cake.”

All sides in the unrest seemed to take a pause on Wednesday. Online, some protesters circulated apologies about the intensity of the violence at the airport the previous night.

The demonstrators proved they had the ability to paralyze an important economic artery, but the strong reaction that Tuesday’s chaos elicited from businesses, travelers and the mainland Chinese news media means that protesters may be more careful about trying such tactics again.

ImageFor protesters, disrupting the airport represents a new but potentially dangerous weapon.
CreditLam Yik Fei for The New York Times

The instability, combined with the trade war between China and the United States, has already rattled Hong Kong’s economy. The territory’s stock market has plummeted in recent weeks, and forecasters have slashed estimates for economic growth. The local economy expanded 0.6 percent in the latest quarter from a year earlier. The figure was unchanged from the quarter before but still represents the slowest pace of growth for Hong Kong since the aftermath of the global financial crisis.

Some residents have started considering new contingency plans for their families and their wealth.

David S. Lesperance’s firm helps the ultra rich plan their tax and personal affairs to minimize legal and political risks. In earlier years, he said, perhaps one potential client from Hong Kong or mainland China contacted him every three months.

Lately, it has been three or four a week.

“People have gotten more pessimistic as events have picked up,” Mr. Lesperance said. “Now, instead of talking about it over drinks with their friends, they’re reading it in the newspapers. Now they’re looking out their windows at the crowds.”

Any major shifts by global companies could depend on whether large-scale protests continue in the coming months. Such changes take months, if not years, and Hong Kong still has major benefits that few other places in Asia can match, including proximity to China and a dependable legal system.

“It’s too simplistic to think that people will just pick up their suitcases and leave for Singapore,” said Ms. Joseph, the American chamber president.

CreditLam Yik Fei for The New York Times

Over the past two decades, Beijing has worked to bring Hong Kong closer to the mainland, both politically and in terms of rail and road connections. But the territory has long been a place that outsiders reach by air.

The ability to jet in with ease has been fundamental to making Hong Kong an attractive place for global companies to do business, and for Chinese tourists to surf the internet freely and buy saucy books, banned in the mainland, about the private lives of China’s elite.

In all, nearly 430,000 aircraft landed at or took off from Hong Kong International Airport last year, carrying almost 75 million passengers. A decade earlier, there were 300,000 aircraft and 47 million passengers.

“Left unaddressed, the closure of the airport would have seriously tarnished Hong Kong’s reputation and role as an air transport hub for the region,” the Hong Kong General Chamber of Commerce, a business group, said in a statement.

“We need to go back to business. We need to live our life,” said Davide De Rosa, the chairman of the European Chamber of Commerce in Hong Kong.

One factor that has potentially mitigated the economic impact is that the disruptions have not affected cargo flights. The Hong Kong airport handles 5.6 million tons of cargo a year, more than any other airport on the planet. But more airfreight is carried nowadays by wide-body passenger planes, and those shipments have invariably faced delays.

At the airport on Wednesday afternoon, Adrianne McKinnon was relieved to find that her flight to Toronto had not been canceled. Ms. McKinnon, 42, works in finance, and she said her primary concern after the latest violence was about how Beijing might react.

“You never know what China can do,” she said.

The protests in recent weeks have put a damper on commercial life across Hong Kong, leaving many neighborhoods eerily quiet at times when they would normally bustle with activity.

CreditLam Yik Fei for The New York Times

“Many people don’t dare to come out to the streets now,” said Lau Kwok Yiu, 50, who runs a small dessert shop in the North Point neighborhood, on the eastern side of Hong Kong Island.

On a recent night in Tsim Sha Tsui, across Victoria Harbor, Laxmi Gurung was sitting outside the pizzeria where she works. She said sales had been slow, both on weekends and weeknights, even with schools on summer break.

It was even worse after the protests rolled through. “Then,” she said, gesturing at the emptiness before her, “the road would look like this.”

“I feel bad,” said Ms. Gurung, 19. “Not just because of business, but also because I am worried about Hong Kong people. I want all this to finish as soon as possible.”

The highest-profile company in Hong Kong to suffer from the protests is among those most closely associated with the airport: Cathay Pacific Airways, the territory’s flag carrier.

The airline agreed last weekend to bar employees who joined the protests from doing any work involving flights to mainland China. It also said it would submit lists of employees who fly to or above the mainland to the Chinese government for approval. China’s aviation regulator imposed the new restrictions after a Cathay pilot was arrested last month and charged with rioting.

In the days since, Cathay’s leaders have warned employees against taking part in “illegal protests.” The company and its largest shareholder, the Hong Kong-based conglomerate Swire Pacific, have issued nearly identical statements backing “a strong and respected rule of law.”

Cathay’s shares have traded this week near their lowest value in a decade.

Given the pride that many people in Hong Kong feel for Cathay, the airline “is a sensitive point for China to apply pressure to,” said Peter Harbison, the chairman emeritus at CAPA Center for Aviation, a research firm.

“At the same time, it can be very quickly self-defeating,” he said. “I don’t think Beijing really does want to destroy all the good things about Hong Kong.”

Elsie Chen and Katherine Li contributed reporting from Hong Kong.

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