China's Airline Industry: Domestic and/or International

Has the sleeping dragon been awake? Some people might not know that China is not only huge or exploding in population and economy but in airline industry. To many people, China is a dilemma when it comes to its economic growth and recently taking the second spot in the world replacing Japan's spot. The one billion and four hundred million people nation is not only four times bigger than the United States population size but its expected to get more growth and maybe even surpass the U.S. economy not too far in distant future if we continue on our behavior. So, what does economy and population have to do with aviation industry?


Although the global economic recession has hit not only the U.S. Economy or Europe, but it also has hit China and the rest of Asia. For China's DOMESTIC flights, here is some statistics that I found which made me think why China's rapid domestic growth for aviation is linked to the economic boom that the republic is noticing. China’s aviation industry returns to robust growth, as domestic traffic recovery gathers pace; China traffic remains in positive territory across the board in Oct-2009; China’s ‘Big Three’ return to the black; continued traffic growth among the majors in Oct-2009; and the list goes on and on.

CAAC Director General, Li Jiaxiang, stated China's aviation sector has returned to robust growth, with double-digit increases in all segments of the industry, and higher passenger numbers and profits at the country's airlines in the last quarter. Chinese carriers, maintenance facilities, airports and other aviation businesses reported a collective profit of CNY9.2 billion (USD1.3 billion) in 3Q2009, compared to a loss of CNY28 billion (USD4.1 billion) in the previous corresponding period. CAAC added that the country’s civil aviation industry reported a profit of USD127 million on revenues of USD4.0 billion in Sep-2009, an improvement from a loss of USD325 million in Sep-2008. The country’s airlines reported a profit of USD23.4 million in the period, compared to a loss of USD387 million in the previous corresponding period, on revenues of USD2.7 billion.China's airlines confronted deep difficulties in 2008, with combined losses among the major state-owned carriers of approximately USD4 billion, as a slowing economy hit demand for air travel, exacerbated by the Beijing Olympics security clampdown, the Sichuan earthquake, the global recession and bad fuel hedging positions.The current results are also not a true reflection of the state of the sector’s financial health, with the results artificially helped by various measures of government support and significant fuel hedging gains. Without these, it would have been a very different scenario for the Chinese carriers.


Not only domestically but internationally China is expierencing a rapid growth. Global major airlines are universally optimistic about the raid growth of demand on the Chinese market and generally plan to expand their hub networks to cover more Chinese cities, according to the 67th Annual General Meeting and World Air Transport Summit held by the International Air Transport Association, which concluded on June 7.


According to the association's analysis, the continuous development of the high-speed railway lines in China will pose a challenge on the competitiveness of Chinese airlines in domestic short and medium-distance air routes, and the long-distance air route market, particularly the international market, will become a new growth point of Chinese airlines.


Also, regarding the EU CO2 cap and trade that is pushing to impose on many nations, it received the same stance that the U.S., Russia, and many other big countries has stood against and drop the idea as whole.
China is no longer regarded as the sleeping dragon but it is the oppesite. The DRAGON has woken up long time ago and now we have to avoid the fire out of its mouth!