Billionaire Cheng’s NWS to Buy Stake in Beijing Airport

NWS Holdings Ltd. (659), controlled by Hong Kong billionaire Cheng Yu-tung, agreed to buy a stake in the operator of China’s biggest airport from sovereign-wealth fund GIC Pte, betting on a surge in travelers.

NWS will buy 8.8 percent of Beijing Capital International Airport Co. (694) for about HK$2.36 billion ($304 million), according to a Hong Kong stock exchange filing yesterday. The purchase of 383 million shares at HK$6.15 apiece will give the transportation unit of New World Development Co. (17) a 20.4 percent stake in the airport operator’s Hong Kong-listed H shares.

The acquisition, at a 2.1 percent discount to the stock’s closing price yesterday, gives NWS an exposure into the booming air travel market in Beijing, ranked the world’s second-busiest airport after handling 82 million passengers last year. As disposable incomes rise in China, there is “potential growth” in revenue at the airport from retail concessions, advertising and rentals, NWS said in its statement.

“Beijing Capital International Airport is a quality infrastructure asset with substantial stature and a key correlation to the continuous growth of China’s economy,” NWS said in the filing. It’s NWS’s first investment in an airport, according to an e-mail from the company today.

NWS shares fell 3.3 percent to close at HK$11.72 in Hong Kong trading. Beijing Capital International Airport gained 0.3 percent to HK$6.30. The city’s benchmark Hang Seng Index rose 0.3 percent.

Billionaire Cheng

GIC owned 413.9 million H shares in Beijing Capital International Airport as of Dec. 31 last year, according to data compiled by Bloomberg. GIC declined to comment in an e-mail.

Beijing, with an airport code PEK, handled 82 million passengers in 2012, an increase of 4.5 percent, according to the International Air Transport Association. Atlanta was the world’s busiest, handling 95.5 million passengers.

Cheng is Hong Kong’s fourth-richest man with a net worth of $20.1 billion, according to the Bloomberg Billionaires Index. Cheng owns 89 percent of Chow Tai Fook Jewellery Group, the largest jeweler in China and Hong Kong. Through Chow Tai Fook Enterprises, his closely held investment company, Cheng also controls New World Development, a land developer with holdings in hotels, retail, infrastructure and public transportation.

Source: Bloomberg News By Joshua Fellman and Jasmine Wang

Shenzhen Airport Launches New Terminal

The launch of a new 8.5 billion yuan ($1.39 billion) terminal at Shenzhen Bao’an International Airport marks this southern Chinese city’s ambition to tap the region’s rapidly growing demand for air traffic.

A Shenzhen Airlines Co. flight bound for Hohhot, Inner Mongolia, was the first to depart from the new 451,000-square-meter terminal—which is shaped like a plane preparing for takeoff—early this morning.

Despite already-congested airspace in the skies above China’s southern Pearl River Delta region, airport operators in Hong Kong, Guangzhou, Shenzhen, Macau and Zhuhai—which currently manage a total of eight runways in five commercial airports—are investing in more infrastructure in an attempt to win over more of the growing number of travelers in the region.

In the first 10 months of 2013, passenger traffic in China rose 11% to 297.6 million, thanks to the robust demand for air traffic despite poor on-time performance.

A plan to construct a third runway at the Hong Kong International Airport is under public evaluation; Guangzhou Baiyun Airport will launch its third runway next year, with a second terminal expected to begin operations in 2016.

The new Shenzhen terminal is part of a 21.8 billion yuan expansion plan, which includes a second runway that opened in July 2011 and a hotel, commercial complex and freight terminal. The new terminal, designed by Italian firm Studio Fuksas, is three times the size of existing terminals. It’s expected to boost the airport’s capacity to 45 million passengers annually by 2020 from around 30 million passengers currently.

Shenzhen is the country’s sixth-busiest airport and its main domestic gateway in Southern China. It has for years been attracting passengers away from the rival airport across the border in Hong Kong, lured by its more extensive Mainland China network as well as lower prices. The Shenzhen airport’s network covers 169 routes to 109 domestic and international cities; Hong Kong services routes to only 44 destinations in Mainland China.

No word on whether the increased traffic will add to delays in China—which is already ranked as the world’s worst for on-time arrivals and departures.

Source: Wall Street Journal 

Chengdu to Build 11 Billion Dollar New Airport

(CRI) Regulatory approvals have been given to build a new 11-billion-dollar airport in Sichuan's capital, Chengdu.

The new airport in Southwest China is scheduled to be completed by 2025.

The new Chengdu airport is going to have three runways, and should be able to handle 40 million passengers per year.

