Speech by Gao Hongfeng,Vice Minister of CAAC

February 14, 2006


Ladies and gentlemen:

Good morning. First of all, I’d like to extend my welcome to your attendance on behalf of CAAC and express my heartfelt thanks to friends from the media which have been giving concern and support to our work for a long time.

I


The 10th Five-Year Plan period was an uncommon period in the history of China’s civil aviation and a period of carrying forward the cause and forging ahead into the future and moving with times. The civil aviation industry of China explicitly brought up and seriously implemented the strategic idea of building a country with powerful civil aviation industry, firmly seized the first important matter of development and devoted major effort to pushing forward reform and opening to the outside world. It markedly raised its transport capability, comprehensive strength and international position and fairly met the requirements of national economy and social development.

(1) Air transport grew by a big margin. According to preliminary statistics, in 2005 the whole industry carried a total air traffic, passenger traffic and cargo and mail traffic of 25.92 billion ton-km, 138 million passengers and 3.035 million tons respectively, representing increase of 111.6 percent, 105.3 percent and 89.2 percent respectively over the figures of 2000. In the five years, average growth of 16.2 percent, 15.5 percent and 13.6 percent were recorded.

(2) General aviation grew rapidly. According to preliminary statistics, during the 10th Five-Year Plan period, a total of 336,000 flight hours of general aviation were operated, up 59 percent over the 9th Five-Year Plan period, with an annual average growth rate of 11 percent during the five years.

(3) Aviation safety level apparently enhanced. The accident rate per one million flight hours in the whole industry was 0.29, down by 55 percent compared with the figure of the 9th Five-Year period and better than the world average level. Meantime, flight incident rate per 10,000 flight hours was on the decrease.

(4) Service quality improved step by step. Great improvement was seen in the hardware environment of air transport. The flight punctuality rate was raised to an average level of 80 percent.

(5) The fleet size expanded rapidly. By the end of 2005, the whole industry had a fleet of 863 transport aircraft, an net increase of 336 aircraft over the that of 2000. Aircraft maintenance facilities and equipment and technical development were strengthened.

(6) Great achievements scored in infrastructure building. In the five years, a total investment of 94.7 billion yuan was made in fixed assets in the whole industry. 21 new airports were added and a large number of airports were modified or expanded. By the end of 2005, there were altogether 142 certified civil airports in China. Around 7.8 billion yuan were invested in air traffic control projects. The completion and inauguration of the Area Control Centers in Beijing, Shanghai and Guangzhou have greatly promoted the technical level of the air traffic control system of China’s civil aviation. The oil storage capacity of the oil supply system reached 1.66 million cubic meters, representing an increase of 380,000 cubic meters over that at the end of 2000.

(7) Major breakthrough achieved in structural reform. During the 10th Five-Year Plan period, a new round of structural reform was completed in China’s civil aviation industry. The airlines and service supporting enterprises were disconnected from CAAC, realizing the detachment of enterprises from the government. The former three-level regulatory structure of “CAAC -- regional administration -- provincial (autonomous regional, municipal) administration” was replaced by two-tier structure of “CAAC -- regional administration.” Reform was carried out in air traffic control system to form a three-level management and operation framework of CAAC Air Traffic Control Bureau -- regional air traffic control bureau -- air traffic control center (station). In order to strengthen aviation security, a contingent of air marshal was established. While reforming regulatory system, adjustments and improvements were also carried out in the CAAC’s policy of industrial regulation. Market access has been further liberalized and private capital investment is allowed for airline operation. Currently, three private-run airlines, namely, OKAY, CHUNQIU and YINGLIAN, have started operation. The control over air route entry, flight scheduling and establishment of operation base were relaxed. The control over price was also relaxed. With respect to enterprise reform, some airlines and airports were reorganized as joint-stock companies and successfully listed on the market, and obvious results were seen in the change of their internal operating mechanism. Wtih a series of reforms, new industry management structure and operation mechanism have been initially established in China’s civil aviation industry in line with the requirements of socialist market economy and in line with international practice.

(8) Big strides made in opening to the outside world. In the five years, new bilateral air services agreements or air traffic right arrangements have been concluded with 42 countries, and by the end of 2005 a total of 98 bilateral air transport agreements have been concluded between China and other countries. With respect to the expansion of traffic rights, experiments were made to open fifth freedom traffic rights of passenger or cargo traffic in such places as Hainan, Nanjing and Xiamen. New regulations concerning the policy of foreign investment in civil aviation industry were promulgated; the proportion of foreign investment and other restrictions were considerably relaxed. A total of US$2.35 billion of foreign investment were utilized in the five years. In 2004, China became a Part one member on the Council of the ICAO.

