Archive for April, 2008

The prospect of weekend ‘charter services’ from July 8 across the Taiwan Strait, as pledged by Taiwan’s President-elect, Ma Ying-jeou, could kick-start the process of opening one of North Asia’s biggest air travel markets. Currently, non-stop services are only permitted in the four major holiday periods on the Chinese calendar.

Daily charter services could be introduced this Northern Winter and be replaced as scheduled services in 2009, under Ma’s proposal.

Airlines on both sides are moving quickly to take advantage of the opportunity.Air China, for example, has applied to establish a representative office in Taiwan after Ma Ying-jeou is sworn in as President on 20-May-08.

EVA Air (shown in our illustration) forecasts a 50% increase in passenger numbers between Taiwan and the Mainland after the first stage of expanding the charter operations.

More than 1.5 million Taiwanese live on the mainland and are expected to travel more, if the inconvenience and added expense of a transit at a third point are removed. Furthermore, the Ma government proposes increasing ceilings on Mainland tourists, to help stimulate the island’s economy. Mr Ma plans to allow 3,000 Mainland arrivals per day to Taiwan from Jul-08, rising to 10,000 by 2012.

But the expansion of cross-Straits services is a serious looming threat for airports in Macau and Hong Kong and the carriers based there that have built large revenues from transfer services between Taiwan and the Mainland.
In terms of seat capacity, Cathay Pacific is the most exposed. Cathay accounts for almost one quarter of seats across the Taiwan Strait (from Hong Kong and Macau) at present, or around 38% including Dragonair. It will have to seriously consider how it will make good that shortfall.

Source: Centre for Aviation

Hangzhou, the capital of eastern China’s Zhejiang province, will invest US$143.19 million (RMB1 billion) in an international aviation building to stimulate the development of the province’s aviation industry.

The 156-meter China Aviation Tower has a total floor area of 102,715 square meters and will be located in the central business district of the city’s Qiantang New City.

The building, due to be completed by 2011, will house domestic and international aviation companies. The illustration is of the current airport.
Source: China Perspective

Air China Ltd.’s net profit more than doubled in the first quarter from a year ago as the continued expansion of the Chinese economy lifted demand for air travel.

Net profit at China’s biggest international carrier rose 147% to RMB1.04 billion ($148.57 million) in January-March, the company told the Hong Kong Stock Exchange.

Sales grew 22% to RMB12.76 billion.

China’s gross domestic product rose 10.6% in the first three months, lifted by spending and investment. The government is priming the economy through the construction of roads, bridges, airports and other facilities needed for hosting this year’s Olympics.

The airline said the RMB’s 4% gain against the dollar during the quarter also lifted earnings.

Air China earlier said it carried 8.31 million passengers during the period, up 5.7% from a year ago.

The downside is that nearly half its costs go on fuel and there is no doubt this year we are going to see rises which will seriously affect profits.
Source: Trading Markets

According to the Wall Street Journal China Eastern Airlines, the least solvent of China’s three major state-owned carriers, plans to take out US$337 million in new loans to pay for additional aircraft for its fleet. Which seems likely as it is massively extending its fleet.

It then goes on that China Eastern’s financial difficulties have continued as strategic investment bids from both Singapore Airlines and Air China parent China National Aviation Holding Co have stalled.

In February the Shanghai-based carrier reportedly missed debt payments totaling US$535 million, according to a person familiar with the situation.

It depends how familiar that person is.

China Eastern Airline officially reports it netted a $83.71 million (RMB586 million) profit in 2007. So missing debt payments, on the face of it, seems unlikely.

True, this is after posting a $0.43 million (RMB2.992 billion) loss in 2006,

The Shanghai Securities Journal reported the airline’s passenger revenue from domestic (excluding Hong Kong) grew 19% year-on-year to $3.42 billion (RMB23.908 billion), while international passenger revenues grew 20% to $1.76 billion (RMB12.308 billion).

Revenues from its routes to and from Hong Kong fell 13% to $0.34 billion (RMB2.355 billion), due largely to increasing competition for the lucrative market.

Cargo accounted for the remainder of revenues.

Fuel costs surged 11.69% year-on-year to $2.16 billion (RMB15.117 billion), accounting for 40.9% of operating costs. The company has forecast that it will carry 42.95 million passengers and 1.07 million tons of cargo this year. It will also buy eight A320 aircraft, five A321s, one A330-200, three A330-300s, one B737-700 and one B737-800.
The China Economic Review covers this story for subscribers, Click here.
Source: China Perpective

Airbus China has called on its partners, suppliers and other key players in the aviation industry in China to share its vision to jointly build a green aviation industry. While this is not a PR exercise it is very much preaching to the converted for the aviation industry, in a sense, has led the field in this area. Still a further declaration of intent will do no harm.

Rainer Ohler, Airbus senior vice president for public affairs and communications (think of him as the Airbus PR), addressing the China Eco-efficiency Conference, said a green industry must be the vision for the future of aviation. He said this will be conducive to the long-term and sustainable growth of the industry and China’s economy.

Rainer Ohler said, ‘There is not one simple solution but cross-industry and international cooperation are the way forward.’

Airbus is preparing to meet the ISO 14001 environment management systems in Airbus China soon. Airbus China has also been awarded a prize by the government of Beijing’s Shunyi district for its achievements in water saving in 2007.

Feng Yan, an official with the Ministry of Environmental Protection, said, ‘We fully support Airbus’ efforts and encourage Chinese aviation enterprises to contribute to an eco-efficient aviation industry.’

China has set goals of reducing energy consumption per unit of gross domestic product (GDP) by 20%, and cutting total emissions of major pollutants by 10% by 2010.

This is not an impossible target to reach and, indeed, in some areas of the aviation industry has been met year after year from more than a decade.

Source: People’s Daily Online