Chengdu's existing International Airport, built in 1938, is already the 5th busiest airport in the country, behind only Beijing, the two airports in Shanghai and Guangzhou.

Some 37-million people flew in and out of the Shuangliu Airport last year.

Source: CRI

Mainland Travelers Granted Landing Permits to Taiwan's Outlying Islands

(Xinhua) Visitors from the Chinese mainland are allowed to travel to Taiwan's outlying islands of Penghu, Kinmen and Matsu starting Thursday, without applying in advance for Taiwan-issued entry permits.

The landing permit enables mainland visitors to stay in the offshore counties for up to 15 days. They are still banned from traveling to other parts of Taiwan without an entry permit.

According to figures released by the Kinmen County government, more than 1.5 million passengers have traveled by ferry in 2014 from Kinmen to the mainland's Fujian Province, 10.8 percent higher than in 2013.

Kinmen is about 10 kilometers away from Fujian's Xiamen City, making ferries the most convenient way to commute between the two destinations.

The landing permit is the latest measure to attract mainland residents to Taiwan. Taiwan began to open the door to individual tourists from mainland cities on June 28, 2011, and the mainland is currently the largest source of tourists to the island.

Source: xinhua via want china times 

Taiwan's Taoyuan Airport sees Asia's highest growth in travelers over 2014

Over 35 million travelers came through Taiwan Taoyuan International Airport in 2014 for a growth rate of 11.4% over last year, which the airport operator said was the biggest growth in Asia over the year.

The passenger volume was also the highest the airport has ever recorded, said Taiwan Taoyuan International Airport on Wednesday.

The company touted the achievement as the result of efforts to improve facilities and services, saying it has scored "a beautiful record" in pursuit of growth in passenger volume, facility upgrades, runway renovation and work on a third terminal.

The company added that its newly-renovated first terminal, the top prize winner of the Taiwan Architecture Award for 2014, was one of the most "checked-in" spots on Facebook in Taiwan.

This year, Taoyuan Airport was ranked the world's fifth best airport in Asia by the Guide to Sleeping in Airports website, 10th in Skytrax's rankings of best airports in Asia, and 18th in Skytrax's rankings of best airports in the world.

Source: Want China Times

China to boost civil aviation in Xinjiang

(Xinhua) China vowed on Saturday to make more efforts to support the development of civil aviation in Xinjiang Uygur Autonomous Region.

Civil Aviation Administration of China (CAAC) said in a guideline that it will improve aviation infrastructures in Xinjiang by supporting expansion of established airports and construction of new ones.

The CAAC will speed up preliminary study of a new airport in Urumqi, capital of the region. It also backed the city to apply for 72-hour visa-free entry for international transit passengers.

In addition, the administration encouraged airlines to operate more routes connecting Xinjiang cities with China's eastern areas as well as foreign countries.

Xinjiang currently has 16 civil airports, with 46 domestic and foreign airlines operating 184 routes. It has the most airports and longest airways among China's provincial-level regions.

From January to November, Xinjiang saw 238,000 civil flights and throughput of over 20 million passengers and 163,000 tonnes of cargo and mail, up 20.5 percent, 9.8 percent and 8.8 percent year on year, respectively.

Source: xinhua via china.org

Beijing to get third airport to reduce congestion, delays

(AP) — China has green-lighted a third airport for the capital Beijing in a bid to reduce congestion and chronic delays, state media reported Wednesday.

The massive new airport will be located 46 kilometers (29 miles) south of the city center and take five years to build, according to the China Daily newspaper and other outlets.

When completed, it will handle 72 million passengers per year, taking the pressure off Beijing Capital International Airport in the city's northeast that is the world's second-busiest, handling more than 83 million passengers last year.

A second airport, Nanyuan, is a former military airfield with limited capacity.

China is splashing out on specific infrastructure as part of efforts to limit its economic slowdown. 

Beijing's is the third airport to get the go-ahead in just the last month, while feasibility studies for five other projects were approved in October.

State planning agency the National Development and Reform Commission has set the airport's construction budget at just over $13 billion dollars.

Designed by Netherlands Airport Consultants B.V., it will have a 700,000-square meter (7,500,000 square foot) main terminal and capacity to process 2 million tons of cargo per year.

The airport will be connected to Beijing by a 66-kilometer (41-mile) light rail line with travel times under 30 minutes.

China's fast growing air travel market is the world's second biggest, but the heavy air traffic and tight control of airspace by the military have given it the world's worst record for flight delays.

Flight cancelations and delays have sparked frequent incidents of air rage aboard Chinese flights and at airports.

