China to invest 1.5 trillion yuan on aviation

08:33, February 25, 2011      

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Beijing will invest a mammoth 1.5 trillion yuan ($229 billion) to uplift its aviation sector, including buying 700 new planes and building 45 airports to better serve people's travel demand and aid economic growth.

Li Jiaxiang, commissioner of Civil Aviation Administration of China (CAAC), the government's air transport regulator, told a news conference in Bejiing Thursday that the 1.5 trillion yuan will be spent in the 12th Five-Year Plan period spanning from 2011 to 2015.

Demand for air traffic is booming as the world's second-largest economy roars ahead on near double-digit annual economic growth and increasingly affluent Chinese people travel more frequently.

It is estimated that 800 million people will travel by air by 2014 by IAEA, and over a quarter of them from China, raising the need for more efficient traffic management and airports.

In the previous five years, China spent about 950 billion yuan on air travel facilities.

Li said that by 2015, China will have 220 civilian airports and the fleet of commercial planes will rise to 4,500. Now China has 175 civilian airports in operation and about 2,600 aircraft in its fleet.

Despite concerns over economic losses reported by some small regional airports, the construction process will be sped over the next five years, Li said.

Li admitted that 130 out of the 175 airports reported "a rather small amount" in losses last year, totaling 1.68 billion yuan. But "regional airports are public infrastructures, and their construction should not be profit-driven", he said.

Li Lei, a civil aviation analyst at CITIC China Securities, said the increase in the number of airports will also benefit the entire industry, according to a China Daily report Friday.

"With more airports built, it will drive market demand for civil aviation."

A total of 267 million air passenger trips were recorded in China in 2010, up 15.8 percent from the previous year, official figures showed.

Domestic airlines reaped profits totaling 35.1 billion yuan in 2010, accounting for 60 percent of the world's total, CAAC statistics showed.

The rapid development has benefited foreign aviation industry players as well, amid a huge demand for aircraft and airport facilities, according to Li.

Of the 200 billion yuan in commercial deals China made in November when President Hu Jintao visited France, 104.1 billion yuan was spent on civil aviation-related goods. Also, when President Hu visited the United States in January, $19 billion out of the total $45 billion in commercial deals was spent in the aviation sector, said the report.

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