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Beijing Airport Considers Expansion
Beijing Capital International Airport last week denied having reached any agreements to buy shares in three other major domestic airports, according to the latest Business Weekly.
It was reported that the capital's airport had sealed deals to buy 25 per cent of Northwest China's Xi'an airport, 35 per cent of Southwest China's Chengdu airport and 40 per cent of Northeast China's Shenyang airport.
Those purchases would have cost about 600 million yuan (US$72 million).
Wang Jianzhuang, secretary of the board of the Hong Kong-listed company, called those reports mere rumours.
"As a listed company, we must announce every big change in our company to the public," Wang said.
Wang acknowledged the company is in talks with many airports, including those three. Any final deals are a ways off, he insisted.
Hong Kong media said airports in Dalian, Qingdao, Chongqing, Kunming, Urumqi and Wuhan also could be targets.
The reports also said Dalian and Qingdao airports had reached rough agreements with the capital airport on an investment plan.
Wang refused to comment on such reports.
Beijing Capital International Airport is the biggest in China, and its business is rising fast with the booming economy.
About 18,700 planes took off and landed in the airport in 2000, transferring 21.7 million passengers and 55,700 tons of cargo.
The airport's income hit 1.8 billion yuan (US$221 million) last year, up 27.2 per cent over 1999.
The airport company combined with Tianjin Binhai Airport earlier this year and sold 9.9 per cent of its shares to Deroports De Paris. That company vowed to help the Capital Airport upgrade its management systems.
Li Peiying, chairman of board of directors of the airport company, said his company would actively invest in domestic airports to develop a huge airport network across China.
The company raised HK$2.8 billion (US$358 million) when it became the first listed airport stock in Asia in January.
That huge cash reserve is the envy of other domestic airports.
China has more than 100 airports, but 90 per cent are losing money because of their small scale,lack of passenger resources or poor management. Most of those airports are trying to upgrade their infrastructure and management to survive the competition that will come with China's World Trade Organization entry.
Chengdu airport is in the midst of a 1.2 billion yuan (US$140 million) project to build a new waiting hall by year's end. The airport still needs investment to renovate airport facilities.
A Chengdu airport official said Beijing Capital International Airport had contacted Chengdu several times, but no results were set.
"Our airport will certainly leap forward with the investment and advanced management from the Capital Airport if the co-operation could be sealed," said the official, who asked not to be named.
Chengdu airport hopes for a stock listing soon.
Sources with the airports in Xi'an and Shenyang said links with the Capital Airport would be good for both sides.
The governing body of China's aviation industry sent out upbeat signals about such moves.
"Large-scale airport group could help cut operating costs and increase the competitive edge of those airports," said Ren Houxiang of the Civil Aviation Administration of China (CAAC).
The CAAC was busy reorganizing major domestic airlines, so airport reform is low on the current agenda.
Yet Ren said CAAC won't block co-operation among domestic airports and will let the market play its role.
But whether one airport could take control of the others remains unclear, Ren said. CAAC traditionally has banned such aggressive investments.
Shareholders remain pleased with Beijing Capital International Airport. The stock price of the airport surged 15 per cent last week in Hong Kong, as speculators liked the prospects that could come from the increasingly likely odds that Beijing will host the Olympics in 2008.
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