The seven State-owned airlines, which flew record numbers of passengers and cargo last year, earned 10 billion yuan (US$1.2 billion) in combined profits in the five years ended 2005, the country's aviation regulator said.

Sales by carriers including Air China Ltd. and China Southern Airlines Co. were 170 billion yuan (US$21.3 billion) last year, said Gao Hongfeng, vice minister of the General Administration of Civil Aviation of China, without giving a comparable figure from 2004.

"The airline business is not a very profitable one because the capital cost needed is huge," Gao said yesterday in Beijing.

Airlines suffered one of the global industry's biggest annual losses in 2005, as record jet fuel prices eroded earnings and pushed them into US$6 billion of combined losses, according to a Jan.

30 estimate by the International Air Transport Association (IATA). The total profit of Asian carriers, including Singapore Airlines Ltd., fell 42 percent to US$1.5 billion last year, IATA said.

Domestic airlines flew a record 138 million passengers last year, 15 percent more than in 2004 and more than double the five-year period ended in 2000, according to Gao's figures. The amount of cargo and airmail rose 14 percent to 3.04 million tons, up 89 percent from the five years ended 2000, he said.

The country's booming economy increased the nation's average annual disposable income by 9.6 percent to 10,493 yuan (US$ 1,312) per person, boosting demand for air travel.

(Shenzhen Daily February 15, 2006)