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Old November 20th, 2004, 07:24 AM   #61
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Finnair to Launch Direct Flights to Guangzhou, September 2005
Finnair Press Release

Finnair will launch direct flights from Helsinki to Guangzhou (Canton) in China on September 2, 2005. Finnair will fly to the city three times a week. Guangzhou is located in southern China on the Pearl River Delta and is one of the country’s most important economic centres.

Guangzhou is located in the economically significant Guangdong Province through which passes a third of Chinese exports. Guangzhou is also part of the Pearl River Delta (PRD) economic and cultural powerhouse, which also includes Hong Kong and Macao. With a population of some 40 million, the PRD is one of the largest and fastest developing industrial areas in the world.

Finnair operates to ultramodern Guangzhou airport which opened this year. The airport is the first in China to offer an especially built transit area for passengers. The airport has excellent connections to other parts of mainland China as well as Hong Kong and Macao.

Finnair flies to Guangzhou from Helsinki on Tuesdays, Fridays and Sundays with flights from Guangzhou to Helsinki on Mondays, Wednesdays and Saturdays. Flight time between the two cities is approximately ten hours. Finnair offers excellent connections from these flights to the rest of its extensive European network.

Guangzhou, or Canton as it is also known, is also a historically significant city which has held on to its traditional Chinese ambiance. The town has attracted foreign trade for the past 2000 years. Guangzhou has a population of about ten million.
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Old November 21st, 2004, 10:34 PM   #62
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Mainland driving up jet fuel demand
Karen Teo, Hong Kong Standard
November 22, 2004

The mainland is driving global aviation fuel demand growth as rapid economic progress continues to see an upsurge in air travel. However, demand may not be as phenomenal next year as traffic figures return to normal and economic growth stabilises, according to the latest industry estimates.

The growth in China's aviation fuel demand is important because the mainland imports about 40 per cent of its needs. Most of that is consumed by the two largest and busiest airports, Beijing Capital International and Shanghai International.

Imports are expected to top 2.59 million tons (56,800 barrels per day) this year. This represents a record 30 per cent growth from a year ago. The normal growth rate should be in the region of 10 to 12 per cent.

The unusual spike in imports this year is largely attributed to a recovery in international traffic figures from the impact of Sars, which resulted in a plunge in worldwide travel demand, particularly in China and other Asian countries.

The International Air Transport Association (IATA) says international air traffic could grow by 14 per centin 2004, compared to flat growth in 2003. International passenger traffic for the nine months to September grew 17.7 per cent over the same period in 2003, while cargo posted gains of 14.1 per cent, according to IATA.

Reflecting improved travel demand this year, China's aviation industry is expected to report its best profits since 1997 as the domestic passenger load factor has reached 70 per cent for the first time since 1996, according to the Shenzhen Daily.

The sector, which was hit by a slowdown during the Sars epidemic last year, reported a loss of 5 billion yuan (HK$4.7 billion) in 2003.

"This year has seen incredible growth in air travel generally - 90 million passengers January to Sep-tember, representing 50 per cent year-on-year growth - and so naturally China's [aviation fuel] procurement has been strong this year as well," says John Casey of the Internal Audit and Investor Relations at Singapore-based China Aviation Oil.

The company is responsible for almost all of the mainland's aviation fuel imports.

However, it is unlikely that 2005 will replicate this growth, according to China Aviation's estimates.

Aviation fuel imports are unlikely to grow at a 30 per cent rate next year, given that 2004 already saw phenomenal growth coupled with the fact that the country's GDP is expected to slow down.

China Aviation estimates that a 10 per cent rise in aviation fuel imports to 2.8 million tons in 2005 is probable, assuming a GDP growth rate of 7 per cent.

The Asia-Pacific Economic Co-operation forum estimates that China's GDP will grow at 8.5 per cent next year, compared to 9.1 per cent in 2003.
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Old November 22nd, 2004, 07:20 AM   #63
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LSG Sky Chefs Seeking Joint Ventures in China

BEIJING, Nov 22 Asia Pulse - Eyeing an expansion in its share of the booming Chinese market, LSG Sky Chefs, which enjoys a 30 per cent share of the world's airline catering business, is seeking joint ventures at China's 30 busiest airports.

