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Air Traffic Expected to Double by 2010

The country's booming aviation sector is expected to see air traffic double in the next five years although profit margins will remain tight, the government says.


Passenger numbers, as well as cargo and mail traffic, will double by 2010 from last year, Gao Feng, vice minister of General Administration of Civil Aviation of China, said.


Gao said that despite growth in the aviation sector's total revenues to 170 billion yuan (US$21.1 billion) at the end of last year, profits in the past five years only amounted to 10 billion yuan.


Total fixed asset investment across the sector amounted to 94.7 billion yuan over the past five years, he said.


"It is difficult to have high profitability in an industry where the investment is so big," Gao said.


His comments came as the China Daily reported that Air China is looking to hire foreign captains and other pilots to meet staff shortages because the nation's flight training institute can only produce some 600 pilots a year.


"Currently, we are short of at least 40 captains, so we will try to recruit foreign pilots," Li Huxiao, a senior Air China staff member, told the newspaper.


"Air China has planned to introduce 20 to 30 airplanes within this year but the exact number will depend on the supply of aircrew members, particularly the pilots," Li said.


Despite the sector's huge jump in passenger numbers, Air China is the mainland's only major airline expected to have turned a profit in 2005.


Two of the mainland's other major airlines -- China Southern and China Eastern -- have already warned of a sharp losses when full-year results are announced in April.


Recent moves to begin liberalizing the sector have led to a number of smaller airlines taking to the skies, shaking up an industry that for years did not have to deal with fierce competition.


However, domestic airlines are still largely beholden to a jet fuel monopoly and price controls.


Jet fuel on average accounts for 40 percent of Chinese costs compared with around 24 percent for airlines worldwide, the International Air Transport Association has said previously.


Although profits might not be huge, Gao said China will need to continue investing heavily in planes and pilots, and that he was comfortable with "slight overcapacity" in the industry.


"Every year during the next five years, we will introduce over 100 planes, meaning we will need over 1,000 pilots," Gao said. "We will be able to basically meet this requirement ... however, we will face a lot of pressure and challenges in maintaining the quality of the pilots and in training mature or good pilots for these airplanes," Gao said.


(Shenzhen Daily February 16, 2006)


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