On July 12, the State Council issued “the Opinions of the State Council on Promoting the Development of the Civil Aviation Industry”, which designates the civil aviation industry as a strategic growth industry; upgrading the development of the civil aviation industry to the level of the national strategic importance.“This is the first important document that guides the development of China Civil Aviation since the founding of New China. It is an important milestone in the history of China Civil Aviation, which will play a significant role in promoting the development of China’s civil aviation,” Mr. Li Jiaxiang Administrator of Civil Aviation Administration of China commented.
During a recent interview, when talking about the potential for the development of China’s civil aviation, IATA’s director-general and CEO Tony Tyle thought that China’s aviation market is enormous and still has room for future growth. Nowadays, China ranks seventh in terms of the number of passengers in the global aviation, and ranks fourth in terms of freight. It is expected that by 2015, the global aviation industry will carry an additional 877 million new passengers than that in 2010; a quarter of them will come from China. It will be inevitable to solve the problems between the increasing number of aircrafts and the current limited airport resources. He pointed out that the expansion of airports is imperative. On the one hand, some airports are not in full operation; but on the other hand, around 80% of China’s airports were unprofitable in 2012. Why do the airports continue to expand?
To speed up the construction of civil aviation is imperative
In 2008, the relevant departments of China issued a“National Plan for Civil Airports”, according to the Plan, by 2020 the total amount of domestic civil airports will reach 244. But by that time, the previous goals haven’t matched the pace of development of the civil aviation industry. The current facilities of 60 airports across the nation have reached saturation or are about to reach its maximum capacity.
According to the Opinion, in the future, 82 airports will be added, which means that at the end of 12th Five-Year Plan, the number of airports will reach around 230, up from 175 at the end of 11th Five-Year Plan.
Mr. Li Jiaxiang pointed out that Chinese civil construction, and in particular, infrastructure construction is not yet ahead of its needs, actually it is lagging behind. He explained that during 12th Five-Year Plan, the number of new airports added airports will be over eighty. The amount is staggering and the sudden need for increase is evidence that current facilities can’t meet the demands of the rapid development of China civil aviation industry.
He explained by way of example, that less than 300 airports in China serve the country compared with 19,000 in the United States. Even Brazil and South Africa are better served by civil aviation infrastructure with over 700 airports. “Last year, after the Earthquake in Japan, the General Administration of Civil Aviation of China sent aircrafts to transport Chinese citizens back to China. Then I found that Japan has sufficient airports for landing not only in large cities but in the remote counties, even township. While China has more than 330 prefecture-level cities, in average each couldn’t have one airport, even some cities having the population of over 11 millions don’t have any airport. So I think the lack of airports limited the development of these cities.” Li pointed out the necessity of expanding the construction of airports.
Insufficient airports affect the ability of profits
Another concern is that most of airports are unprofitable. According to the statistic from CAAC, in 2011, over 75% of China’s airports were unprofitable, costing taxpayers a combined RMB 2 billion. However, Mr. Li expressed that the profits of all 180 airports attained RMB 4.6 billion last year. And the steps will not stop due to the deficit of airports. It is predicted that at the end of 12th Five-Year Plan, more than 80% of the population in domestic will have access to flight services within 100 km in a straight distance. These newly-built airports are mainly to improve the transport conditions of the Midwest and remote areas.
Li explained that so-called “loss” is because the airports only calculate the ratio of profits and loss, but did not calculate their comprehensive social benefits. He believed that insufficient airports affect the ability of profits. For instance, in Yunnan Province, 12 regional airports have gained the profits for five years, because these airports create a network effect. Li said: “Airline services can bring enormous benefits to local economies. Such as the county-level Mohe Airport in Heilongjiang Province, which employs about 60 staff and costs 20 million yuan annually to operate. When the airport is built, the comprehensive earning will attain more than RMB 300 million for local economy. If the profit rate is 15%, the direct profit will be RMB 45 million. If the local government adds the subsidy of RMB 20 million to the airport every year, it still earns RMB 25 million. So, that’s why we do still want to fly and build (airports) that need subsidies.”
More than economic benefit
In addition, the function of the regional airports is far more than the economic benefits. Wu Xiao, Deputy Director of Department of Basic Industries of the State Development and Reform Commission, thought regardless of the profitability of the airport, it should be considered in the general, such as its function, the wider benefits and the development of the regional airports. It should be confirmed as public infrastructure.
Mr. Huang Min, basic industries director at the National Development and Reform Commission (NDRC), emphasized that this rising wave of infrastructure activity is focusing on regional airports that would handle fewer than 500,000 passengers a year and serve small communities including tourist destinations and mining areas. Additionally, he further explained, most of remote areas located in complex terrain, once there are emergency incidents or natural disasters, it can quickly aid rescue efforts. So the regional airports also play an important role in social development.