The company, which is part of the Germany-based LSG Lufthansa Service Holdings AG, runs joint ventures in eight Chinese mainland cities, including Beijing, Shanghai, Chengdu in western China's Sichuan Province, and Sanya in southern China's Hainan Province.

Serving 120,000 meals a day and currently generating annual revenue of about US$2.2 billion on the mainland, it has an 11 per cent of the share of the market, said H.K. Cheung, chief operating officer for LSG Sky Chefs' Asia-Pacific operation.

Its share is much higher for international flights from the mainland airports it serves, he said.

LSG Sky Chefs sees immense potential in the Chinese market, with more overseas visitors coming for the 2008 Beijing Olympic Games and the World Expo in Shanghai in 2010, Cheung said.

China's air travel industry will also be stimulated by the growing middle class and the flourishing domestic tourism sector, he said.

China is forecast to become the No 1 tourist destination in the world and the fourth largest source of tourists by 2020, according to the World Tourism Organization.

The number of overseas tourists grew by 21 per cent year-on-year and by 11 per cent over 2002 to 79.9 million in the first nine months of this year, according to official statistics.

The number of air passengers of Chinese airlines, which topped 90.64 million in the first nine months, is expected to set a record of more than 100 million this year.

The latest venture of LSG Sky Chefs was launched at the new Guangzhou Baiyun International Airport in Guangzhou, Guangdong Province in South China last week. LSG Asia GmbH, parent of LSG Sky Chefs, owns 30 per cent of the venture called Guangzhou Baiyun International Airport LSG Sky Chefs Co, the airport company holds 65 per cent and Beijing Hua Zhuo Investment Management Co the remaining 5 per cent.

Covering 12,000 square metres and involving 150 million yuan (US$18.07 million) of investment, the Guangzhou venture has the capacity to cook 18,000 meals a day. It is serving about 6,000 meals for 50 flights a day at present.

(XIC)
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Old November 22nd, 2004, 06:37 PM   #64
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Struggling Airlines Compete Fiercely for China Routes
By JEREMY W. PETERS


Five United States airlines are fighting for a business opportunity not seen in a decade and a half: flights to China.


Over the next 15 months, the authorities in Beijing will allow two daily round trips from a major American city to Shanghai or another large city in China. They have also approved, in principle, additional routes for both passengers and cargo, and those flights would be phased in over five years.


The first of the new routes is to begin in March 2005, the next one added in 2006, and the Department of Transportation will determine whether this second route will be for a passenger or cargo flight.


One or two routes to China do not sound like a big source of revenue for an airline, but this represents a growth market for United States airlines struggling with troubled balance sheets and increased domestic competition from low-cost carriers.


Since 1987, only two passenger airlines, Northwest and United, have flown to China, because Beijing restricts air traffic from overseas. But in July, the Transportation Department and the Civil Aviation Administration of China negotiated an agreement that would allow the number of flights between the two countries to increase nearly fivefold over the next five years, to 249 a week.


Almost as soon as the agreement was announced, the United States airlines started lining up. Three long-haul carriers - Delta, American and Continental - are competing against two smaller carriers, Hawaiian Airlines and North American Airlines. United hopes to expand its business in the China market, and so has also submitted a bid with the Transportation Department to fly the new route. Northwest has filed for only a future cargo route and not for passenger flights.


The airlines are to submit their final bids today to the Transportation Department, which will then choose the carriers for the two new trans-Pacific routes.


Unlike the airline market in the United States, where intense competition is making it difficult for most of the large carriers to be profitable, routes to Asia make money.


"China is obviously a big and growing market," said D. Scott Yohe, Delta's senior vice president for government affairs.


Since 2000, passenger traffic between the United States and China has increased 53 percent, to 185,000 passengers, in the first five months of this year, according to the Bureau of Transportation Statistics.


