GE investing in 3.7b yuan Jieyang Chaoshan Airport in Guangdong

PUBLISHED : Friday, 20 June, 2008, 12:00am
UPDATED : Friday, 20 June, 2008, 12:00am

General Electric of the United States has agreed to invest in and co-manage the new 3.7 billion yuan (HK$4.2 billion) commercial airport in Jieyang Chaoshan, even though there are already nine airports in Guangdong province and the Pearl River Delta.

The airport would replace Shantou Airport when completed in 2011, said Chen Xiaoning, a vice-president of Guangdong Airport Management Corp, the airport's owner and operator.

The airport is also used by the military.

Jieyang Chaoshan Airport, which will be five times larger than the old one, will mainly cater to the expected traffic growth between the mainland and Taiwan, as well as passengers to and from Southeast Asia.

There are five international airports and four city airports in Guangdong and the Pearl River Delta. The key airports are in Hong Kong, Zhuhai, Macau, Shenzhen and Guangzhou and many are competing to be the international air hub in south China.

The replacing of the old airport comes as Zhuhai Airport operates at less than 10 per cent of its capacity.

'However, the new airport is too small and too far away to compete with other airports in the Pearl River Delta,' said Zheng Tianxiang, a professor at Sun Yat-sen University.

Jieyang Chaoshan Airport is about 500km from the Pearl River Delta and is designed to have an annual capacity of 5 million passengers by 2015.

'By that time, the five airports in the delta will handle 260 million passengers per year,' Mr Zheng said.

At present, the passenger throughput in Hong Kong, Shenzhen and Guangzhou exceeds 100 million.

The new airport would cater mainly to the expected cross-strait traffic growth between the mainland and Taiwan, as well as traffic bound for Southeast Asia, Mr Zheng said.

Shantou and Chaozhou have a long history that connects them with Southeast Asia.

Many immigrants in the region originated from the two mainland cities.

Also, the mainland is pressing hard to promote a free-trade agreement with the 10 members of the Association of Southeast Asian Nations, which will increase air traffic between the two areas.

Traffic from the old civil military airport in Shantou, which is capable of handling about a million passengers a year, could not cater to the growth.

The Airport Authority Hong Kong said it would strengthen services to maintain competitiveness in the region and could not predict the impact of the new airport on business.

Mr Chen did not disclose how big a stake GE would take in the airport after the two companies signed a letter of intent on Tuesday.

According to regulations, foreign companies cannot own more than 25 per cent of a mainland airport.

GE's investment in Chaoshan airport follows several international investments in mainland airports, demonstrating that the nation's rapidly growing air traffic continues to attract foreign corporations.

Fraport, an airport management company based in Frankfurt, Germany, invested Euro50 million (HK$604.7 million) in Xian International Airport in April last year.

China Airlines, a Taiwan government-controlled airline, has a 12 per cent stake in Xiamen International Cargo Terminal.

In addition to Shantou Airport, Guangdong Airport Management also manages two other airports in the province - Meixian Airport and Zhanjiang Airport.

Market watchers said it was highly likely that Zhanjiang Airport, at the southwest point of Guangdong, would also seek expansion.