Source: Associated Press

New Airport Approved to be Built in Beijing

(CRI) China's top economic planner has finally approved the construction of a new airport in south Beijing, to ease the traffic pressure on Beijing Capital International Airport.

The airport will be built in Beijing's suburban Daxing district, which is 46 kilometers from the city center.

Zhang Guohua is the Dean of the Institute of Comprehensive Transportation Research with the National Development and Reform Commission.

"According to recent planning, the new airport is a little smaller than the old one. But considering its long-term development, its size will be bigger than the old one, since it's far from the city center. 

Based on the experiences of foreign airports, this airport will be built mainly for international flights, but will also take domestic flights into account."

The new airport will be able to accommodate take-offs and landings of four-engined long-haul wide-body airliners like Airbus A380.

It is expected to be completed and put into use in 2019, with a total investment of 80 billion yuan or nearly 13 billion US dollars.

Source: CRI

China’s NDRC Approves New $12.9 Billion Beijing Airport

(Bloomberg) China’s top economic planning agency approved plans for a second international airport in Beijing at a cost of 80 billion yuan ($12.9 billion), aiming to ease congestion at the capital city’s main hub.

A civil aviation development fund will provide 18 billion yuan, while state-owned Capital Airports Holding Co. will contribute 6 billion yuan and private funding will be “aggressively” pursued, the National Development and Reform Commission said in a statement Monday.

China’s growing middle class is fueling a travel boom in the world’s second-largest economy. Air-travel demand in Asia is projected to expand 5.7 percent in the four years through 2017, the second-fastest pace in the world, with routes within or connected to China being the single largest driver, according to an International Air Transport Association study last year.

The new airport will be built in the south of the city, the agency said. Beijing Capital International Airport, which served 83.7 million passengers in 2013, was the busiest in the world last year after Atlanta’s Hartsfield-Jackson Airport, according to Airports Council International.

Source: Bloomberg News by Clement Tan

France sells airport stake to Chinese consortium

(AP) France's economy minister says the government is selling a 49.9 percent stake in the airport in Toulouse to a Chinese consortium looking to increase international air links in the south of France.

The Toulouse-Blagnac airport is also home to Airbus, which tests some of its aircraft there.

Economy Minister Emmanuel Macron told La Depeche newspaper in an interview published yesterday that the 308 million-euro (US$381 million) stake went to the Symbiose consortium, which includes an aircraft leasing company already among Airbus’ clients.

He said the airport itself — runway and buildings — would remain state property.

Macron criticized recent comments attacking the deal, saying he was having a “hard time” 

understanding why it’s ok for the Chinese to buy planes but not part of an airport.

Source: Associated Press via shanghai daily

China continues airport construction drive despite losses

China is stepping up efforts to build small airports across the country despite most small airports currently facing huge losses and relying on heavy government subsidies to stay open, according to a report from the Beijing-based Legal Weekly.

The policy is evident in the National Development and Reform Commission (NDRC) granting approval in mid-October for feasibility reports or proposals for five new airports in Jilin's Songyuan, Qinghai's Golog, Inner Mongolia's Zalantun, Yunnan's Lancang and Guizhou's Renhuai, with total investment pegged at 5.49 billion yuan (US$897 million), according to published data.

Based on the consideration of bolstering economic development, the government has been extending enormous support to airport infrastructure projects, according to Wang Zhiqiang, director of the Airport Planning Institute of Civil Aviation University of China.

Li Jiaxiang, general director of the Civil Aviation Administration of China, said in 2013 that China only has 0.19 airports per 10,000 square kilometers, compared with 0.57 in the United States, 0.92 in the European Union and 2.59 in Japan. China therefore aims to build 70 airports, and revamp and expand 101 existing ones by the end of 2015, according to Li.

Over the past five years, only 33 airports were built in the country, Li noted.

Wang attributed the government's strong push for the construction of small and medium-sized airports in local areas as part of its efforts to push the development of the country's economy and promote local tourism.

However, nearly 80% of small airports in the country currently face huge losses, said Zhang Qihuai, vice-president of aviation law research for the China Law Society.

The continuing development of freeways and high-speed railway systems has significantly affected the air transportation industry, given its exorbitant ticket prices and weather-sensitive nature, Zhang pointed out.

Moreover, small and medium-sized airports are usually located in areas with relatively small population sizes, where tourism and the economy are less developed, which can lead to low passenger traffic.

Source: Want China Times

Nearly 80% of small airports face huge losses

(china.org) Nearly 80 percent of small airports in China currently face huge losses and are relying on heavy government subsidies to stay in business, Xinhua reported Wednesday.