"There's no question it's an important route for any airline," said Dan McKinnon, the founder and president of North American Airlines, which is based at Kennedy International Airport in New York. "It doesn't matter if it's American, Delta or Continental. It's important for all of us."


Delta projected that it would get an overall economic boost of about $400 million annually if it added service to China, though some analysts called that optimistic. Hawaiian Airlines said the state of Hawaii could expect about $11 million more in tax revenue from it during the first year of service to China.


American, while indicating that it did not have hard figures for revenue, said its plan would be to fly 136,000 passengers to China the first year. "In the long run, we think this is a very profitable area of the world to be in," said William Ris, American's senior vice president for government affairs.


The competing airlines have started campaigns to win the routes. American, the largest carrier, outlines its case on a separate Web site, http://flyaatochina.com, and lists more than 100 members of Congress who have sent letters of support to Transportation Secretary Norman Y. Mineta.


Delta has set up a similar section on its Web site where people can e-mail a letter to Mr. Mineta that says in part, "Delta's proposal to provide daily nonstop service from Atlanta to Beijing in March 2006 is the best proposal." A company spokeswoman said Delta supporters had sent at least 9,000 messages.


Since September, the airlines have been trading jabs in thousands of pages of legal filings with the Transportation Department.


Hawaiian Airlines said in its filing, "Chicago simply cannot adequately serve those passengers most in need of new service to China, those in the western United States."


That was a jab at American Airlines, which would fly to China from Chicago. Then, Hawaiian took aim at Delta and Continental, declaring, "Atlanta, much like Newark, is simply not a good choice for this service."


Delta has proposed flying to China from its hub in Atlanta, and Continental from Newark.


Of North American Airlines, Hawaiian added, "Little can be said that provides a hint that North American understands the market or has the background or capability to serve the market."


In its filing, North American was more subdued. "Two legacy carriers and the three major alliances already serve China," it said. "Given this fact, why shouldn't the public have access to a low-fare carrier to China?"
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Old November 22nd, 2004, 06:53 PM   #65
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Pacific Life Insurance compensates for air crash victims

www.chinaview.cn 2004-11-22 22:30:54


BEIJING, Nov. 22 (Xinhuanet) -- The Shanghai-based Pacific Life Insurance Co. Ltd., announced Monday that it would grant a total of 900,000 yuan (108,696 US dollars) for the six crew members killed in the air crash in northwest China's Baotou.

The Pacific Life Insurance Co. Ltd said the crew members took out a collective insurance policy with the company.

The three pilots received a compensation of 200,000 yuan each, two stewards and one bodyguard for 100,000 each, according to the company, adding that the compensation has been given to the victims' family Monday morning.

Wang Guoliang, board chairman of the Pacific Life Assurance Co.Ltd., said the company has opened a telephone hotline numbered 95500 and will compensate for any passenger killed in the air crash as long as he/she is confirmed as the client of the company.

A 50-seat branch-line jet CRJ-200, with 47 passengers and six crew members aboard, crashed shortly after take-off en route from Baotou, Inner Mongolia Autonomous Region, to Shanghai, about 8 a.m.Sunday. The flight was operated by the Yunnan Branch Co., a unit of China Eastern Airlines.

All of the people aboard and a man on the ground were killed. The remains of 54 victims have been found.

Huang Yi, a senior official with the State Administration of Work Safety, said cause of the air crash was under tense investigation.
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Old November 22nd, 2004, 10:48 PM   #66
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Copyright 2004 Financial Times Information
Il Sole 24 Ore
November 19, 2004

Italy's Blue Panorama to Fly to China

The Italian airline Blue Panorama has announced that it is to offer direct flights from Milan Malpensa, via Venice, to Shanghai from November 30. In so doing, the carrier will end the monopoly which Air China has held on flights between Italy and China since the Italian flagship airline, Alitalia, abandoned its own services on the route. Alitalia's flights to the People's Republic will, moreover, resume on December 2, when it begins flying between Milan Malpensa and Shanghai three times a week.

