Hong Kong airport's new terminal will help strengthen the city's position as an Asian and global transportation hub, but competition from rivals in the region continues to grow, analysts said.

Hong Kong International Airport's second terminal - built to meet increasing passenger demand - formally opened on June 1.

In a region where passenger growth is faster than the global average, analysts said Hong Kong has to be well- prepared to fend off any threats to its position as an international air hub.

"All the airports are planning for the future, particularly in Asia and the Middle East, like Dubai," said Vincent Ng, a Singapore-based aviation analyst for Asian Equity Research at Standard & Poor's.

"You can see that Asia is going faster than the rest of the world. Airports are being built bigger and bigger. This gives them time to position themselves for the future," he said.

Jim Eckes, managing director of Hong Kong-based aviation consulting firm IndoSwiss Aviation, believes the opening of the new 140,000-square-meter terminal will pull in more customers.

"You have to be prepared for the future. Adding a second terminal gives you a lot of advantages and you can attract other airlines to come to Hong Kong, further strengthening its already extensive flight network," he said.

"If you are really going to be a landmark airport, you have to be ahead of the curve."

Hong Kong is seen as an important air hub in Asia and for China. Built on reclaimed land, the airport is among the world's largest and has seen rapid passenger growth since its opening in 1998.

The number of air travelers has grown from 28.6 million in 1998 to 44.4 million last year, with 80 million predicted by 2025. More than 85 airlines operate flights from Hong Kong to more than 150 destinations worldwide, including 40 mainland cities.

But Hong Kong has its rivals. Singapore, whose airport handled 35 million passengers last year, already has two terminals, with a third one set to open in January 2008.

The new 380,000-square-meter structure will bring the total annual passenger handling capacity to about 70 million at the airport, connected to more than 180 cities by more than 80 airlines.

"Singapore is always ahead of the pack in terms of having a terminal before it is needed," Eckes said.

"They are looking ahead. Hong Kong has to do that, too."

But Hong Kong faces bigger threats closer to home. While it is considering a third runway, Guangzhou's Baiyun airport already has plans to build a third, with completion scheduled for 2011.

Baiyun - the mainland's third-largest airport - handled 26.2 million passengers last year and is gaining market share from Shenzhen airport, according to a research note issued by Morgan Stanley.

"When you look across China where Baiyun airport was built, you've got competition in this business," Eckes said.

"You've got to have the facility not only to keep up with your neighbors but project an image that you can handle the growth rate, which right now is astronomical."

China's aviation industry is one of the world's fastest growing, mirroring the broader economic growth in the nation of 1.3 billion. Air passenger traffic in China grew 16.7 percent to 332 million trips last year.

It could take some time before Baiyun catches up. Hong Kong can take comfort that Asian Aerospace, the world's third-biggest airshow, will be moving to the city this year after being held in Singapore every two years since 1984. With its firm position as a gateway to China, organizers relocated the event to the SAR to target the hugely lucrative aviation market.

"I'm sure Hong Kong will continue to be an important air hub in this part of the world. But all top airports will continue to invest to further their advantages in order to lead the future," said Ng of Standard & Poor's.