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

A long and extremely well written article in The Economist —its articles are the best-edited in the world — concerns the future of aviation in Asia with special attention been give to China. What follows is the gist of part of the article regarding China. It is well worth looking up the full article using the URL at the end.

According to Naverus, the Seattle-based firm that installed the Required Navigation Performance (RNP) system at Linzhi in Lhasa conventional ground-based aids do allow precise enough navigation to the airport, which sits 9,670 feet above sea level. So it combines the avionics in a modern jet airliner with GPS to guide pilots along a narrow path to the airport. (Note that Aviation Week has the most excellent article on doing a landing using this system. It gives you some idea of the problems involved. If you know anything about flying this article is a serious ‘must-read.’)

China is planning to install scores of such systems, not just where landings and take-offs are difficult but also at congested airports. Already China has announced that from November the vertical spacing between aircraft will follow world standards which effectively doubles the air space in China.

Travelers in China are already getting fed up with airport queues and flight delays and these moves will help eliminate them.

In China last year airline passengers took 179m trips in China (135m on domestic services and 44m on international ones). The government says the numbers are increasing by around 15% a year, with a huge boost expected next year because of the Beijing Olympic Games. By 2010 they are likely to reach 270m — though that will still be only a third of America’s total last year.

China’s Civil Aviation Administration says it will spend more than RMB140 billion ($17 billion) in the next three years on building more than 42 new airports and upgrading others. China will still end up with only around 200 commercial airports, compared with some 20,000 (including many small ones) in America, which has barely one-quarter of China’s population. The potential for China’s aviation market is huge.

China leads the world in the introduction of electronic ticketing, which offers huge savings. Last year 95% of tickets issued in the country were electronic, up from 10% in 2005.

China is also investing heavily in new aircraft. Officials say that mainland carriers plan to double the size of their fleets to a total of more than 1,500 aircraft by 2010, reaching 4,000 aircraft by 2025. China already builds some small regional airliners and has announced plans to challenge Boeing and Airbus in the market for big jets by 2020.
Source: The Economist

China’s civil aviation administration plans to lift its control over the domestic air route operations right by 2010 which means domestic airlines would not be required to go through the current approval procedure and would only need to report the decision to fly on a certain route to the Civil Aviation Administration of China (CAAC).

It would give a chance to small private-owned and joint venture airlines to compete with their bigger counterparts to fly on profit-making routes. Such routes are mostly monopolized by the country’s three biggest airlines.

CAAC deputy director Yang Guoqing said in a statement posted on the administration’s website, ‘Liberalization of the air transport services is a global trend, and China will follow the trend while drafting international and domestic air transport policies. . . . We have drafted an overall policy — strengthening safety control and gradually loosening other controls’.

In 1978, the US became the first country to loosen government control over its aviation industry, and the policy has greatly stimulated the development of its airlines. This is now a global trend. In China it will mean that a large number of new airlines will arise.

Flights in and out of eight key airports — Beijing, Shanghai’s Pudong and Hongqiao, Shenzhen, Guangzhou, Chengdu, Kunming and Dalian — as well those linking to airports with the 15 largest passenger volumes, are still under CAAC’s control.

One CAAC official said the control had been imposed because the resources of these key airports were relatively limited compared with the huge demand.

Some analysts said the three biggest airlines in China — Air China, China Eastern and China Southern — could suffer a jolt because of the CAAC decision.

The effects are already beginning to be seen with the first private airline to operate in China, Okay Airways. At the moment it operates about 20 passenger flights. None of them, however, flies to Beijing, Shanghai or Guangzhou. After the restrictions have been lifted no doubt those cities will be included.
Source: China.org.cn

Chinese and U.S. Government negotiators have reached an agreement to increase the number of passenger flights between the two countries, including the award of an additional non-stop flight from the U.S. to China by August. The pact also calls for adding 13 new flights through 2012, up from three by 2010, and lifts some restrictions on cargo flights.

An executive speaking for the Port Authority of New York and New Jersey, said, ‘We will almost certainly see an increase in the frequencies and routes to the New York metro area as this thing unfolds.’

Currently, domestic carriers make 19 daily trips between U.S. cities and China. Continental Airlines has a daily Newark-to-Beijing flight, and China Eastern Airlines flies nonstop from New York to Shanghai. (Our illustration is of a hostess on China Eastern.)

Continental had lobbied hard to win a Newark to Shanghai non-stop flight, but lost its bid in January when the Department of Transportation awarded the 2007 route to United Airlines’ Washington, D.C.-to-Beijing service. The new agreement gives the Houston-based airline another chance.

The agreement also opens up U.S. airports to smaller Chinese carriers, which haven’t been able to win one of the limited designations and who will now have the opportunity to try for the U.S. market.
Source: New York Business

This is very important. Very safe. Easy to understand. China will reduce the vertical air space between aircraft starting from November 22. In doing this it is breaking no new ground, taking no undue risks, not breaking any barriers. The Reduced Vertical Separation Minimum, we will call it RVSM, it shortens the vertical space between aircraft from 2,000 feet (610 meters) to 1,000 feet (305 meters.)

First, is it safe? Yes. It is in use most places in the world and is fine provided all instruments have been checked to a fairly high level. If this is done then it makes not difference to safety. But it makes an immense difference to the available flying space, effectively doubling it.

Wang Changshun, CAAC’s deputy director, said, ‘We can make better use of the airspace, increase air traffic flow and reduce flight delays. It is good news for travelers who will have to spend less time sitting in cabins waiting for the aircraft to take off.’

Last year, flight delays topped the passengers’ complaint list. Air traffic control was a major reason for the delays.

CAAC has been under pressure to make better use of the limited airspace, as the aircraft fleet keeps expanding. RVSM, which the International Civil Aviation Organization introduced in the 1970s, is used in Europe, North America, the Pacific, the Atlantic, Japan and Republic of Korea.

CAAC carried out a pilot project in Sanya, South China’s Hainan Province in 2002, and has now decided to apply it nationwide in November, about eight months ahead of the 2008 Summer Olympics in Beijing.

Local airlines will have to equip their aircraft with specially certified altimeters and autopilots before October 1.
Source: China Daily