Blue Panorama, which also flys twice-weekly to Bangkok from Malpensa and Bologna, is now negotiating a commercial agreement with the Chinese carrier China Eastern. For 2004, it expects to show turnover of 138m euros.
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Old November 23rd, 2004, 05:59 AM   #67
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Tuesday November 23, 5:34 AM
Bombardier shares fall as China grounds jets

MONTREAL (Reuters) - Shares of Bombardier Inc. fell 7.4 percent Monday as China grounded the company's locally operated jets, a day after 54 people died in the crash of one of its regional airliners in Inner Mongolia.

Bombardier's class B shares fell 20 Canadian cents, or 7.4 percent, to close at C$2.50 in Toronto Monday, approaching its year low of C$2.43. The stock's year high is C$7.13.

A 50-seat Bombardier CRJ200 operated by China Eastern airlines crashed into a frozen lake seconds after takeoff from Baotou in Inner Mongolia Sunday, killing 53 people on board and one on the ground. The jet was en route to Shanghai.

Horst Huenekin, analyst at Westwind Partners, said it was too early to say what long-term effect the crash might have on Bombardier, the world's third-largest civil aircraft maker, as the investigation will examine a range of issues.

Those include the possibility of pilot error, maintenance of the aircraft, and design of the jet.

China Eastern grounded its five other CRJ200s. China's civil aviation authority ordered other Chinese airlines operating 24 others to ground their Bombardier jets beginning Tuesday for maintenance checks.

"It's purely precautionary and we expect that it will take a couple of days," said Bombardier spokeswoman Sylvie Gauthier.

Bombardier said six Chinese airlines had been operating a total of 30 of its regional jets, including 28 of its 50-seaters and two CRJ700 70-seaters.

Bombardier said it sent an accident response team to the crash site and Canada's transportation safety agency had also dispatched an investigator.

($1=$1.18 Canadian)
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Old November 23rd, 2004, 06:20 AM   #68
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Struggling Airlines Compete Fiercely for China Routes
By JEREMY W. PETERS
22 November 2004
The New York Times

Five United States airlines are fighting for a business opportunity not seen in a decade and a half: flights to China.

Over the next 15 months, the authorities in Beijing will allow two daily round trips from a major American city to Shanghai or another large city in China. They have also approved, in principle, additional routes for both passengers and cargo, and those flights would be phased in over five years.

The first of the new routes is to begin in March 2005, the next one added in 2006, and the Department of Transportation will determine whether this second route will be for a passenger or cargo flight.

One or two routes to China do not sound like a big source of revenue for an airline, but this represents a growth market for United States airlines struggling with troubled balance sheets and increased domestic competition from low-cost carriers.

Since 1987, only two passenger airlines, Northwest and United, have flown to China, because Beijing restricts air traffic from overseas. But in July, the Transportation Department and the Civil Aviation Administration of China negotiated an agreement that would allow the number of flights between the two countries to increase nearly fivefold over the next five years, to 249 a week.

Almost as soon as the agreement was announced, the United States airlines started lining up. Three long-haul carriers -- Delta, American and Continental -- are competing against two smaller carriers, Hawaiian Airlines and North American Airlines. United hopes to expand its business in the China market, and so has also submitted a bid with the Transportation Department to fly the new route. Northwest has filed for only a future cargo route and not for passenger flights.

The airlines are to submit their final bids today to the Transportation Department, which will then choose the carriers for the two new trans-Pacific routes.

Unlike the airline market in the United States, where intense competition is making it difficult for most of the large carriers to be profitable, routes to Asia make money.

''China is obviously a big and growing market,'' said D. Scott Yohe, Delta's senior vice president for government affairs.

Since 2000, passenger traffic between the United States and China has increased 53 percent, to 185,000 passengers, in the first five months of this year, according to the Bureau of Transportation Statistics.

''There's no question it's an important route for any airline,'' said Dan McKinnon, the founder and president of North American Airlines, which is based at Kennedy International Airport in New York. ''It doesn't matter if it's American, Delta or Continental. It's important for all of us.''

Delta projected that it would get an overall economic boost of about $400 million annually if it added service to China, though some analysts called that optimistic. Hawaiian Airlines said the state of Hawaii could expect about $11 million more in tax revenue from it during the first year of service to China.

