Hong Kong-based Dragonair, which is associated with Cathay Pacific and was originally established in May 1985, plans to expand to a number of major destinations throughout China.

Kenny Tang , chief executive officer of Dragonair, said as part of an effort by the airline to strengthen its network, the company will soon begin offering travel services to several extra top Chinese destinations.

He said, ‘We are pleased to bring more flexibility and convenience for mainland travelers. The addition of these extra services gives travelers more options, while we can help attract more mainland tourists to visit Hong Kong and boost the economy.’

The airline fully joined the Cathay Pacific Group last September although Cathay had an involvement for some years before that. In 2006 tourism in Hong Kong increased 8.4% as more than 13.5 million travelers arrived from mainland China.
Source: UPI

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

IATA, the International Air Transport Association (IATA) has identified five challenges China will face in an air industry which can compete at world levels. These are: efficient air traffic management, environmental sustainability, cost-efficient airport infrastructure, internal cost control and commercial freedoms.

However, note that IATA. almost by definition, is representing all the other commercial airlines (a vocal slab of which is American neatly protected from true competition by Americ’a strange bankruptcy laws) and commercial freedom is something members of IATA have been squabbling about among themselves since it was formed. Basically what most IATA members want is commercial freedom from everyone else, but not for everyone else.

Giovanni Bisignani, IATA’s Director General and CEO and shown here, at the China Civil Aviation Development Forum in Beijing, said, ‘China has an important role in the industry today, and is a future global leader for air transport. By 2010, the largest single market for aviation will be intra-Asia, accounting for nearly a third of all air travel with China at the centre. China is at a critical moment that is also a great opportunity. And to build a more successful future, China has to avoid the mistakes made in other parts of the world.’

He went on, ‘ While there have been impressive accomplishments in China - IATA-1 was opened last year that cuts 30 minutes off a round trip to Europe, RVSM will be implemented this year — big challenges still remain. The congestion delays in the Golden Triangle can be measured in hours, while the inefficient airspace design in the Pearl River Delta is costing HK$1 million a day with Chinese carriers being the most affected. We need a solution quickly.’

And IATA would like, please, to have the prices of going and coming lowered.

Giovanni Bisignani said, ‘China has some of the highest charges in Asia outside of Japan. With uniform charges for all Chinese airports, they are definitely not cost-related. IATA is working with the government to develop a charges regime that challenges airports on efficiency, provides a reasonable return to investors, and supports a competitive industry.’

The competitive industry would, of course, mainly be members of IATA and, indeed, again he has a point.

Massive landing charges curtail commercial development and China will have to make up its mind of what basis those charges should be made.

He then got to commercial freedom which is a tricky point with every major country in the world and it is pointless trying to blame one country over another.

He said, ‘The recent US-EU open-skies agreement moves the industry in the right direction, but falls short of the fundamental change we need. China’s fast growing economy demands efficient air transport links, and progressive liberalisation has played an important role — opening Hainan as a free port for aviation services, liberalising bilaterals with the US, ASEAN, Japan and Korea. With the aviation industry’s centre of gravity moving East, China has an enormous leadership opportunity to shape policy where the US and EU have failed to do so.’

It may well be he is hoping for too much.
Source: Money Control

By 2010 there will be six new airports in central China. This according to a senior official with the General Administration of Civil Aviation of China (CAAC).

The six airports will be built in Bengbu City in east China’s Anhui Province, Yichun in Jiangxi Province, Zhumadian in Henan Province, Yueyang and Hengyang in Hunan Province. The sixth will be located near Mount Jiuhua, a well-known Buddhist holy mountain in Anhui and this is where our illustration was taken.

We are not talking major international airports. These are small airports serving defined communities.

Li Yongqi, from the CAAC’s planning section said airports at six provincial capitals, namely, Zhengzhou, Wuhan, Taiyuan, Changsha, Nanchang and Hefei will also be upgraded.

Central regions include Anhui, Henan, Hubei, Hunan, Jiangxi and Shanxi. They have a combined population of 361 million and the central regions are economically less developed as the country’s eastern region. Now, with new airports they have a better chance to develop.
Source: China.org.cn