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Aviation industry sees stable growth

By Tu Lei (Global Times)

08:11, June 12, 2012

A senior official from the Civil Aviation Administration of China (CAAC) yesterday said that the industry would see stable expansion, although the country faces an even more challenging economy than during the financial crisis of 2008.

"Chinese airlines will order 150 to 200 planes every year in the coming few years," Wang Changshun, chairman of Air China and vice head of the CAAC, said at the International Air Transport Association (IATA) annual meeting, which started in Beijing yesterday.

"I think the domestic routes offer better performance than international ones, and the growth of regional routes is faster than for trunk routes," Wang said.

China faces risks including the worsening EU debt crisis, weakening US economic growth, and a downturn among Asian economies, Wang said, but the domestic civil aviation market is still stable as the Chinese government has been working on expanding domestic demand, and the consumption level is still growing.

Wang's comments came after a prediction made by IATA yesterday that net post-tax profits for the global aviation industry would fall from $7.9 billion in 2011 to $3 billion in 2012, which would be just 0.5 percent of the revenues. But profits from the Asia-Pacific region in 2012 would reach $2 billion, IATA said.

"China will offer a significant portion of the profits," Tony Tyler, director-general and CEO of IATA, said yesterday.

"The Chinese cargo sector is not a big player in the world market, and their business has been less affected by the global slowdown," Andrew Herdman, director-general of the Association of Asia Pacific Airlines, told the Global Times yesterday.

In its fiscal report for 2011, Air China said that it plans to order 52 planes in 2012, 56 planes in 2013 and 55 in 2014. Air China has the most overseas routes among Chinese airlines.

IATA's data showed that China's domestic aviation passenger market is the second largest in the world, and that China's international passenger market and international cargo market rank the 7th and 4th largest in the world as well. Wang from the CAAC also predicted that the domestic passenger transport volume this year would increase to 340 million from 290 million last year.

However, Lin Zhijie, an independent industry analyst, yesterday told the Global Times that there are some signs of an oversupply of planes in China, amid the slowdown in economic growth.

"When the economic situation is good, buying 200 planes per year is not a big deal. But when the economy is not so strong, 150 planes is too much," Lin said. "If the government further expands the air transport capacity, the oversupply problem will intensify."

CAAC figures show that the growth of passenger transport volume has declined from 13 percent year-on-year in January to 6.9 percent in April.

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