American, while indicating that it did not have hard figures for revenue, said its plan would be to fly 136,000 passengers to China the first year. ''In the long run, we think this is a very profitable area of the world to be in,'' said William Ris, American's senior vice president for government affairs.

The competing airlines have started campaigns to win the routes. American, the largest carrier, outlines its case on a separate Web site, http://flyaatochina.com, and lists more than 100 members of Congress who have sent letters of support to Transportation Secretary Norman Y. Mineta.

Delta has set up a similar section on its Web site where people can e-mail a letter to Mr. Mineta that says in part, ''Delta's proposal to provide daily nonstop service from Atlanta to Beijing in March 2006 is the best proposal.'' A company spokeswoman said Delta supporters had sent at least 9,000 messages.

Since September, the airlines have been trading jabs in thousands of pages of legal filings with the Transportation Department.

Hawaiian Airlines said in its filing, ''Chicago simply cannot adequately serve those passengers most in need of new service to China, those in the western United States.''

That was a jab at American Airlines, which would fly to China from Chicago. Then, Hawaiian took aim at Delta and Continental, declaring, ''Atlanta, much like Newark, is simply not a good choice for this service.''

Delta has proposed flying to China from its hub in Atlanta, and Continental from Newark.

Of North American Airlines, Hawaiian added, ''Little can be said that provides a hint that North American understands the market or has the background or capability to serve the market.''

In its filing, North American was more subdued. ''Two legacy carriers and the three major alliances already serve China,'' it said. ''Given this fact, why shouldn't the public have access to a low-fare carrier to China?''
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Old November 23rd, 2004, 08:18 AM   #69
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China's Junyao Group aims to offer scheduled airline service

SHANGHAI, Nov 23 (AFP) -
Junyao Group, a privately-owned mainland Chinese conglomerate involved in aviation, dairy and real estate, has applied to set up a new airline, state press reported Tuesday.

The Shanghai-based company, originally set up by recently deceased entrepreneur Wang Junyao, was the first operator of private chartered flights in China, the Liberation Daily reported.

Junyao, which has total assets of some 3.5 billion yuan (420 million dollars), is awaiting official approval to run regular scheduled flights. Approval is expected by the end of the year, the newspaper said.

The company began flying charter flights from Changsha in central Hunan province to Zhejiang's Wenzhou in 1991.

Company officials were not immediately available for comment.

Junyao will join a growing list of aspiring scheduled airline operators.

Three other chartered carriers -- Aukai, Spring and Eagle United -- have also applied to operate scheduled flight services.

Junyao already owns an 18 percent-stake in Wuhan Airlines, a regional airline controlled by China Eastern Airlines.
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Old November 23rd, 2004, 12:37 PM   #70
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Quote:
Originally Posted by hkskyline
Struggling Airlines Compete Fiercely for China Routes '
Uh, I already posted this article yesterday.
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Old November 23rd, 2004, 12:56 PM   #71
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Quote:
Originally Posted by hkskyline
Struggling Airlines Compete Fiercely for China Routes
By JEREMY W. PETERS
22 November 2004
The New York Times

Five United States airlines are fighting for a business opportunity not seen in a decade and a half: flights to China.

Over the next 15 months, the authorities in Beijing will allow two daily round trips from a major American city to Shanghai or another large city in China. They have also approved, in principle, additional routes for both passengers and cargo, and those flights would be phased in over five years.

The first of the new routes is to begin in March 2005, the next one added in 2006, and the Department of Transportation will determine whether this second route will be for a passenger or cargo flight.

One or two routes to China do not sound like a big source of revenue for an airline, but this represents a growth market for United States airlines struggling with troubled balance sheets and increased domestic competition from low-cost carriers.

Since 1987, only two passenger airlines, Northwest and United, have flown to China, because Beijing restricts air traffic from overseas. But in July, the Transportation Department and the Civil Aviation Administration of China negotiated an agreement that would allow the number of flights between the two countries to increase nearly fivefold over the next five years, to 249 a week.

