The Chinese state council has finally given the go-ahead to a plan to reorganise the financially troubled national airline industry.
The Civil Aviation Administration of China (CAAC) has been planning for two years for three of China's largest carriers - Air China, China Eastern Airlines and China Southern Airlines - to acquire seven smaller airlines under its direct "control and administration".
The state council, China's de facto cabinet, granted final approval late in January, says CAAC minister Liu Jianfeng. Air China will take over China Southwest Airlines and China National Aviation; China Eastern will take over China Northwest Airlines and Yunnan Airlines; and China Southern will take over China Northern Airlines and Xinjiang Airlines. China Eastern has already taken over Great Wall Airlines as part of the process.
The aim is to reduce cut-throat competition, blamed for widespread losses by Chinese carriers over the past five years, after huge growth in the late 1980s and early 1990s. The CAAC says each of the three main airline groups will have assets of 50 billion yuan ($6 billion) and around 150 aircraft.
The CAAC will change its structure, ceding ownership of the airlines to focus solely on a regulatory role, and closing 24 local arms, to leave only seven CAAC regional branches. It will also restructure aviation service companies, such as jet fuel supplier China Aviation Oil Supply, while management of most airports will pass into the hands of the provincial governments.
The CAAC also plans to overhaul the country's domestic air route network this summer, banning or restricting services from the main hubs of Beijing, Guangzhou and Shanghai, in an effort to create a US-style hub and spoke network.
Liu says 2001 was a better year, with the industry "as a whole" earning 690 million yuan in profits, and some debt-plagued carriers, including Air China, China Southwest, China Northern and Xinhua Airlines, recording "slight" profits. He adds that the CAAC hopes for total profits this year of between 1 billion and 2 billion yuan. Around 83 million passengers are expected to be carried by air in China this year, up from 75 million in 2001.
Source: Flight International
