Despite strong doubts that he would get the needed permissions to complete, Pang Yuliang, an entrepreneur from Central China’s Henan Province and chairman of LinkGlobal Logistics, has said he will definitely acquire Parchim Airport in northern Germany at a cost of RMB1 billion ($130 million) on July 5.

This makes him the first person in China to buy a major European airport through his company or, indeed, in any other way. He declined to reveal any detail about the purchasing fund source, but said he had submitted an application to the Ministry of Commerce for the acquisition and he implied that such permission was forthcoming.

Pang beat ten other global competitors, including FedEx, Hamburg Airport and Emirates Airline, in an international tender. According to the deal, LinkGlobal has 100% property rights to Parchim Airport located in Schwerin, near Hamburg, and its facilities, as well as permanent ownership of land in an economic cooperation zone affiliated to the airport.

This makes a big difference to LinkGlobal which is his company. It has a network covering more than 200 cities in China and about 90 countries worldwide but now it has an European base from which it can expand much further.

The governments of Henan Province and Zhengzhou City as well as the authority of Zhengzhou Xinzheng International Airport have signed an agreement with Pang’s company to set up a Zhengzhou-based aviation logistics company.

The company will operate a cargo transport business between China and Germany, and Pang’s company will hold a majority stake. It look very much as is LinkGlobal will be fighting it out with the major international carriers on their own territory.
Source: China Daily

Cargo Air France-KLM is in talks to team up with China Southern Airlines in setting up an international cargo airline in China. It is following in the footsteps of Lufthansa.

Lufthansa Cargo holds a 25% stake in Jade Cargo International, which started operations last month.

Air France-KLM is (since the airlines amalgamated Air France-KLM can be regarded as one airline) eager to play a role in the China air cargo market.

To give a guide to what is possible: Jade Cargo was founded in October 2004 as a joint venture between Shenzhen Airlines (51%), Lufthansa Cargo (25%) and the German development finance institute DEG-Deutsche (24%). The company’s headquarter is in Shenzhen. Jade Cargo International currently serves the following destinations from its hub in Shenzhen:

Amsterdam; Seoul-Incheon; Brescia, Italy; Barcelona, Spain; Osaka; Luxembourg (which is, in itself, a cargo hub for much of Europe); Shanghai-Pudong; Leipzig-Halle, Germany; Stockholm, Sweden; Frankfurt, Germany; Vancouver, Canada; Houston, USA.

That is a long list (note there is no destination in France or the UK) and shows, very clearly, the potential of the market. It is also enough to make the cargo management of Air France-KLM very nervous.
Source: Luchtak Aviation

Under the 2004 bilateral agreement China opened its air hubs and major coastal cities to US airlines. From this year, under a new, more extended bilateral agreement it will open its central hinterland (effectively all of China) to US carriers.

As a result Chinese airlines will feel the heat of competition. US carriers can now fly to provinces such as Anhui, Hunan, Hubei, Jiangxi and Shanxi.

According to Li Lei, an airline analyst with Zongxin Investment the new deal will open up all provincial capitals to US carriers. Restrictions on air cargo flights between the two countries will be lifted by 2011. This means, notes Li Lei, ‘potential cargo routes reserved for Chinese operators will be taken away by powerful US cargo airlines.’ The use of that word ‘powerful’ suggests that Li Lei may not be totally without bias.

Under the deal, US carriers will be able to operate 23 daily round-trip flights by 2012, up from 10 currently. China will have the right to fly the same number of flights to the US.

US carriers are eager to expand their flights after using up their quotas under the 2004 deal while Chinese carriers have still not utilised more than half the flights permitted. The reason is simple. To make a quid out of the airline business you need two way traffic. Passengers and cargo there, passengers and cargo back. Flying empty planes is a way to lose serious money.

From China to the US it is not a major problem getting a full load. The other way around is seriously difficult. US passengers, by and large, tend to book on US airlines.

According to the Civil Aviation Association of China the new deal offers an additional 13 flights for both sides, but as the Chinese side has no capability to use these flights, only the US operators will benefit.

This is true. Which means the Chinese operators are going to have to rethink the way they operate. To survive costs have to be cut, service improved, loads made more profitable. This is not easy, as airlines all over the world have discovered.

Tian Baoping, chief of the China Civil Aviation Management Institute, said Chinese operators need to work harder for self-preservation, which could be achieved faster by joining aviation alliances. He said, ‘Only internationalisation can uplift local airlines and airports and strengthen the civil aviation chain.’

China carriers have already started making moves to join alliances. China Southern is expected to become a member of the SkyTeam alliance by November; Shanghai Airlines may join the Star alliance by year-end; Air China has also expressed its interest in joining the Star alliance; and China Eastern Airlines is preparing for accession to the Oneworld alliance.

Membership in the alliances can help fill Chinese passenger and cargo aircraft as well as cut costs because of discounts achieved through the joint purchase of fuel, parts and freighters by the alliance members.

Another method of boosting international flights for Chinese carriers is to invite foreign operators to form joint ventures such as the Lufthansa-Shenzhen Airlines joint venture of Jade Cargo. China Southern is currently in talks with Air France-KLM on a joint cargo venture, while China Eastern is close to clinching a deal to sell a 25% stake to Singapore Airlines.

The airline business is tough and is about to get tougher. There will undoubtedly be casualties.
Source: CargoNews

China Southern Airlines is the biggest airline in China and now doing very nicely as are all the others. This year they may all expect a 16% increase in number of passengers carried because of economic growth and rising inbound tourism.