Statistics compiled by the news agency show that among the 183 airports in operation across the country in 2012, a total of 134 were deficit-ridden facilities of branch airlines with losses totaling 2.9 billion yuan (US$474.15 million).

A national civil aviation investigation cited the example of a small airport in northeast China's Heilongjiang Province that had an average of five flights arriving and departing per week. That figure actually declined even more after the seven-day National Day holiday at the beginning of October, when only 20 percent of the seats were filled.

In 2013, about 70 percent of Chinese airports handled less than a million passengers, Xinhua reported.

Industry insiders are worried about the falling-off in regional aviation transportation. One analyst cited passenger numbers on Beijing-Zhengzhou flights that have fallen by nearly half since bullet trains went into operation on the route in December 2012. "The challenge from high-speed rail is certainly a major reason for regional flight service losses," said the expert.

Local governments absorb the biggest part of the losses. In some areas, 20 percent of passengers are government officials whose travel effectively subsidizes the airports. Two local governments of Jiangsu Province even issued a document to encourage civil servants to make travel by air as their first choice.

A worker at one local airport said smaller airports depend heavily on government subsidies. "A single round trip on China Southern Airlines, for example, will get about 150,000 yuan in subsidies from the county government, while Air China can get as much as 400,000 yuan."

Surprisingly, despite the gloomy figures, many areas in the country have been unveiling plans to build small airports for feeder flights.

Current practice in the civil aviation industry makes it impossible for an airport with an annual passenger volume below 500,000 to make any profit, and those airports dealing in figures in the tens of thousands or below cannot even self-support daily operations.

A civil aviation official conceded that the fact that more than 80 percent of small airports suffer huge losses reveals the severe imbalance in the domestic aviation industry.

Large airlines ignore regional markets due to low profits. Instead, they flock to large airports in Beijing, Shanghai and Guangzhou, causing congestion. The intensive high-speed rail network now emerging in eastern China only exacerbates this trend.

The Regulations on Administration of Civil Airports, which went into effect in 2009, clearly define the proper role for airport public infrastructure – namely, that airports must take into account the dual attributes of public welfare and profitability, but that the import of social benefits should far outweigh that of the economic benefits.

An aviation official takes a broader view, saying that small airports play an important role in combating natural disasters like earthquakes or floods, and they cannot be entirely governed by market laws. "Even most of the small airports in the United States get government subsidies early on."

Source: china.org by Li Jingrong | Photo: Bloomberg

Airbus Helicopters expects China to become biggest market by 2020

(Reuters) - Airbus Helicopters, the world's largest civil helicopter maker, expects China and Hong Kong to become its biggest global market within six years as Beijing starts to lift restrictions on the use of low altitude airspace from 2015.

The Airbus Group NV's helicopter division expects to increase its annual sales in China to 150 units by 2020 from around 30-40 helicopters now, its China president Norbert Ducrot told Reuters.

Sales in the United States, the firm's biggest market, average around 120-150 aircraft per year.

"The China market is very small with a big potential," Ducrot said in an interview in Beijing. "I am pretty sure around 2020, China will be the first market for Airbus Helicopters."

"Before (our customers) were mostly state companies, police and fire fighting, but now we can see the emergence of civil private helicopter operators," he added.

China simplified flight approval procedures for private aircraft late last year, but the fledgling market for helicopters and small aircraft has been constrained by the military's control of low altitude airspace.

A dearth of small airports, maintenance facilities, mechanics and pilots have also hampered the sector's growth.

Ducrot said he expects demand for helicopters and small aircraft to pick up gradually when China starts to open up its low altitude airspace next year.

As infrastructure improves and the military opens up more airspace by 2020, Ducrot estimates there will be 50,000 helicopters in China over the next 30 years. There are only about 330 helicopters currently in operation in China, including Hong Kong.

Other small plane makers are also expanding to cash in on China's growth potential.

Textron Inc's  Cessna Aircraft Company and Embraer SA have started assembling business jets in China, while Gulfstream Aerospace Corporation and Dassault Falcon are adding service and maintenance centers in China.

Airbus Helicopters is currently the market leader in China, with customers that include state-backed Citic Offshore Helicopter Co Ltd. In July, it announced an order for 123 helicopters to three privately owned Chinese general aviation companies, a deal that would effectively double the size of its fleet over the next five years.

In March, it also signed an agreement with Aivcopter, the firm's long-time government-owned partner, to jointly produce 1,000 EC175 models.

Industry observers say more than 200 general aviation companies, mostly privately owned, are lining up for regulatory approval in China.

Existing companies are also planning to expand their facilities. Beidahuang, China's biggest general aviation service provider, plans to buy over 40 planes and helicopters, increasing its fleet to around 130 by 2020.

