Chinese air traffic is up 16.4% in the first half of 2009, according to the Civil Aviation Administration of China (CAAC).
Note most carefully that this is mainly domestic air travel, not international air travel. Thus China is moving fast in terms of capacity for air transportation, new airports, air navigation services, and air traffic management infrastructure. The in-service commercial aircraft fleet in China has reached 1,365. But almost all of it is focussed on travel within China.
And note that China’s top three carriers, Air China, China Southern Airlines and China Eastern, collectively lost more than RMB 27.8 billion in 2008. China Eastern alone posted a loss of RMB 13.9 billion last year, while Shanghai Airlines reported a loss of RMB 1.25 billion.
However, the prospects are now much more pleasing and the industry is being rationalised. For example, Shanghai Airlines and China Eastern recently announced merger plans, allowing them to take 50% of the Shanghai market, while reducing competition along 80% of their routes.
Internationally, struggling with excessive capacity, fuel hedging losses, and declining demand, Chinese airlines took steps similar to those of other international carriers: cutting capacity and eliminating unprofitable routes.
Meanwhile CAAC has reacted with cash subsidies, tax returns, and put in place ten supportive measures aiming to guide the industry through the crisis.
To boost domestic demand and investments, the Chinese government has announced a (US$586 billion) stimulus package, 45% of which will support infrastructure projects including new airports across the country.
eTurbo News said Government assistance worked and China’s civil aviation industry is experiencing an overall recovery. In the first half of 2009, passenger traffic volume showed rapid growth, with an average month-on-month growth rate of more than 13%. In particular, the year-on-year domestic passenger traffic volume growth rate stood at 20.4%.