China's Aviation Industry Hard Hit by SARS

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Last updated at: (Beijing Time) Friday, May 23, 2003

China's Aviation Industry Hard Hit by SARS

The Chinese aviation industry's hopes for a successful 2003, after a major regrouping last year, have been dashed by severe acute respiratory syndrome (SARS).

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The Chinese aviation industry's hopes for a successful 2003, after a major regrouping last year, have been dashed by severe acute respiratory syndrome (SARS).

Since April, the disease has halted the industry's 15 percent annual growth rate, and caused declining occupancy rates and reduced services.

China's aviation enterprises took some cost-saving measures in order to minimize the losses. The three major Chinese airline companies delayed delivery of 39 new aircraft, merged flights with occupancy rates lower than 15 percent, and canceled or postponed investment projects.

Controlling costs and expanding income sources, which are the universal practices of the world's aviation industry, could likewise help Chinese airlines overcome the SARS crisis, said Xu Donghua, an expert with the Development Research Center of the State Council.

All airline companies in trouble suffered cash flow problems. Under such circumstances, the China Eastern Airlines gained operating funds from banks thanks to a cooperation agreement.

The airlines also increased cargo transport to compensate for the loss of passengers. Cargo transport prices rose slightly in general, up 30 to 40 percent on some routes.

During the current low-season, airline companies seized the chance to inspect and maintain their aircraft, improve quality andcapacity. Flight attendants also reviewed their professional knowledge.

The General Administration of Civil Aviation of China and Boeing China Company jointly organized senior training courses, with interactive teaching methods attracting many students.

Li Fenghua, vice-president of China Eastern Airlines, said every cloud had a silver lining and the SARS disaster might on theother hand help promote competitiveness.

Though facing difficulties, the aviation sector remains confident.

"The demand for aviation is objective, though temporarily restrained by SARS, so it will recover or even soar after the disease is under control," said Yan Zhiqing, general manager of China Southern Airlines.

"When the fear of SARS ends, the environment for aviation will return to normal," said Ye Yigan, chairman of China Eastern Airlines.

All the companies had more hope when the central government worked out policies such as reducing aviation infrastructure fees and suspending sales tax. Some local governments also considered financial aid to airline companies.

Experts said that if the monopoly in aviation oil were ended, China's aviation would see a more booming period.

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