Source: Reuters by Fang Yan and Matthew Miller

Beijing Capital International Airport Profit Flat in First Half

(WSJ) Beijing Capital International Airport Co.'s first-half net profit was flat, capped by slower air-traffic growth and limited handling capacity at the overcrowded gateway.

The Hong Hong-listed company, which operates the airport in the nation's capital, said net profit for the six months ended June 30 rose 0.6% to 677.7 million yuan ($110.2 million) from 673.3 million yuan a year earlier. Its revenue rose 4.8% to 3.7 billion yuan from 3.53 billion yuan.

Air-traffic volume growth at Beijing Capital Airport has been slowing in recent years as the nation's busiest airport by passenger throughput is running well beyond its designed capacity of 76 million passengers a year.

The airport handled 1.9% more passengers, for a total of 41.6 million, in the first half of the year, following 2.2% growth for all of 2013 to 83.71 million passengers. That made it the world's second busiest airport after Hartsfield-Jackson Atlanta International Airport in the U.S.

The weak first-half earnings also come after the Chinese government in May unveiled a plan to build a $14 billion airport on the outskirts of the nation's capital to relieve congestion at Beijing Capital Airport. 

Set to open in 2018, the airport will have four runways in its first phase and will be able to handle nearly as many passengers as Beijing Capital Airport, with provisions for three additional runways as needed.

The company said in a statement that slower economic growth, political uncertainty in some regions and a decrease in air travel demand to Southeast Asian countries following the disappearance of Malaysia Airlines Flight 370 also contributed to the traffic-growth slowdown.

It expects air traffic growth on international routes to outperform domestic traffic growth in the second half as the global economy continues to recover.

The company recommended a first-half dividend of 0.0469 yuan a share, compared with a first-half dividend of 0.0466 yuan a year earlier.

Source: Wall Street Journal by Joanne Chiu

China Military Trump Vacationers as Drills Ground Flights

(Bloomberg) Shen Zhihong arrived at Shanghai’s Pudong International Airport looking forward to a vacation at the beach only to find his flight delayed indefinitely and his holiday plans at the mercy of the People’s Liberation Army.

The 64-year-old retired professor was among thousands to have their travel obstructed last week when more than 900 flights at Shanghai’s two airports were canceled as the Chinese military staged exercises in the East China Sea. That was the most of any city in the world and more than those of the New York and Chicago metropolitan areas combined, according to Flightstats, a website that compiles airline data.

“We understand and support the needs of national defense,” Shen said as he waited to fly to the port city of Dalian with a group of former colleagues from Fudan University, where he used to teach. “But we hope there will be less and less impact on civilian flights.”

Delays at Chinese airports, ranked the world’s worst, highlight the tensions in a nation home to a swelling middle class and a ruling party with a 65-year monopoly on power that’s intent on strengthening its military. At stake is the growth of a commercial aviation market that trails only the 

U.S. in size and needs the PLA to cede airspace to China Southern Airlines Co. (1055) and other carriers to increase routes.

“The Western world’s been following a different model where civilians take priority,”said Geoffrey Cheng, head of transportation research at BOCOM International. “The aviation market has been developing in China at the discretion of the military releasing airspace.”

Worst Ranking

Shanghai’s Pudong airport was ranked next to last for timeliness among the world’s 35 busiest, with only 29 percent of flights departing on schedule, according to a June 2013 report by Flightstats. 

Beijing’s Capital International Airport was the worst, with just 18 percent of flights on time.

Phone calls to the Shanghai Airport Authority and the Civil Aviation Administration of China seeking comment went unanswered. The Ministry of Defense didn’t respond to faxed questions seeking comment.

Anger about delays has triggered extreme reactions. In April 2012, a 15-hour delay prompted about 30 enraged passengers to storm onto the taxiway at the Pudong airport. Two days later, another group of passengers also forced their way onto the tarmac, this time at Guangzhou Baiyun Airport. (600004)

Military Control

One reason for the delays are limits on where jetliners can fly. While head of the department for air transportation regulation at the Civil Aviation Administration of China, Shi Boli said in a May 2013 interview that civilian aircraft could only use about 20 percent of airspace. In eastern China, home to the busiest airports, the military controls 52 percent of air space, according to a 2011 report by the 

China News Service.

By contrast, military-controlled and restricted air zones in the U.S. are relatively rare, said Richard Aboulafia, an aerospace analyst at Teal Group Corp. who is based in Fairfax, Virginia. European airspace is managed under a “flexible use” policy and there’s seldom any major impact on civilian routes, according to air traffic supervisory agency Eurocontrol.