(9) Important progress was also made in the building of legal system and in science, technology, education and personnel training. The tremendous achievements obtained by China’s civil aviation industry during the 10th Five-Year Plan period have pushed China’s civil aviation industry to a new starting point of history. However, we must clearly realize that the further development of China’s civil aviation will face a lot of contradictions and problems, which are manifested mainly in the fact that the personnel quality, infrastructure level and management level can not catch up with the rapid increase of air transport. We’ll try our best to solve these problems.

II


The period from the 10th Five-Year Plan period to 2020 is an important period for building China into a well-to-do society in an all-round way. It is also an important strategic period of opportunity for civil aviation development. The civil aviation industry of China already put forward its objective of trying to realize a transition from a big country of civil aviation to a country with strong civil aviation industry during the first 20 years of the this century. To meet the needs of the economic and social development of the country and the demands of building a country with strong civil aviation industry, CAAC recently further advanced the grand concept of building a new generation of civil air transport system.

To build a new generation of civil air transport system, we must persist in taking man as the foundation, adopt advanced idea, mode and technology and transform, optimize and upgrade existing civil aviation service system. This system will not only make the air transport of China to be upgraded in quantity, but also leap forward in quality.

The objectives of a new generation of civil air transport system:
- comprehensively improve and develop airport facilities in an forward-looking way;
- set up new type of highly effective, transparent and multi-layer, non-interference airport security inspection system;
- fully apply new science and technology, change the concept of air traffic control and set up an air traffic control system with good adaptability;
- set up a comprehensive public information network platform of the industry;
- set up a scientific, comprehensive and proactive rule-based safety management system;
- comprehensively and systematically upgrade weather observation and forecast level so as to greatly reduce the impact of weather on flight;
- set up an airworthiness certification system conforming to international new technology, new standards and new procedures;
- build in an all-round way an corporate culture and industry culture with the characteristics of Chinese traditional culture.

The building the new generation civil air transport system will start from air traffic control and meteorological service, and the industry will strive to make breakthrough in the said two fields by the end of the 11th Five-Year Guidelines period and then carry out the remaining projects.

III


During the 11th Five-Year Guidelines period, China’s civil aviation industry will persist in leading the development of civil aviation with scientific concept of development, change the idea of development, blaze new trails in the mode of development, raise the quality of development. Achieve important progress in establishing a new generation of civil aviation system and build a country with powerful civil aviation industry. On the basis of strong safety support, optimizing structure and greatly improved service, the civil aviation industry of China will make in 2010 total air traffic, passenger traffic and cargo and mail traffic in the volume double the figures of 2005. It will realize an average growth of over 10 percent in general aviation and more extensive application of general aviation in various fields of economy and society.

To realize the above objectives, the civil aviation industry of China will adopt the following policy measures: (1) Unswervingly give first priority to the safeguard of aviation safety. Introduce the safety management concept of putting people first and comprehensive administration, make safety management more proactive, systematic and reliable. By sustained improvement of safety work, the aviation safety of China will reach, by and large, the current level of aviation developed countries. (2) Devote great effort to promote coordinated development. Speed up the development of civil aviation infrastructure in west, northeast and central China and open up more domestic and international air routes. Step up the development of aviation hub in East China and raise international competitive power. Expedite the development of transport on international air routes, air cargo transport, feeder-line aviation and general aviation. (3) Further reinforce the development of infrastructure. In line with the policy of “upgrading Eastern region, strengthen Central region and densify Western region”, build an airport system which is rationally distributed, appropriate in scale, complete with functions and coordinated in development. New technologies such as communication, navigation, monitoring, traffic control and meteorology will be adopted in an all-round way and strengthen the development of air traffic control system. (4) Continue to deepen reform and open wider to the outside world. Taking as focal points the change of government functions and the deepening of enterprise reform, expedite the improvement of structure and mechanism. Improve market entry and exit system, reform flight management on domestic and international air routes, reform the management method of flight timetables, reform the policy of price control, exercise fair and orderly competition and improve the modern market system of civil aviation. Coordinate in an overall manner the development at home and opening to the outside world, continue to expand the extent of opening to the outside world. (5) Implement in depth the strategy of rejuvenation with science and technology and qualified personnel.

What I’ve said is my brief introduction. Now, my colleagues and I are willing to answer your questions.