China's aviation boom drives airport building frenzy

Starbeam Ventures

26/06/2015 06:23

BEIJING, June 26 (Reuters) - When Mangshi opened its airport 
two decades ago, the small tropical city on China's border with 
Myanmar was served by few airlines. China's recent travel boom 
has changed that - seven carriers brought in more than 1 million 
visitors last year.  
    "We had a hard time attracting airlines in the early days," 
Li Ping, deputy chief of the airport's expansion steering 
committee, told Reuters. "Now we are struggling to accommodate 
flights."  
    Mangshi is one of more than 60 inland airports under 
expansion, with another 30 new regional airports being built. 
Government planners estimate China's airports will increase to 
240 by 2020 from around 200 today.   
    Li Jiaxiang, head of the Civil Aviation Administration of 
China (CAAC), said this week the country would invest $80 
billion in aviation projects this year alone.  ID:nL3N0ZA1KH  
    The aviation market is being lifted by rising business 
travel and a surge in outbound tourism fuelled by an 
increasingly wealthy middle class in coastal and inland cities.  
    The number of leisure travellers going overseas for the 
first time topped 100 million in 2014, official data shows. 
Foreign travel is tipped to grow another 10 percent this year as 
the United States, France and Australia ease visa policies. 
    That has prompted Air China  0753.HK , China Eastern 
Airlines  0670.HK  and China Southern Airlines  1055.HK  to fly 
to New York, Paris and Sydney from Nanjing, Wuhan or Chengdu, or 
at least with a stopover in those second-tier cities. 
 ID:nL3N0Y24UE  
    China's so-called Silk Road initiative is also certain to 
boost traffic. Under the scheme, the government aims to extend 
its economic and political influence to neighbouring countries. 
A network of railways, highways and new air routes are part of 
the plan.  ID:nL6N0SB1XD  
    Last year passenger volumes at Chengdu's Shuangliu airport 
and Chongqing's Jiangbei airport rose 12.6 percent and 15.8 
percent, respectively, beating Beijing's 2.9 percent gain and 
Guangzhou's 4.4 percent increase. 
    Xiamen's Gaoqi airport handled 20.9 million passengers, far 
exceeding its designed capacity of 15 million, while Dalian is 
expected to hit full capacity in 2016.  ID:nL3N0RH1N3  
    Sceptics warn about white elephant projects such as the 
barely used $6 million airport in Dachangshan island off China's 
northeast coast. Many existing airports are also in losses due 
to huge upfront investments.  ID:nL4N0X734X  
    CAAC's Li said the country's airport expansion is supported 
by data showing rising passenger numbers.  
    "Airport building should be a bit ahead of the demand. 
Judging from the experience of the developed world, our airport 
construction is far from enough," Li said. "We are still unable 
to catch up with demand."   
     
    FRANTIC BOOM 
    Earlier this month, China approved four additional new 
airports in provinces including Xinjiang and Heilongjiang, 
costing 16.3 billion yuan ($2.63 billion).  
    Chongqing, an industrial city in the southwest, is in the 
middle of a 29.4 billion yuan expansion. A little over three 
hundred kilometres to the northwest, Chengdu is preparing to 
build a second airport with six runways and four terminals at a 
cost of 69.3 billion yuan.  
    "The Chengdu airport is very busy and discount air fares are 
hard to get," Rose Wang, a business woman who often shuttles 
between Shanghai and Chengdu, told Reuters. "Thirty or 40 
percent discounts were normal previously."  
    On the coast, Xiamen and Dalian are creating artificial 
islands for new airports, with landfill effort in Dalian alone 
costing 26.3 billion yuan.  
    The aviation boom is boosting sales for global suppliers 
Thales SA  TCFP.PA , Indra Industries  INDD.BO , Raytheon Co 
 RTN.N , Lockheed Martin Corp  LMT.N  and Honeywell Aerospace.  
    In May, Honeywell tested its next generation GPS-based 
precision landing system at Shanghai's Pudong airport.  
    Thales has sold 40 air traffic management (ATM) radars in 
China. It supplies ATM systems to the crucial Beijing, Shanghai 
and Guangzhou sectors, and has recently added Urumqi in Xinjiang 
to its client list. 
    "Demand for navigation systems will be on the rise as more 
airports are built or expanded which will also result in more 
demands in ATM systems as well as surveillance technologies," 
Xia Jinsong, deputy chief executive officer with Thales China, 
told Reuters. "That means more business opportunity for us." 
    In Mangshi, where passenger volume is expected to exceed the 
designed capacity of its airport, a more urgent issue is at 
hand.  
    Its runway needs to be extended by 400 metres to 2,600 
metres to handle Junyao Airlines' A320 and Xiamen Airlines' 
B737-800 jets. Only B737-700 and A319 jets can fly in for now. 
    "We have to keep the airlines waiting as our runway is too 
short and not safe enough for bigger planes," said Li of the 
airport's expansion committee.  
($1 = 6.2077 Chinese yuan renminbi) 
 
 (Reporting by Fang Yan and Matthew Miller in BEIJING; Editing 
by Ryan Woo) 
 ((yan.fang@thomsonreuters.com; 86 10 6627 1233; Reuters 
Messaging:  yan.fang.thomsonreuters.com@reuters.net)) 
 
Keywords: CHINA AVIATION/