Almost as soon as the agreement was announced, the United States airlines started lining up. Three long-haul carriers -- Delta, American and Continental -- are competing against two smaller carriers, Hawaiian Airlines and North American Airlines. United hopes to expand its business in the China market, and so has also submitted a bid with the Transportation Department to fly the new route. Northwest has filed for only a future cargo route and not for passenger flights.

The airlines are to submit their final bids today to the Transportation Department, which will then choose the carriers for the two new trans-Pacific routes.

Unlike the airline market in the United States, where intense competition is making it difficult for most of the large carriers to be profitable, routes to Asia make money.

''China is obviously a big and growing market,'' said D. Scott Yohe, Delta's senior vice president for government affairs.

Since 2000, passenger traffic between the United States and China has increased 53 percent, to 185,000 passengers, in the first five months of this year, according to the Bureau of Transportation Statistics.

''There's no question it's an important route for any airline,'' said Dan McKinnon, the founder and president of North American Airlines, which is based at Kennedy International Airport in New York. ''It doesn't matter if it's American, Delta or Continental. It's important for all of us.''

Delta projected that it would get an overall economic boost of about $400 million annually if it added service to China, though some analysts called that optimistic. Hawaiian Airlines said the state of Hawaii could expect about $11 million more in tax revenue from it during the first year of service to China.

American, while indicating that it did not have hard figures for revenue, said its plan would be to fly 136,000 passengers to China the first year. ''In the long run, we think this is a very profitable area of the world to be in,'' said William Ris, American's senior vice president for government affairs.

The competing airlines have started campaigns to win the routes. American, the largest carrier, outlines its case on a separate Web site, http://flyaatochina.com, and lists more than 100 members of Congress who have sent letters of support to Transportation Secretary Norman Y. Mineta.

Delta has set up a similar section on its Web site where people can e-mail a letter to Mr. Mineta that says in part, ''Delta's proposal to provide daily nonstop service from Atlanta to Beijing in March 2006 is the best proposal.'' A company spokeswoman said Delta supporters had sent at least 9,000 messages.

Since September, the airlines have been trading jabs in thousands of pages of legal filings with the Transportation Department.

Hawaiian Airlines said in its filing, ''Chicago simply cannot adequately serve those passengers most in need of new service to China, those in the western United States.''

That was a jab at American Airlines, which would fly to China from Chicago. Then, Hawaiian took aim at Delta and Continental, declaring, ''Atlanta, much like Newark, is simply not a good choice for this service.''

Delta has proposed flying to China from its hub in Atlanta, and Continental from Newark.

Of North American Airlines, Hawaiian added, ''Little can be said that provides a hint that North American understands the market or has the background or capability to serve the market.''

In its filing, North American was more subdued. ''Two legacy carriers and the three major alliances already serve China,'' it said. ''Given this fact, why shouldn't the public have access to a low-fare carrier to China?''


authorities in Beijing? i have always thought that it's up to U.S. authorities? (see some previous posts)
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Old November 24th, 2004, 02:14 AM   #72
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Wednesday November 24, 6:59 AM
U.S. Airlines Vie for Flights to China

(AP) Three of the nation's largest airlines and several smaller carriers have made their final presentations to federal regulators and are taking potshots at each other in a competition to win the first new flights between the United States and China in more than a decade.

The stakes are high. Facing fierce competition at home, U.S. carriers view China as a potentially lucrative market with a growing economy. The winner will join UAL Corp.'s United Airlines and Northwest Airlines Corp., which already fly to China.

American Airlines, the largest U.S. carrier, and Houston-based Continental Airlines Inc. are bidding to launch service next year. American would fly between Chicago and Shanghai, and Continental would use its hub at Newark, N.J., to serve Beijing and Shanghai.

Atlanta-based Delta Air Lines Inc. seeks approval for an Atlanta-Beijing route beginning in 2006. Hawaiian Airlines Inc. and North American Airlines are also in the bidding, as are several cargo carriers.

Under an agreement between the two governments, the U.S. Department of Transportation can pick one U.S. carrier to operate seven weekly nonstops beginning next year and another _ either a cargo airline or a combination passenger-and-cargo carrier _ to start in 2006.

