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Hong Kong airport pays 1.99 bln yuan for 35 pct of Hangzhou airport

18-Apr-2005

BEIJING (XFNews) - Hong Kong's airport authority has agreed to take a 35

pct stake in state-controlled Hangzhou Xiaoshan International Airport for

1.99 bln yuan, a Xiaoshan airport official told XFN-Asia.

The agreement for the sale in the mainland's 10th largest airport operator was signed today in the eastern city of Hangzhou, the official, Gong Zhiye said.

The deal is subject to the approval of the State Council, or cabinet, said Gong.

Xiaoshan airport, in China's eastern province of Zhejiang, began operations in late-2000.

Passenger traffic reached 6.34 mln last year, up from 2.98 mln in 2001, with freight volume rising to 160,000 tons from 87,000 tons.

The airport operates over 120 air routes, including eight international routes mainly to neighboring counties.

It is used by 20 domestic and foreign carriers, including China Eastern, China Southern, Malaysia Airlines, Korean Air and All Nippon Airways.

"We will attract more airlines and open more international routes, especially to the US and Europe," Gong said, adding that the partnership with Hong Kong could be a great help to the airport's plans for expansion.

The airport is now courting other foreign carriers, including UPS and FedEx, in the hope of securing trans-Pacific cargo flights to North America.

In a move to revamp the mainland's airport sector, the General Administration of Civil Aviation of China (CAAC) transferred control of most of the country's airports to local governments last July.

CAAC director general Yang Yuanyuan and other senior industry officials have encouraged foreign investment in the industry to help Chinese airport operators improve corporate governance amidst an increasingly competitive environment.

Overseas investment remains limited so far, as most of China's 130 airports -- especially those in inland regions -- are operating in the red due to poor planning and insufficient traffic flow.

But industry analysts expect foreign capital to increase as the country's air traffic grows.

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