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China Civil Aviation May Earn Little This Year
China's civil aviation, which succeeded in getting rid of great losses in 1999, may see its profits take a steep dive this year, due to the unexpected climb in the price for oil.
Although preliminary statistics show that the sector had earned 450 million yuan in the first 10 months of this year, its potential to become more profitable in 2000 seems to be quite limited after spending 4 billion yuan in compensation for increasing cost, according to a senior financial official with the General Administration of Civil Aviation of China (CAAC).
The price for aerial oil has been raised eight times since November 1999, with a growth rate of 86 percent. The CAAC was eventually forced to raise air ticket prices by 20 percent, said the official.
But he does not agree that the temporary measure will do much good to alleviate the pressure of oil price rising. He suggested that airlines should improve their management and service to lower cost and upgrade efficiency.
Information from the civil aviation sector said passenger volume has not changed dramatically because of the rising cost of air tickets.
"In fact, the rising margin is not too much, and airlines still have to digest the increasing cost themselves," said an insider.
The industry has maintained a high development speed of over 20 percent in the past decade. It began to lose money in 1998, and turned losses into a profit of 790 million yuan in 1999 after taking some effective measures, such as standardizing the market order, adjusting flights and air routes, and developing a pool system.
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