The General Administration of Civil Aviation of China said in a statement on its web site that China’s airlines may carry 185 million passengers in 2007. The number of passengers rose 16% to 160 million a year earlier.

Passengers are likely to take a total of 1.5 billion domestic flights in China in 2007, 8% more than a year earlier. This is a reflection of the country’s economic growth which makes leisure and business trips affordable to more people.

Cargo traffic was expected to reach 3.9 million tons, up 12% year on year, as exports and imports expand to $2 trillion. The administration said it would revise current plans for price reforms and launch new rules of charging at local airports this year.
Source: TD Trade and Shanghai Daily

The Shenzhen-based Jade Air Cargo will fly to the United States upon delivery of its fourth B747-400ER freighter.

Reto Hunziker, vice-president of sales and marketing, said, ‘We will fly to Houston in June.’ He said that initially it will be twice a week, but the frequency will probably be increased to three.

The service is routed over Vancouver. On the eastbound sector, the Canadian city will be chiefly a fuel stop, but in the westbound direction Hunziker hopes to pick up seafood destined for Asian markets there.

Reto Hunziker said, ‘We were thinking of flying perhaps over Portland, but we can only fly city pairs that are not already served by another Chinese carrier.’ Air China has freighter service to Portland.

In recent months, a number of carrier executives have warned that capacity out of China has grown faster than demand for cargo, producing a glut and downward pressure on yields.
Source: Cargonews Asia

Chinese customs officers are on the lookout for smugglers of endangered species, hazardous waste and ozone depleting substances. A workshop at the Shanghai Customs College aims to train the trainers from regional customs agencies. The training emphasizes cooperation that is expected to become a lasting partnership between China customs officials and the other partners.

Currently China Customs operates at 253 first-class ports — including airports, sea ports and land passes — approved by the central government and around 200 second-class ports approved by provincial governments.

China has a land border 22,000 kilometers long and a sea border of 18,000 kilometers.

A wide range of chemicals, including persistent organic pollutants and chemicals that deplete the ozone layer, are now controlled, banned or subject to phase-outs under multilateral environmental agreements.

In June 2003 when UNEP and the World Customs Organization signed an agreement to foster stronger ties between the two organizations on environmental enforcement issues.

The initiative focuses on training border guards and the training is begining to show results.

China Customs seized nearly 8.2 metric tons of dichlorodifluoromethane (CFC-12), an ozone depleting substance used in refrigerant and air conditioning systems, between September 1 and November 30, 2006. The seizures were made in Guandong Province - 752 kilograms in Shengzhen and 7.5 metric tons at Huanpu Port.

Meanwhile treaties such as the Convention on the International Trade in Endangered Species, CITES, cover trade in wildlife.

Between 1999 and 2005, Chinese customs officers seized 80 tiger skins and 31 skeletons, 744 leopard skins and six skeletons, and 19 snow leopard skins and one skeleton, according to a 2006 report published on the website of the China CITES Management Authority.
Source: Environment News Service

n the past year or so Chinese airlines have not been making money. Indeed, in some cases heavily the reverse. Now a light is shining at the end of the tunnel. In the first quarter of this year Chinese airlines narrowed their losses. Three reasons: a stronger currency, higher fuel surcharges and a booming travel demand.

That still does not mean they are on easy street.

The General Administration of Civil Aviation of China said on its Website that China’s airlines posted a combined loss of RMB820 million ($110 million) in the first three months of this year .

The cheering news is that this figure is RMB1.28 billion less than a year ago.

The carriers, including China Southern Airlines and Air China Ltd, increased revenue 20% to RMB40.5 billion. While the revenue was galloping the costs were moving at a more sedate pace — 17%.

Ji Lijun, an analyst with Shanghai Securities, said, ‘The large drop in losses was created by a booming economy that fueled air travel demand.’

Chinese airlines flew 40.9 million passengers in the first quarter, up 16% from last year and the carriers filled 72.7% of available seats in the quarter which is an excellently high figure. The airlines also carried 858,000 tons of cargo in the period, a year-on-year rise of 13.3%.

The forecast is that air travel will rise 7.2% annually until 2025 although there will be a smart upward blip for the Olympics and another for Shanghai’s Expo 2010. So the prospects are pleasing even though the immediate past history is less so.

Now China’s airlines are operating a total 1,028 planes which is 66 more than at the end of 2006. That figure will steadily increase.
Source: Shanghai Daily

UPS and the Shanghai Airport Authority have signed an agreeement to construct a UPS International Air Hub at Pudong International Airport in Shanghai.

The UPS International Air Hub, which is scheduled to open in 2008, will be the first constructed by a US carrier. It is important because of its built-in set of connections. It will link China via Shanghai to UPS’s international network. Then, further, it will also connect points served in China by UPS through a dedicated service provided by Yangtze River Express, a Chinese all-cargo airline.

These agreements are a direct result of the Agreement on Sino-US Civil Aviation Transportation Air Services signed by the Chinese and US governments in July 2004.

UPS is calling the air hub ‘a significant step in making the Shanghai Airport an international cargo hub, promoting the development of the Shanghai transportation center, and upgrading the service functions of the city of Shanghai.’

Under the 2004 Air Services agreement, UPS will find it easier to expand its international and Chinese networks in the future. Over the past five years, UPS has invested approximately $600 million in China.

When the hub opens, it will operate 24 hours a day, seven days a week, and UPS will increase its capacity into Shanghai by ‘up-sizing’ aircraft from the current MD-11s to Boeing 747-400s.
Source: Manufacturer