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China's to invest billions in aviation infrastructure. CAAC encourages airline consolidation

12-Jul-2011 9:50 AM

CAAC Administrator Li Jiaxiang, during a central party meeting, said the State Council is expected to propose plans for the development of the domestic civil aviation industry and the improvement of the industry's strategic competitiveness, focusing on both financing and policies ( Securities, 11-Jul-2011). Priorities reportedly include:

  • Enacting favourable lending policies for infrastructure construction in the sector;
  • Subsidising the construction of regional airports and the establishment of airlines in central and western provinces;
  • Offering subsidies and tax reduction or exemption to carriers using domestically manufactured aircraft.

Mr Li reportedly added that with these policies, China's aviation sector would still be in its "golden era" for the next 20 years (AFP, 11-Jul-2011). As previously reported, Mr Li reportedly stated China would invest more than CNY1.5 trillion (USD232 billion) in the aviation industry over the next five year. Mr Li reportedly stated that the country would institute favourable tax policies to help domestic airlines open new international passenger and cargo routes. China plans to add more than 45 airports over the next five years, bringing the total to more than 220.

China will promote consolidation among airlines to improve their international competitiveness (Shanghai Securities News/Reuters/AAP, 11-Jul-2011). Mr Li said the nation's three largest carriers, Air China, China Southern Airlines and China Eastern Airlines, were still too small in scale compared with global rivals. “China’s carriers, including its 3 state-owned ones, still lack competitiveness in the global market, and we should push through industry restructuring to forge 2 or 3 truly large carriers with global competitiveness,” Mr Li stated.