China plans to build 97 new airports by 2020. China’s General Administration of Civil Aviation said the $89 billion undertaking over the next 12 years will bring the total number of civilian airports in China to 244, up from 147 in 2006.

The new airports will be built in five main regions of the country — north, east, south-central, south-western and north-western.

When the expansion is complete, it would mean that 82 percent of China’s population — expected to hit 1.45 billion people by 2020 — would be living within 100km — or a 90-minute drive — of an airport.

Currently, about 60% of the popularion lives with this range.
China’s air passenger volume rose by 15.3% to 51.9 million in the third quarter of 2007, and air freight volume increased by 11.5% to 1.05 million tons.
Source: CargoNews Asia and
Bloomberg

Ameco Beijing, an aircraft maintenance joint venture between Air China and Lufthansa, will start construction on an RMB47 million warehouse this month.

Ameco said in a statement that the 8,000 square meter facility, which should be operational by October next year, will store civil aviation materials and maintenance tools.

Air China holds a 60% stake in Ameco Beijing while Lufthansa holds the remaining 40%. The joint venture is based at Beijing Capital International Airport.

Cathay’s first Boeing 777-300ER aircraft has two huge General Electric engines which give it fuel efficiency. Nowadays, with the price of fuel, that is desperately important.

The delivery of Cathay’s first 777-300ER last month also means a better sleep for long haul passengers. First and business-class seats, but of course, electronically recline into fully flat beds. But economy class provides seats that recline within a fixed shell to boost space.

The story is that Cathay had research showed passengers want more comfort, privacy and control over their immediate living area. One would have thought a chat with any ten passengers would have brought precisely the same result.

Cathay’s investment coincides with the fact that the total number of travellers passing through Chinese airports rose 17% last year and is expected to grow by 14% annually through 2010.

Eleven airlines, including Cathay, now serve the Vancouver-to-Asia market. Canadians’ visits to China surged 56% in 2006.
Cathay predicts that, by 2020, China will have 12 million aircraft movements a year - up 400% from today.
Boeing forecasts that Asia-Pacific air traffic will expand at 6.3% a year for the next 20 years.
Of the 8,350 new jets Asia will need during this period, China alone is expected to account for about 3,000 new aircraft deliveries.

The illustration is the Boeing 787 Dreamliner Engineering flight deck simulator in Seattle.
Source: Canada.com

Cathay Pacific , Hong Kong’s largest airline, has made Boeing very happy by ordering seven 777-300ERs and 10 747-8 cargo planes, the airline said in a Hong Kong stock exchange statement . The carrier also took options for another 14 747-8 freighters and received ’significant price concessions.’ Put in an order like that and you would expect a discount.

Cathay Pacific plans to expand its fleet as China’s economic growth rate of at least 11% boosts travel and trade. The new freighters will replace older, less fuel-efficient planes, helping the airline cut its fuel bills at a time when prices are soaring.

Edward Wong, an analyst at Quam in Hong Kong said, ‘Cathay needs more airplanes to support its expansion in mainland China. China is expected to open its aviation market, and carriers need to get ready ahead of that.’

Cathay Pacific now has 30 commitments for the 777-300ER, including three already delivered, making it the largest customer for the plane in Asia.

Air travel in China grew 19.5% in the first half as economic growth made holidays and business trips affordable to more people. Cathay Pacific bought smaller rival Hong Kong Dragon Airlines last year to add flights to the mainland and if it sorts out its current dramas with the pilots it is in a good position to build in it largest market which currently accounts for 43% of sales.

Chief Executive Tony Tyler, seen here, said, ‘Sometime in the future we will be ordering more aircraft to supplement frequency and capacity on our regional network. I am confident that we will continue to grow our fleet.”

The Cathay Pacific Group, including Dragonair and Air Hong Kong Ltd., a cargo venture with DHL, operates a combined total of 175 planes, according to the statement. That will rise to 196 by 2012, including 147 painted in Cathay Pacific colors.

But Cathay Pacific does not always win. Its attempt to get a part of China Eastern Airlines did not happen as the previous story shows.

Airfreight is fast and reliable. It is, however, a lot more expensive than shipping. Air cargo carriers, particularly the North American and European airlines, are seeing long-haul cargo being diverted to ocean vessels.

Korea gives a good example of what can happen. Ken Choi, president of KAL Cargo, estimates that about 30% of Korean cell phone exports were shipped by sea last year. Traditionally, virtually all cell phone shipments went by air.

Steve Dearnley, chief operating officer for the Asia-Pacific region of Schenker said, ‘No question, we have seen a trend.’

Giorgio Laccona, chief executive officer of forwarder IJS Global, said, ‘Electronics still move by air, but more and more is going by ocean. The trend is just more noticeable with garments than with consumer electronics. We’re seeing buyers earlier in China now, trying to book block space for ocean. People are becoming more astute in their planning, and they have better technology to do it.’None of which augurs well for airlines which are heavily investing in cargo planes.
Source: CargoNews Asia

A long, intelligent article on the challenges facing China carriers.

