CAAC to spend 1.5tr yuan to expand airports and fleets

PUBLISHED : Friday, 25 February, 2011, 12:00am
UPDATED : Friday, 25 February, 2011, 12:00am

Beijing plans a massive expansion of its aviation sector by 2015 after the Civil Aviation Administration of China said more than 1.5 trillion yuan (HK$1.77 trillion) would be spent on airports and aircraft to meet a forecast surge in passengers and airfreight.

Li Jiaxiang, head of the CAAC, said the mainland was set to have more than 220 commercial airports by 2015, up from 175.

This compared with a plan put forward by the CAAC three years ago to have 244 civil airports by 2020 which included 97 new facilities.

Li said the mainland would have more than 4,500 commercial aircraft, up from 2,600. He also forecast the number of passengers would soar to 500 million per year by 2015, up from 267 million last year.

The regulator gave no breakdown on how much would be spent on airports or aircraft. But Li said the government would continue to subsidise financially stressed airports, especially in remote areas, because of the economic benefit and connectivity they bring to local economies.

Li said about 130 of China's 175 airports made a combined loss of 1.7 billion yuan last year, while about six billion yuan in subsidies were handed out between 2006-2010.

He added that commercial finance could be used to fund the expansion which one source said could encourage better financial control on operators.

Li said that while the development of China's high-speed railway network could lure travellers away from air travel, 'the impact ... will help the civil aviation sector to improve its management and control'.

Andrew Orchard, regional transport analyst for RBS, said passenger traffic had soared 240 per cent since 2001, but larger aircraft served only 8 per cent of the increase. As a result, there have been more narrow-bodied passenger aircraft flying which has strained air traffic and airport capacity.

'China is not building infrastructure for the sake of it. They need infrastructure; they need aircraft as well,' he added.

Tony Concil, a spokesman for the International Air Transport Association, said Li's passenger demand figures 'are in line with our mid-term forecasts'.

IATA, which represents about 230 global airlines, estimated the number of domestic travellers in China would grow to 379 million passengers in 2014, while the number of the mainland's international passengers would climb to 82.1 million in 2014.

'So this means growth in the range of 10-15 per cent, which China has shown it can handle safely. Certainly training will be a challenge, but again it is one that China has been able to deal with in the past,' Concil added.

Sherry Carbary, vice-president of flight services for Boeing Commercial Airplanes, has previously forecast the mainland would need 70,600 pilots by 2029 to meet the growth in aircraft deliveries. There are about 21,000 airline pilots flying at present.

But Li's forecasts about the number of aircraft needed are more optimistic than prevailing figures.

Goldman Sachs, in an aviation industry research report in November last year, put the size of China's fleet much lower at 1,639 aircraft. These ranged from 50-sear regional jets to 450-seat Boeing 747s.

Goldman forecast the number of aircraft would rise to 3,500 by 2022 based on estimates China could have a billion air travellers.

'Over the longer term, we estimate that China could acquire roughly 4,000 aircraft between 2010 and 2030,' Goldman Sachs added.

One insider said Li's aircraft figures included business and private aircraft in addition to the commercial airliners flown by the mainland's 43 airlines.

David Dodwell, from research and policy advice company Strategic Access, said the growth in air transport outlined by Li would put further pressure on the mainland's four main hubs, Shenzhen, Guangzhou, Beijing and Shanghai.

Wheels up

A CAAC plan three years ago saw 244 civil airports by 2020

The number of commercial airports operating on the mainland at the moment: 175