Raising standards

In spite of recession elsewhere in the world, China's airline business has enjoyed phenomenal growth. Although some aviation statistics tend to be unreliable, the consensus is that, measured to tonne kilometres, China has achieved an average of 22 per cent growth per annum over the last 12 years. When the People's Republic was founded in 1949 there were just 12 domestic routes ? now there are more than 350.

However, safety and service on Chinese airlines are still not up to international standards though Jiang Zhu Ping, head of the Civil Aviation Administration of China (CAAC) has stated his intention to achieve this within five years. Last year alone, China witnessed no less than four serious air accidents, resulting in 276 deaths.

According to Chinese government statistics, in 1992 Chinese airlines carried a total of 29 million passengers and four billion ton per kilometre of freight ? an increase of more than thirty per cent over the previous year.

Part of this dramatic expansion can be attributed to increased independence of regional airlines after the CAAC started giving its former CAAC regional carriers more autonomy in 1988. China now even has a number of autonomous airlines, though regional airlines are required to surrender 10 per cent of all yuan earnings and all foreign exchange earnings to the central authorities. Pricing for all routes is controlled by Beijing and this is likely to continue to hinder the development of truly independent regional carriers.

The Civil Aviation Authority of China was set up in 1949 and at that time controlled all aspects of aviation from licences to purchases, though after 1980 moves were made to separate its regulatory and airline roles. Separate airlines were allowed to be setup under the umbrella of CAAC's regional offices although most of these airlines are not really independent, save in name. Beijing based Air China a remains the most regulated airline and is effectively the country's state carrier, still dominating most international routes.

Shanghai Airlines was established in 1985 as an independent carrier. The airline currently has three Boeing 757s, serves twelve cities, employs more than 800, and flies in excess of 100 flights per week. Unlike most of the other regional airlines, Shanghai Airlines is not part of the CAAC group and recently applied for rights to fly to Taiwan. The airline is gradually winning acceptance from China's conservative administration. Starting with just three aircraft, it turned in its first year profit last year.

Although the authorities in principle accept Shanghai Airlines desire to fly overseas routes, company sources say that the real problem is getting authority from the destination countries concerned. According to the airline's vice chairman, Sun Zhong Li, the airline anticipates flying to Taiwan at some point in the future and the company has already appointed several general sales agents in Taiwan. As yet there are no direct flights between Taiwan and China.

Autonomy for Shanghai Airlines has meant that unlike the other regional carriers, it is free to make purchasing deci sions for itself, rather than having to go through the CAAC. However the airline is not free to compete on price, as the state sets all domestic airfares in China. However Shanghai Airlines competes on services with city rival, China Eastern Airlines. Unlike China Eastern Airlines, Shanghai Airlines offers three classes of service on its planes and many of its hostesses were trained by Singapore Air-lines.

In the face of increased competition from Shanghai Airlines, China Eastern Airlines announced that it plans to import more passenger aircraft and recently y opened new international routes from Shanghai to Chicago, Bahrain and Brussels, where the airline plans to open an office in the near future.

In March 1992, China Eastern Airlines signed a contract to purchase seven Fokker 100 aircraft powered by Rolls Royce Tay 650 engines. Although China Eastern operates under CAAC's umbrella, the airline's freight operation became independent from CAAC in April 1990.

China Northern Airlines was officially established on 11th April 1991 having previously been a part of the China North Eastern civil aviation authority. The airline's fleet comprises 14 MD-82s and 13 smaller planes, mainly Yun-7s. Its last six Tridents were with-drawn from service in 1990 and the air-line plans to buy wide bodied planes in 1993 or 1994.

China Northern Airlines has begun a regular service between Shenyang, Harbin and Aomori in Japan as well as opening a new air route between Meizhou in Fuzhou province and Shenzhen in south China. In May last year, the airline announced that it is to fly to Chengdu and Nanning every Thursday and the airline aims to open international routes to Korea, Japan and the USSR at some point in the short to medium term.

