Chinese Aviation Industry Has High Potential

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Last updated at: (Beijing Time) Tuesday, June 04, 2002

Chinese Aviation Industry Has High Potential

Despite a disappointing slowdown in global business,the international aviation community is still confident in China's increasingly important role in the world's airline industry.

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Despite a disappointing slowdown in global business, the international aviation community is still confident in China's increasingly important role in the world's airline industry.

China's industry has enormous growth potential, said world airline leaders at the industry's first major gathering since the September 11 terrorist attacks.

Leaders were in Shanghai for the 58th Annual General Meeting of the International Air Transport Association (IATA) which began Monday.

International support for China's airline industry disperses some doubts about Chinese civil aviation, particularly in safety and security, following two devastating air crashes involving two major Chinese airlines in April and May.

"The way the (safety) issue is handled here and the safety record of Chinese aviation make us believe the region is not at all our major concern,'' said Pierre Jean Jeanniot, current director general of the IATA, whose members account for nearly 98 per cent of the world's scheduled air traffic.

The director general credits China with remarkable past achievements and great growth potential.

"The event is being held here because we believed the time had come to highlight the very significant progress in civil aviation accomplished here over the recent past,'' said Jeanniot.

The gathering also dubbed the "World Air Transport Summit,'' attracted more than 800 participants, including top executives of airlines, airports, air transport manufacturers, government officials as well as delegates from global aviation organizations such as the IATA and the International Civil Aviation Organization.

The worldwide aviation industry was already affected by a global economic downtown when the September 11 attacks occurred, further worsening the situation.

On other issues

Aside from a special session on the Chinese aviation industry, participants are expected to exchanges views on issues such as restoring consumer confidence in air security and insurance, and increasing the financial viability of airlines.

"Security and recovery are the major challenges now facing the global airline industry,'' said Hu Qili, vice-chairman of the Chinese People's Political Consultative Conference at the opening ceremony of the two-day event.

"Since September 11, our over-riding priority has (been) to take whatever measures are required to speed up the industry's return to profitability,'' echoed Jeanniot in the presentation of his annual "State of the Industry'' review.

Experts estimate that the industry suffered huge losses, up to US$12 billion last year, which is almost as much as the industry's combined profit of the previous four years.

The best the industry can hope in 2002 would be to cut last year's losses in half. The industry also predicts that 2003 will be the year it reaches the break-even point, Jeanniot added.

Assisting the industry's return to profitability required companies to deal with a number of important issues largely out of their control Jeanniot said.

Such issues include the nature and the cost of new security measures and the availability and additional costs of insurance -- primarily for war risk, as well as for the supply and cost of airport and air navigation infrastructure.

To better tackle the challenges and restore consumer confidence, collaboration is urgently needed in the global air transport community. Governments should also take action to integrate rules and regulations, intensify oversight and inspection, as well as upgrade air security facilities, Hu said.

The main priority is still safety, participants said, adding that safety is also a precondition to restore consumer confidence in flying.

"We should never sacrifice safety even though we feel the pressure to lower costs and streamline operations for consumer satisfaction,'' said Fan Hongxi, president of Shanghai Airlines.

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