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BIZCHINA / Review & Analysis
Aviation industry set to take off
By Lu Haoting (China Daily)
Updated: 2007-08-10 15:07
Chinese airlines raked in an aggregate profit of 1.54 billion yuan in the
first half of this year thanks to brisk market demand, appreciation of
the renminbi and lower jet fuel prices.
The strong performance in the first six months, usually a slack season
for the airline industry, could be a prelude to continued robust growth
in the next three years, analysts said.
Chinese carriers have seen first-half losses over the past two years. The
industry's aggregate loss for the first half last year skyrocketed to
2.57 billion yuan on record-high oil prices.
"Strong market demand brought by China's fast economic growth is the main
driver (of this year's results)," said Ma Xiaoli, an aviation analyst
with CITIC Securities.
Chinese carriers transported 86.7 million passengers and 1.82 million
tons of cargo from January to June, up 16.7 percent and 15.3 percent over
the same period last year, according to the General Administration of
Civil Aviation, the industry regulator.
Average passenger loads were at 73.9 percent during the first half of
2007, a year-on-year increase of 1.6 percent.
"Besides the sound economic growth, the Chinese airline industry will
benefit a lot from a series of global events in the coming three years,"
Ma said. The three events are the 2008 Olympic Games in Beijing, the 2010
Shanghai World Expo and the Asian Games Guangzhou in 2010.
The CAAC expects China's aviation industry to maintain an average annual
growth rate of 14.6 percent during the 11th Five-Year Plan period
(2006-10).
"The growth rates for last year and the first half of this year have
exceeded that expectation," Ma said, adding that a capacity increase in
the coming three years would be stable despite brisk market demand.
"The CAAC and Chinese airlines' planned capacity increase for the 11th
Five-Year Plan period is based on their previous forecast of a
14.6-percent annual growth rate. They are unlikely to significantly
change their original plans," Ma said.
"On the other hand, due to the global aviation industry revival, Boeing
and Airbus have sold so many aircraft that it is difficult for them to
respond to short-term needs and their production positions are basically
sold out till 2010," Ma added.
The renminbi appreciation has also helped Chinese airlines cut costs,
analysts said.
(For more biz stories, please visit Industry Updates)
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