1992 saw China's regional airlines offering a rash of new routes and the trend has continued this year. China South west Airlines recently announced routes from Shenzhen to Guiyang, Chagdu and Chongqing. Last June Air China announced that it was increasing the number of its flights to London to four per week, with two of the flights served by Boeing 747-400 air-craft.

Air China has also expanded its domestic routes and now operates twice weekly flights between Hohhot, capital of Inner Mongolia and Ulan Bator, capital of Outer Mongolia and the air-line has opened routes linking Tianjin with Xian, Chengdu, Shenzhen and Fuzhou. Xinjiang Airlines operates twice weekly services between Urumqi and Shenzhen via Changsha and in May last year the airline began flights between Urumqi and Guilin via Xian.

China Southern Airlines has boosted the number of ton-kilometres it flies by an average 24 per cent per annum for the past decade, according to airline officials. In 1991 the airline carried 5.7 million passengers which was 6.2 times the number carried in 1980 and cargo traffic is growing at nearly 20 per cent per annum. China Southern Airlines was until recently part of the CAAC though has now been promised more independence by the State Council. In fact the airline and its regional CAAC to all intents and purposes, remain one and the same body.

Sichuan Airlines Corporation (SCAC) was founded in 1986 but had to cease operation because of personnel shortages and other difficulties. The airline was then refounded a year later and flights began in 1988. Sichuan Airlines started with just four aircraft ? three Yun-7s and one Yun-12 and flies fourteen routes mainly within Sichuan province. Sichuan Airlines is completely independent from CAAC and is funded by Sichuan' provincial government. Although sources at the airline admit that they do compete with CAAC, this is apparently not too problematic as it claimed that CAAC are by in large supportive of them.

Airports

During the seventh Five Year Plan period (1986-1990), civil aviation developed rapidly with 25 airports constructed or upgraded. However most of these were small scale projects and foreign funding was only required for two of them ? Xiamen and Jinan. Ten new airport are planned under the Eighth Five Year plan (1991-1995) for central and southern China with new airports planned for Guilin, Guiyang and Nanjing and a new terminal building for Beijing s Capital Airport. Most of the existing airports in central and southern China were military in origin and many are still owned by the People's Liberation Army Air Force (PLAAF) although civilian aircraft can use them.

Shenzhen's new airport near the border with Hong Kong is now operating and flies routes from Shenzhen to Shanghai, Beijing, Kunming and Chengdu. Last July saw announcements that international bids have been invited for the expansion of Xiamen international airport in Fujian province. The US$37 million project will include construction of a new taxiway as well as a new terminal building and oil depot. In the same month, Jinan's new airport opened ? it will handle flights from Hong Kong, South Korea, Japan and Singapore and was financed by the Kuwaiti government.

Beijing's Capital Airport is also having its control tower and lounge buildings expanded. The present terminal was constructed in 1981 and was expanded to cater for the Asian Games in 1989. Current throughput is estimated to be 5 million passengers each year and the completion of the next stage of the airport's upgrade is scheduled for 1996, in time for Beijing's bid for the 2000 Olympic Games. The total project will cost some 2 billion RMB yuan with the Japanese government providing US$150 million under the OECF Third Yen loan. It is hoped that the new terminal will be able to handle 6 million passengers per year. The feasibility study for the project has already been approved by the State Planning Commission. Shanghai's Hongqiao airport is also due to be renovated this year using Japanese loans. Likewise, a new airport is also planned for Guangzhou in the city's Baiyun district, due for completion by 1997.

According to diplomatic sources, Wuhan will open a new airport ? the Tianhe International Airport ? to be funded under a 7.850 billion Yen (US$47.3m) OECF loan by the Japanese government. The airport is scheduled to open this year, if everything goes to plan. Hainan in south China is also planning to open a new airport capable of handling Boeing 747 aircraft. The first base is scheduled for completion in 1998 and it is planned that the total project will be completed by 2010. However, reports suggest that the project is badly organised and it is questionable whether it will be completed within the planned time scale. The airport will be situated in the island province's capital, Haikou. *