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Flag of China  , Sichuan,
Thursday, November 13, 2008

Despite the global downturn and a projected economic downturn in China - it's first for nearly 30 years - China is going ahead with airports and expansions:

Airport projects get $65b for 2 years
By Xin Dingding (China Daily)


A total of 450 billion yuan ($65.88 billion) will be spent on at least 60 airport projects, which will start in the next two years, the Civil Aviation Administration of China (CAAC) said on Wednesday.

At least 40 of the projects will start next year and incur an expenditure of 200 billion yuan, a CAAC press release said.

Existing airports in Shanghai Pudong, Guangzhou, Chengdu and Nanjing will be expanded, and new ones will be built in many inland cities, including Yan'an in Shaanxi province and Daocheng in Sichuan province.

The central government has granted an additional 3 billion yuan for airport projects in the fourth quarter of this year to spur domestic demand and boost the economy, a CAAC spokeswoman said.

And "the CAAC has decided to use the additional money to expand existing airports and build new ones in western China".

Kunming, Chongqing and Nanning airports, too, will be expanded, and Hechi in the Guangxi Zhuang autonomous region and Tengchong in Yunnan province will get new airports. The cumulative expenditure on these projects would be 30 billion yuan.

The expenditure on ongoing airport projects across the country, however, adds up to 100 billion yuan, the CAAC said.

China has planned to build 97 airports from 2006 to 2020, taking their total number to 244. Once these are completed, 82 percent of the country's people will be able to reach an airport in 90 minutes. Till two years ago, only 52 percent could do that.

Experts say the huge expenditure on airport projects will boost the construction, steel and cement industries in the short term.

Li Xiaojin, a professor in Civil Aviation University of China in Tianjin, cited studies to say a 1-billion-yuan investment on airport constructions could generate an additional investment of 6 billion yuan from local governments and other sources.

But for domestic airlines, which reported consecutive drops in passenger flow in July, August and September, such investments are "not enough to pull them out of their plight", said Li Lei, an analyst with CITIC China Securities Co. These airlines want aviation oil price to be lowered and passenger flow to increase.

"But in the long-run, large-scale airport constructions can help the aviation industry a lot," Li said.

Earlier this month, the CAAC said it had spent 11.7 billion yuan of the airport construction fee to subsidize airport construction projects and to operate of small airports in western China and maintain airlines' regional flights.

Zhou Laizhen, director of CAAC's financial department, said last week that small- and medium-sized airports in central and western China, which handle fewer than 5 million passengers a year, would be given priority.

"Civil aviation enterprises are capital-intensive. And because of the global financial crisis, many of them find it hard to get financing and are thus under unprecedented pressure," he said.

That's why "subsidies are expected to relieve the capital pressure on them and help them survive the crisis. It can raise the demand for air transport, too", he said.

A total of 122 small- and medium-sized airports were subsidized in 2006, with their number going up by one last year, and about 70 percent of them were in central and western China.
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