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Top ministry official says consolidation looms as the industry adjusts to growth

Beijing's top aviation official has pledged that 2005 will be a year of consolidation for mainland airlines and airports, with priority  on refocusing the industry's energies and on improving its safety record.

Yang Yuanyuan, director-general of the General Administration of Civil Aviation of China (CAAC), said in his annual report published by the ministry that tighter controls would be developed to ensure safer air travel and prevent the industry's development from overheating.

Mr Yang said the CAAC  would freeze delivery of new aircraft for domestic airlines temporarily this year because the number of planes  delivered last year was sufficient to meet air travel demand.

But  he said the rapid pace of liberalisation of the mainland's aviation relationships with international  partners would continue, with expanded pacts with Southeast Asian and several Latin American countries in the pipeline.

In the report, Mr Yang made  references to the crash of a China Eastern Airlines  jet in Inner Mongolia on November 21, which killed 53 crew and passengers.

He said the mainland aviation industry's skill set  had not kept pace with its rapid development and fast growth.

Last year, mainland airlines carried more than 100 million passengers for the first time, flying more than 20 billion tonne-kilometres - a measure of the total weight of the entire mainland commercial aircraft fleet multiplied by the distance flown.

Mr Yang said that, between January and November last year, 112 million passengers and 2.7 million tonnes of freight were  carried by mainland airlines, an increase of nearly 42 per cent and 27 per cent respectively over the previous year.

Total industry revenues for the first 11 months reached 143.5 billion yuan, with an estimated one billion yuan in operating profit, he said.

But he said there was a worry that some domestic airlines were neglecting safety and service in the pursuit of profit, when equal consideration should  be paid to both. More attention to internal safety management would be needed as mainland carriers expanded their fleets and added more flights, Mr Yang said.

The CAAC planned to formulate a system this year  requiring airlines to set aside a minimum amount of money for safety training, the purchase and operation of rescue and emergency equipment and for implementing controls to assess potential dangers, he said.

In addition, some airports  that  the CAAC found to operate below satisfactory safety levels would be closed, he said.

'The CAAC and regional aviation authorities will conduct an assessment of airports' maintenance capabilities. Those airports that fail to meet minimum requirements will be forced out,' Mr Yang said. 'Airlines also need to increase their input into training flight and maintenance personnel to improve their ability to ensure safe operations.'

The freeze on new aircraft deliveries this year affects ad hoc procurement through short-term leasing agreements,  rather than  bulk aircraft purchases made directly with Boeing and Airbus.

Despite the emphasis on safety, the mainland aviation industry's aggressive liberalisation is not expected to slow. Mr Yang said a policy framework would be set up on civil aviation co-operation with the Association of Southeast Asian Nations (Asean).

Asean has long pushed for the creation of an Asian civil aviation bloc, much like that of the European Union, which would throw open the region's entire aviation market - both domestic and international - to all Asian airlines.

Mainland airlines are also being encouraged to partner  Latin American airlines through code-shares and other commercial ventures.

The CAAC hoped that direct flights to Latin America could be launched  this year, with Mexico, Argentina, Cuba and Brazil being likely destinations, he said.



CAAC places 2005 focus on improving safety standards