An airport in Inner Mongolia. China's smaller civil airports were usually built with local government support and find it hard to cut costs with fewer passengers and flights. (Photo/Xinhua)
An official from China's Civil Aviation Administration says 135 of the country's airports did not make any profits last year, and in fact made total losses of 1.68 billion yuan (US$266 million). Most were branch-line airports, reports the Chinese-language Beijing News.
Li Jiaxiang, director of the administration, stated at a national construction meeting on Sunday that there are 180 civil airports in China, of which more than 70% lost money last year.
According to industry experts, the airports in the red mainly offer branch-line services, for whom low flight numbers make it difficult for them not to lose money. It is reckoned that an airport which handles fewer than 500,000 passengers per year is not able to make a profit. Experts said most smaller airports depended on local government support in the early stages of their operation and find it hard to reduce their operating costs on account of the lower numbers of flights and passengers.
Li said the deficits have not deterred local governments from investing in the construction of airports, however. About 26 provincial-level regions have plans to build airports and open new routes to major cities this year.
Many experts told the newspaper that the deficit implies an imbalance in the aviation industry. Major airports will have to rely on smaller airports channeling passengers in the future. Congestion at the airports in the country's largest cities have meant that rail travel is an attractive alternative for many passengers as the country's high-speed rail network expands.
"The construction of the airports was not too fast, but too slow," one anonymous expert was quoted by the Beijing Times as saying. In view of long-term economic development, China should build more airports, the source said.
China is the second-largest civil aviation market in the world, with 180 civil airports, 2,800 planes and plans to build more 60 airports by 2016. It is still far behind the United States, which has more than 17,000 civil airports and 320,000 planes.
Jiang Jianqing is the chairman of Industrial and Commercial Bank of China (ICBC). His research interests include theoretical and practical bank innovation, and corporation theory of industrial and ...