The effects of military control over Chinese airspace have been on display in the past three weeks. On July 22, state broadcaster China Central Television reported that airlines had been ordered to cut a quarter of their flights to a dozen domestic airports to accommodate four weeks of “high frequency exercises” from July 20 to Aug. 15. The report, posted to CCTV’s microblog, was later deleted.

Every Country

Geng Yansheng, a defense ministry spokesman, said at a July 31 briefing that military drills would affect civilian flights to a “certain extent.” This phenomenon “exists in every country,” Geng said, according to a transcript of his remarks posted on the ministry’s website.

China’s military drills are growing in scale amid increased tensions with Japan, Vietnam and the Philippines over competing territorial claims. Last weeks exercises in the East China Sea took place as live-fire drills were held in the Bohai Strait and the Gulf of Tonkin. Zhang Junshe, a researcher at the Navy Military Research Institute, told the Beijing News it was a coincidence that the exercises happened simultaneously, though the scale of the drills was larger.

That’s put the PLA at odds with surging demand for travel from China’s burgeoning middle class. The number of outbound Chinese tourists will double to 200 million annually by 2020, CLSA Asia-Pacific Markets estimated in January.

More Congestion

China Southern, Asia’s largest airline by passengers, and other local carriers are buying planes and adding flights in response. Their total number of aircraft may almost double to 4,200 by 2020 from 2,145 at the end of last year, according to Li Jiaxiang, head of the civil aviation regulator.

China Southern fell 1.5 percent to HK$2.65 as of 2:27 p.m. in Hong Kong trading today, extending the year-to-date-decline to 12 percent. Air China Ltd. (601111) fell 1.5 percent to HK$4.75 and China 

Eastern Airlines Corp. fell 2 percent to HK$2.50.

Without more airspace, more planes will mean more congestion if airlines must squeeze greater numbers of flights into the existing number of routes.

Chinese travelers have an alternative in the 19,000 kilometers of high-speed rail that the government targets building by 2015. A journey from Beijing to Shanghai by that train network is about five hours, compared with about three hours by air.

“China is going in that general direction of reform, but opening up air space is a multi-year process,” said Paul Wan, head of Asia transportation and industrial research at CLSA Ltd. in Hong Kong. 

“Nobody should expect anything to change too much too soon.”

Source: Bloomberg News 

Military Exercises Result in Glut of Canceled Flights in China

(WSJ) Chinese aviation authorities asked airlines to reduce flight traffic by as much as 75% at two of the country's busiest airports Tuesday, the latest air-travel disruption because of military exercises along China's southeastern coast.

The air-traffic disruption delivered another blow to travelers already plagued by flight delays and cancellations. It also underscored the challenges faced by commercial airlines in China, where military flights are given precedence over civilian ones.

China's Air Traffic Management Bureau, a unit of the nation's aviation regulator, issued the restriction on two Shanghai airports—Shanghai Hongqiao International Airport, which mostly handles domestic traffic, and Shanghai Pudong International Airport—for flights between 2 and 6 p.m. Tuesday, said two airline officials based in Shanghai. More than a dozen smaller airports in eastern and southern China also halted flight arrivals and departures during the period, the air-traffic bureau said.

China's Ministry of National Defense coordinated the exercises, which it said were routine and designed to test the military's combat capability, according to a statement on the ministry's website. The ministry gave no details about the precise location or schedule of the drills.

The reduction is part of a three-week curb on flights through mid-August because of the drills. So far the restrictions have resulted in capacity reduction of as much as 25% at a dozen Chinese airports, including the two in Shanghai, airline officials said.

The aviation regulator said last week that "rainstorms, routine military exercises and other comprehensive factors" are behind widespread flight delays and cancellations in the second half of July. 

It has stopped applications for executive aircraft, additional scheduled flights and chartered flights at affected airports.

Eric Lin, an aviation analyst at UBS Securities, said the latest flight reduction is especially damaging for the air-travel industry in eastern China, which has already faced flight delays and cancellations caused by adverse weather conditions.

"The scale of the military drills and its duration is rarely heard of, and one that falls into a traditional peak season for air travel would definitely have an impact on airlines' profitability," Mr. Lin said.

The curbs have added pressure on China's already congested airspace for civil aviation. Shanghai-based China Eastern Airlines Corp. canceled 22 flights scheduled for Tuesday and Wednesday because of rainstorms and airspace restrictions, it said on its official Weibo microblog account Monday, adding to hundreds of flight cancellations since the middle of July. At the two Shanghai airports, a total of 135 departure and arrival flights were canceled and an additional 428 were delayed as of Tuesday afternoon, according to flight-tracking organization FlightStats.

