Aviation giant urges further reforms to boost industry

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Aviation giant urges further reforms to boost industry

(Xinhua) 15:30, October 24, 2013

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Despite China's position as the world's second-largest aviation power, the country still needs to further open up the industry to meet growing public demand for air services, Chen Feng, board chairman of Hainan Airlines Group, said on Thursday.

Air traffic congestion and flight delays have become the major public complaints about China's aviation industry, which went through a boom period led by the country's reform and opening-up policy launched in 1978.

"The problems reflect that the level of development of the aviation industry still lags far behind the growth of the country's economy and people's living standards," Chen said in an interview with Xinhua.

China's aviation industry, which had for years been operated by the state and state-control enterprises, has witnessed fast development after the government pulled away from enterprise management and gradually opened the sector to private capital.

Official data from China's Civil Aviation Administration showed that the number of air travellers in the country increased 11 percent year on year in the first nine months of the year.

However, flight schedules for nearly 20 airports, which carried 75 percent of the total air passengers in China, were affected by delays or cancellations due to air traffic congestion.

If the government fails to carry out new reforms, the sector will face great challenges in coping with an explosion of demand in the future, Chen said.

Chen, who founded the Hainan Airlines Group in 1993, has grasped the opportunity brought by the government's reform policies since 1978 to boost his company, which combines capital from the state as well as private and foreign sources.

"Once a monopolized sector, China's aviation sector has explored a new development path aided by the country's reform efforts -- a great achievement that can be used as a reference by other monopolized sectors," Chen said.

However, the sector has encountered growth bottlenecks in recent years, as demand for air transport also surged as a result of the country's economic take-off.

Rigid requirements for market access and aircraft purchases, rigid airspace control, high tariffs on aviation equipment imports and the lack of aviation professionals have all constrained further development of the civil aviation industry, according to Chen.

As China's new government, which took office in March, focuses on reducing its intervention in the economy, Chen expects aviation authorities to follow suit.

Chen said that the urgent task for the government now is to open the aviation transport market to all types of capital, and to improve both airline management and airspace control mechanisms.

Hainan Airlines Group, the parent company of China's fourth-largest carrier by fleet size, earned 127 million yuan (20.87 million U.S. dollars) in revenue last year, marking an annualized growth rate of 44 percent.