CCID Consulting, a leading research, consulting and IT outsourcing service provider in China, said in a report that revenues from the main operations of China’s entire civil aviation industry surpassed 200 billion Yuan in 2006 and total profi ts reached nearly 10 billionyuan.
CCID Consulting analyst Liu Xu said that the civil aviation industry will maintain an overall relatively high-speed growth from 2006 through 2009. During this time the Beijing 2008 Olympic Games and other factors will lead to big-margin increases, though in 2009 the industry will experiencea small recession.
Courier services will increase relatively rapidly in the next fi ve years, except for document delivery, which will decrease due to the popularity of “courier” delivery through the Internet. World air cargo transport will increase 6 percent in the next 10-20 years, while courier services will increase twice as much at 12 percent. Courier services in the Asia-Pacifi c region, however, will increase by a minimum of 18 percent annually.
China’s courier market is currently equivalent to the added European markets and is expected to show the highest market increase at 36 percent. Currently 390,000 foreign enterprises and over 1 million Chinese enterprises need to communicate on a daily basis, the majority of whom have foreign trade documents, international payments, and transfers completed by international courier. Most experts predict that the compound growth rate of China’s international courier service will reach 30 percent over the next fi ve years.
The CCID report also found that in general, airlines arrange expansion of their transport on the basis of predictions of their future business. In China, aircraft purchases are affected to a large extent by political factors. Optimistic predictions based on explosive growth demands for civil aviation in 2004 and diplomatic and strategic arrangements of the state were conducive to a large increase in the number of planes purchased by Chinese airlines in 2005.
With fast increases in air travel and cargo transport in the next 20 years, China’s aircraft fl eet will be more than three times today’s size in 2025, increasing from 1030 planes in 2005 to 3900 planes. In the next 20 years, Chinese airlines will add 2880 new planes to their fl eet, with a total worth of US$280 billion. Of these, 2,200 will service the ever-increasing domestic market, including passenger planes and freighters. Single-aisle planes will increase the most with 1840 planes 90 percent of which will service the Chinese market and 10 percent of which will service medium-to-short-distance international markets originating from Chinese ports. The next biggest increase will be medium-sized double-aisle planes with a total of 660.
Last but not least, large aircraft had an addition of 90, accounting for about 3 percent of all new planes added to China’s airlines. One-third of the large aircraft were freighters, which will support the skyrocketing air cargo market. A very small number of large planes will specifi cally service the domestic market, whereas the rest will serve long-distance international markets.
The CCID report concluded that the competitive structure of China’s civil aviation industry will become relatively stable in the next fi ve years. Because of preferential policies and the entry of fl ight routes between large hub cities, the three major airline groups hold control of the best resources and will continue to hold the largest market shares.
Among the three airlines, Air China shows the strongest momentum for development. The Beijing 2008 Olympic Games and increases in Chinese citizens fl ying internationally will make Air China, whose fl ights account for half of all international fl ights in China, the biggest winner in the next few years. Hainan Airline (just about to be renamed Da Xinhua Airline) and Shanghai Airline in the second tier will have to face competition from low-cost aviation and foreign airlines. Judging from the current operational statistics, the former shows better prospects for development than the latter, the report said.