On Monday, 119 flights were canceled at the two Shanghai airports, accounting for 30% of the 397 flights canceled at Asian-Pacific airports, according to FlightStats. An additional 1,116 departures and arrivals were delayed at the two airports on the same day, accounting for 16% of delays in the region.

Air travel in China is booming, with passenger traffic in the first five months up 12% from a year earlier after an 11% rise in 2013, even as the nation's economic growth slows. However, the nation's airports and airlines are among the worst in the world in getting flights off on time.

Aviation experts cite military control of China's skies and inefficient operations at Chinese airports among reasons leading to excessive delays. Roughly 20% of available airspace is allotted to civil aviation and the remainder is tightly held by the military, the aviation regulator has said. In the U.S., by contrast, there are few restrictions for general aviation usage on most airspace apart from that over major metropolitan areas.

Even without the latest curbs, flight delays and cancellations are common at many Chinese airports. 

Winnie Poon, former chairwoman of Dragonair's flight-attendants union, said it isn't unusual for a round-trip flight between Hong Kong and Shanghai—which usually takes about 2 1/2 hours one way—to return to Hong Kong three hours late.

Zhang Qihuai, a Beijing-based lawyer and frequent traveler, said the government should balance the interest of China's military exercises for defense purposes with ordinary people's lives. "Military drills should not disrupt ordinary people's travel plans," he said.

Mr. Zhang, who has in the past altered travel plans to Shanghai several times because of persistent delays and cancellations, said he would consider making further changes because of the traffic curbs. "I would opt for the high-speed train instead of traveling by air if I really have to travel to Shanghai," he said.

Analysts estimate the traffic curbs will reduce China Eastern's revenue by 1% to 2% on an annualized basis. Other Shanghai-based airlines such as Spring Airlines Co., China's biggest budget carrier, and Hong Kong-based Dragonair, a China-focused unit of Cathay Pacific Airways Ltd., will also be affected by the traffic restrictions, they say.

James Wang, an official at China Eastern, said aviation regulators notified the airline of the traffic curbs. 

"We were told that airspace over eastern China is occupied by other users at some time slots, and we have adjusted our flight schedules and alerted our customers accordingly," he said, without elaborating. 

He said the airline cut its number of flights by less than 25% but declined to disclose the exact percentage.

Zhang Wuan, a spokesman at Spring Air, said that it also received notices from aviation authorities about the traffic restrictions.

"It definitely has an impact on our business during the travel peak," he said. However, he said that regulators' decision to give earlier notices about the restrictions could enhance transparency to the public and alert travelers so they could adjust their plans.

And unless such large-scale flight reductions become regular, they aren't likely to affect China's demand for air travel, which is expected to grow in a range of 9% to 10% in the foreseeable future despite the nation's economic slowdown, said UBS's Mr. Lin.

Source: Wall Street Journal by Joanne Chiu

China's airline regulator warns of flight delays

(Xinhua) China's airline regulator on Saturday issued an orange alert for massive flight delays in eastern and central China, saying the traffic capacity of some routes may drop as much as 65 percent.

"The airspace in east China will be quite busy on Saturday," the Civil Aviation Administration of China (CAAC) said in a statement, noting at least 23 airports will be affected, including those in Shanghai, Nanjing, Nanchang, Hefei, Zhengzhou and Wenzhou.

The CAAC said in an earlier statement that "rainstorms, routine military exercises and other comprehensive factors" were behind widespread flight delays and cancellations.

In Shanghai, the air traffic's busy hours will last between 8 a.m. to 12 p.m. and between 3 p.m. to 7 p.m. on Saturday, reducing air traffic capacity by 65 percent.

During the same period, the civil flight handling capacity in airspace above the Zhengzhou area will drop by 60 percent, according to CAAC.

During busy hours, flights will be unable to land at airports in the cities of Linyi, Xuzhou, Lianyungang, Huai'an, Yancheng, Changzhou, Yangzhou and Nantong, while flights departing for airports in Nanchang, Ganzhou, Jiujiang, Yichun, Jinggangshan, Jingdezhen, Wuyishan and Wenzhou will not be allowed to take off.

At least 14 flights operated by six airline companies in Shanghai were canceled as of noon on Saturday.

The CAAC is seeking to address the issue by setting up temporary air routes and allowing airlines to alter flight plans, according to the previous CAAC statement.

The CAAC also banned applications for business jet flights, additional flights and charters at the affected airports.

Source: xinhua via china.org

12 airports in eastern China affected by military drills for one month

(Want China Times) From July 20 to August 15, twelve airports in eastern China are being affected by military drills that will see a 25% reduction of flights.