In filings with the agency this week, the airlines touted their own credentials while taking swipes at their rivals.

American, a unit of Fort Worth-based AMR Corp., bragged about support from more than 100 members of Congress and played up Chicago's location in the middle of the country, easily reached with connecting flights from many cities. American sniffed that Continental's bid would have little impact beyond the New York area, which is already served by Air China.

Continental responded that American's China service from Chicago would be too similar to that of United Airlines.

"Do we need American and United flying duplicate service from Chicago? We think not," said Rahsaan Johnson, a Continental spokesman. "New York is the largest market between the United States and China, and no U.S. carrier serves that route."

Both American and Continental are also interested in the 2006 award, putting them in competition with Delta.

American disparaged Delta's proposal to fly from Atlanta, which it said is "too far south and east." Continental said Atlanta isn't a big market for U.S.-China travel.

Delta fired back that more than two-thirds of Chinese travelers to the United States visit interior cities beyond the four current "gateways." Delta said it provides the best network of connecting U.S. flights in the "critically underserved" area east of the Mississippi River.

Hawaiian, which filed for bankruptcy protection last year, said in its bid it could serve the neglected West Coast market to China. New York-based North American, a charter airline making the move to scheduled service, wants to fly from Oakland, Calif., via Honolulu, to Shanghai.

Dan McKinnon, a former aviation regulator who is president of privately-held North American, said his airline could scoop up connecting passengers on other low-cost carriers and fly them to China.

"We're the only low-cost applicant in the field," McKinnon said. "One-third of the passengers are on low-cost carriers. Why shouldn't this go to a low-cost carrier?"

Although China's population exceeds 1 billion, the number of air travelers is a fraction of the U.S. market. Analysts and industry consultants say Chinese officials are beginning to encourage travel and tourism, however. They say air traffic in China is growing along with the economy, making the market attractive to U.S. and European airlines.

"It's a decent opportunity right now, but in the future it's going to be phenomenal," said Adam Pilarski, an executive with aviation consultants Avitas Inc. in Reston, Va.

Consultants say another appeal of the market is that the Chinese government limits flights, preventing the kind of competition that has led to lower fares _ and huge losses _ for carriers in the U.S. market.

Shares of AMR closed unchanged at $8.76 on the New York Stock Exchange Tuesday. Continental shares ended the session up 26 cents, at $10.99, and Delta shares were down 6 cents, to $6.55.
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Old November 24th, 2004, 07:34 AM   #73
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China will not halt launch of private carriers despite crash - analysts
23 November 2004

BEIJING (AFX) - China is unlikely to put on hold plans to launch privately-owned carriers after a weekend crash killed 55 people, but the aviation regulator is expected to impose tougher safety standards and raise the threshold for newcomers, industry analysts said.

A China Eastern Airlines Bombardier CRJ-200 plunged into the water Sunday morning shortly after taking off from the northern city of Baotou on a flight to Shanghai. It was the country's deadliest aviation disaster in two years. Investigators have not yet determined the cause of the crash but have ruled out terrorism.

'They (the new airlines) will take off sooner or later, but will have to pass tougher safety checks, as no one wants to see another disaster,' said Gao Xiaoqing, an analyst with Great Wall Securities.

Other analysts said they agreed.

'I don't think one accident will cause fundamental changes in government policies towards private airlines,' Ma Ying, an analyst with Haitong Securities told XFN-Asia.

The Bombardier was operated by Yunnan Air, a small airline under the wing of major carrier China Eastern.

The crash followed a report by state media last week touting the safety record of domestic airlines -- more than five mln flying hours without an accident.

It triggered market concerns that the regulator might reverse course and slow its plans to allow the creation of at least three privately-funded carriers.

But analysts said the government has been encouraging private investment in the aviation sector to keep up with air traffic demand that has been growing at an average rate of 15 pct over the past years as the economy surges ahead.

China Eastern's stock price fell 0.10 yuan, or 2.18 pct, to 4.48 yuan today.

