NICHOLAS IONIDES / SINGAPORE
Civil Aviation Administration warns carriers not to place large orders to avoid overcapacity
China Eastern Airlines has signed a conditional agreement with Airbus on the purchase of 20 more A320 family aircraft, lifting expectations that a sizeable Chinese deal with the European aircraft manufacturer may be forthcoming.
The news has been tempered, however, by a statement from the head of the Civil Aviation Administration of China (CAAC) saying that the country will order far fewer aircraft in the years ahead than some manufacturers predict.
Shanghai-based China Eastern confirms it is seeking government approval for the Airbus deal to be firmed up and, if endorsed, deliveries will start this year. The carrier also says it plans to lease six more Boeing 737s, although it will not reveal details.
Chinese authorities have been in talks with Airbus on a major deal covering 30-50 A320 family aircraft for allocation to several carriers for more than a year. This followed a deal for 30 Boeing 737-700/800s, but no contract was signed with Airbus.
China Eastern, which already has 28 A320 family aircraft in service, says it hopes its proposed deal for 20 more aircraft will be approved soon - allowing for deliveries to start later this year and continue through 2005 or 2006.
It is unclear, however, if a major A320 family order will go ahead as CAAC minister Liu Jianfeng is calling for airlines to avoid aggressively growing their fleets.
Liu told airlines at a CAAC planning meeting in Beijing on 5 February that China's carriers will no doubt need many more aircraft in the years ahead to keep up with strong traffic growth, but "it will be far less than some aircraft manufacturers had predicted".
Airbus and Boeing expect China to be the biggest market for sales over the next two decades, with demand forecast at up to 1,700 aircraft worth over $140 billion.
Liu says the CAAC plans to continue limiting purchases of new aircraft by the country's airlines in the "near future" to avoid the overcapacity problems that were seen in the late 1990s. "If airlines cannot convince CAAC with precise details that the new aircraft will bring in profits, applications are unlikely to be approved," he warns.
Source: Flight International