The airports affected are Shanghai Hongqiao International Airport, Shanghai Pudong International Airport, Nanjing Lukou International Airport, Hangzhou Xiaoshan International Airport, Hefei Xinqiao International Airport, Jinan Yaoqiang International Airport, Wuxi Sunan Shuofang International Airport, Ningbo Lishe International Airport, Qingdao Liuting International Airport, Lianyungang Baitabu Airport, Zhengzhou Xinzheng International Airport, and Wuhan Tianhe International Airport. Passengers have been pre-warned of inevitable delays.

The People's Liberation Army started the drills codenamed Firepower 2014 Shandan on July 15 in Shandan county, Gansu province. One brigade taking part in the drills is an air defense unit stationed in Tibet. This is the first time the PLA has sent a brigade stationed in Tibet to conduct live ammunition maneuvers at low altitude.

Ten army brigades stationed in Nanjing, Shenyang, Guangzhou, Beijing, Chengdu and Jinan, and their long distance rockets, artillerymen, air defense units will move between six stations and operate under the complex electromagnetic environment around the clock for three months.

Source: Want China Times

Mountaintop airport in Guangxi

When it opens next month, the airport in Hechi in Guangxi Zhuang autonomous region should prove a nail-biting landing for arriving passengers.

Dozens of hilltops were levelled to clear way for the 850-million yuan (HK$1.06 billion) airport, built 677 metres above sea level. There is a single terminal and one runway extending 2.2km.

It can accommodate three flights an hour, compared to the 60 that the mainlands busiest airports handle.

Construction began in December 2008 and was completed at the end of last year. The airport will be a transit stop on the sole air route between Chongqing and Haikou in Hainan province. It might also add a flight from Guangzhou in the future, local media reported.

Hechi is located in northwestern Guangxi on the southern end of the Yunnan-Guizhou Plateau, which is home to about four million people.

Source: china daily

Record Profit for Hong Kong Airport Authority

(WSJ) Airport Authority Hong Kong said its full-year net profit hit a record, amid concerns about potential capacity constraints at one of the world's busiest airports.

The authority, which operates the city's international airport, said Wednesday that its net profit for the year ended March 31 rose 15% to a record HK$6.45 billion ($832.1 million), up from HK$5.62 billion a year earlier, due to strong contributions from its retail and commercial operations and stringent cost controls. Revenue rose 13% to HK$14.81 billion from HK$13.13 billion.

The results come after the unlisted, government-owned authority called Friday for the public to express its view on the environmental impact of constructing a third runway at the airport at Chek Lap Kok.

Building a new runway would help expand capacity as the authority seeks to cope with growing air traffic in the region. The new runway project, estimated to cost HK$136.2 billion, would boost the airport's handling capacity by more than 40% when it becomes operational in 2023. However, environmental groups are concerned that the expansion, to be built on reclaimed land, would cause widespread pollution and damage the marine ecosystem.

The monthlong public consultation will end July 19, after which the government will make a decision on whether to grant an environmental permit to the project. The airport authority would also need to finalize funding for the runway, the city's most expensive infrastructure project ever, before it begins construction in 2016.

Chief Executive Stanley Hui said he expects the airport's existing two runways to reach maximum capacity in 2016, three years ahead of the initial estimation, because of stronger-than-expected demand for air travel.

Hong Kong's airport handled an average of 1,055 flights departing and arriving daily in the first five months of 2014, ranking it as the world's third busiest in terms of international air passengers, after Dubai International Airport and London Heathrow Airport, according to Airports Council International.

In recent years it has battled congestion, particularly during peak hours, because of limited availability of departure and arrival slots. Neighboring Shenzhen Bao'an International Airport, which is also planning to add a third runway, has for years been attracting passengers from Hong Kong with its more extensive network in mainland China and lower prices.

Still, in the near term earnings growth at Hong Kong's airport is expected to be tempered by softer air traffic volumes. "Growing constraints in handling capacity, weaker contribution from retail operations and the higher base that was created in the last fiscal year are all contributing factors," said Finance Director William Lo.

The airport operator estimates growth of passenger traffic to slow to around 3.8%, or a total of 63 million passengers, in the year ending March 2015. The airport handled 60.7 million passengers in the previous year, up 6.1% from 57.2 million a year earlier, while cargo throughput rose 3.5% to 4.18 million metric tons from 4.04 million tons.

The airport authority said it would pay the Hong Kong government a dividend of HK$5.3 billion, up 21% from a year earlier. Its return on equity rose to 15.6% from 14.3%.

Source: Wall Street Journal by Joanne Chiu