China carriers are leaping feet first into the international aviation rat race. They already have placed orders for over 100 aircraft with Boeing and Airbus. Boeing predicts China will require 3,400 new airplanes worth about $340 billion over the next 20 years. Boeing is of the view that China’s fleet will nearly quadruple to 4,460 airplanes by the end of 2026.

With a lack of established international networks, China carriers return half or one-third full on the return trips from foreign destinations.

Aviation analyst Li Lei, said, ‘Chinese carriers must first consider cultivating air cargo networks before jumping into the international scene.’ He noted that the ratio between US-bound cargo and China-bound return cargo has hovered at around 6:1 over the years. There always will be insufficient US cargo back to Asia.

Meanwhile cargo rates have been falling while fuel prices have been rising.

Last year, Chinese airlines handled 3.49 million tonnes of air cargo, and about 72% of this was handled by Shanghai’s Pudong and Hongqiao airports.

One analyst said the sudden arrival of Chinese airlines on the international scene may be largely ‘a face-saving exercise’. He noted that while most foreign carriers had used up their quotas under bilateral agreements between their countries and China, mainland airlines still have not used up their 2004 quotas as yet. The article is detailed and worth reading. Click on Source: CargoNewsAsia.
Source: CargoNewsAsia

China is likely to become a major battlefield for cargo plane makers in the next 20 years as the country’s air cargo sector maintains a more than 10%.

China Aviation Industry Corporation I (AVIC I) — one of the country’s leading aircraft manufacturers — said China would need 568 freight carriers by 2026, more than 10 times the size of the present fleet, as its air cargo industry continues to boom.

An AVIC 1 report says that by the end of last year, Chinese airlines were operating 46 freighters with a commercial payload of 2,300 tons,.

Liao Quanwang, vice-president of Aviation Industry Development Research Center of China, which is affiliated to AVIC I, said, ‘China’s air cargo market will maintain an annual growth rate of 10.5% in the next two decades, which is slightly higher than the growth rate of the passenger transport market.’

He said the fast growth is being fueled by China’s booming foreign trade, which provides abundant cargo to air carriers.

Boeing has said China’s air cargo market will continue to lead the world in the next two decades during which its fleet of cargo planes will more than quadruple in size.
Source: China Daily

For Cathay Pacific the seriously competitive market is cargo, not passengers. It reported a 55% increase in profit — net income $330 million compared to the $281 million median forecast in a Bloomberg News survey of four analysts — and overall sales climbed 28% to $4.4 billion.

Cathay Pacific and its Dragonair unit carried 11 million passengers in the first half, 1.3% more than a year earlier. The two airlines filled 78.1% of seats, compared with 77.7% a year earlier.

But Cathay Pacific said its cargo yield, or average rate per shipment, fell 8.3% in the first half. The drop came amid increasing competition from Deutsche Lufthansa, Singapore Airlines and other carriers that have set up ventures in China. Cargo revenue accounted for 21% of the airline’s revenue in the first half.

Everything else seemed pretty rosy. Cathay Pacific added 21 routes into China, the world’s second-largest aviation market, with the purchase of Hong Kong Dragon Airlines.

Back to freight. Cathay aims to add at least 11 more freighters by the end of 2009 and to form a Shanghai cargo venture with Air China by the end of the year.

The Shanghai-based venture would let Cathay Pacific fly cargo from China directly to the United States and Europe instead of via Hong Kong.

Cathay Pacific ranked behind only Korean Air Lines, Lufthansa and Singapore Air in terms of international cargo traffic in 2005, according to the International Air Transport Association.

Chief Executive Officer Tony Tyler said at a press conference, ‘To get the yield up in cargo is a difficult task. We are in a very competitive market. We are very confident in the long run about cargo as an element of our business.”
Sources: International Herald Tribune and Bloomberg

Korean Airlines, the largest international air cargo carrier, has won preliminary approval for a $65-million venture in China. The airline will spend $16.25 million on a 25% stake in Galaxy International. Sinotrans Air Transportation Development will invest US$33.15 million and hold 51%.

In this Korean Air follows Singapore Airlines, Lufthansa and other airlines in forming China cargo ventures. Chinese exports were 28.7% higher in May than a year earlier but there are now signs that the air cargo market is becoming a little overcrowded and highly competitive.
Source: Shanghai Daily

This is the way it might be more and more in the future. Air France-KLM Group and China Southern Airlines agreed to have exclusive discussion over the creation of a cargo joint venture in China. Air France-KLM Group and China Southern Airlines already have extensive cooperation in both passenger and cargo services.

Further details of the joint venture will be announced later after the discussions.

China Southern Airlines is the largest carrier in China in terms of fleet, routes and annual passenger carrying capacity. It operates more than 600 domestic and international routes with destinations to 152 cities throughout China and the world.

In 2006, China Southern Airlines carried 49.21 million passengers and was the only airline on the Chinese mainland to rank in the world’s top ten passenger carrying airlines.
Source: People’s Daily Online