Haitong's Ma said the General Administration of Civil Aviation of China will no doubt impose more stringent safety standards and raise the threshold for aspiring new airlines.

Since the beginning of this year, the regulator has given the initial go-ahead to three private carriers -- Eagle United, funded by an IT firm based in Guangdong, Spring Airlines, backed by a Shanghai travel agency, and Aukai Airlines, co-financed by three local investment firms.

None of the companies has any experience in running an airline.

While the trio await their flying licenses, Shanghai-based chartered air service operator Junyao Group, also reportedly filed an application this week to launch a regular airline.

Aviation officials were not available for comment today, but a spokeswoman told XFN-Asia in an earlier interview that while encouraging more qualified candidates to enter the aviation market, the regulator will exercise caution in issuing new licenses, because 'safety has always been our utmost concern.'

China has three major state-run airline groups - Air China, China Eastern Airlines and China Southern Airlines.

There are around two dozen smaller regional carriers, including Hainan Airlines Co Ltd (SHA 600221; SHB 900945) and Shanghai Airlines Co Ltd (SHA 600591), backed by local governments.

The country also has four cargo carriers and a newly-formed joint venture -- Jade Cargo International -- financed by Deutsche Lufthansa AG unit Lufthansa Cargo, DEG Bank and Shenzhen Airlines.
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Old November 26th, 2004, 05:00 AM   #74
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PLANE CRASH RAISES VITAL SAFETY QUESTIONS
By Zhi Ming
26 November 2004
China Daily

The recovery of the two cockpit recorders of the crashed plane in Baotou, Inner Mongolia Autonomous Region will hopefully help decode the cause of the accident, but it is not necessarily going to dispel the growing "flying panic" of the public.

On Sunday, the 50-seat branch-line jet CRJ-200, with 47 passengers and six crew members on board, dived into a lake in Nanhai Park in Baotou shortly after it took off. All on board and two on the ground were killed.

It has been reported that in the wake of the Baotou accident, travellers have backed off from taking planes, especially small ones. As a result, air fares are on the decline on some routes.

Human error has been ruled out as the cause of the crash, said one member of the investigation team, according to the Xinhua News Agency.

Li Fenghua, general manager of China Eastern Airlines, which operates the plane, also said the widely rumoured possible causes, such as irregular early take-off, careless safety checks and operational error by a tired crew, were not well founded.

But the public still doubts the airline's managerial and operational soundness.

The Beijing Times reported that three passengers on the plane used the identity cards of others to get on board. Li Fenghua said this could not have caused the accident. He may be right, but the loophole does pose great potential hazards for safety.

A series of accidents - although not fatal - have occurred recently, which reinforces the public's fear.

On Monday, a Bombardier CRJ-200 plane experienced landing gear problems in Northeast China's Jilin Province, just a day after the crash of the same type of aircraft in Baotou. The plane had to circle in the air for more than an hour to dump fuel before safely returning to the take-off airport.

On Tuesday, an Air China plane slid off the runway onto nearby grassland after landing at the Kunming airport in Southwest China's Yunnan Province.

It is understandable that many are wondering why these accidents are happening and whether they are purely accidental. Something is wrong.

Are those accidents caused by operational or mechanical malfunctions? Is there any defect in the planes themselves? The public will not feel reassured before questions like these are answered.
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Old November 26th, 2004, 07:47 AM   #75
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China: Beyond the Factory Floor:
Delivery Services Expand Role --- DHL, FedEx, UPS See Opportunity in Managing Supply Chains

By Bruce Stanley
26 November 2004
The Asian Wall Street Journal

Shanghai -- EXPRESS DELIVERY companies that gambled years ago on the potential demand for their services in China are finally cashing in on growth in a burgeoning industry.

But DHL, FedEx Corp. and United Parcel Service Inc. are already looking beyond expediting components and finished goods into Chinese factories and on to overseas buyers, to what they see as an even greater opportunity: Helping manufacturers in China save time and money by managing their increasingly complex supply chains.

As Chinese exports become more sophisticated, factories here are working harder to juggle their supplies to avoid crippling shortages and costly build-ups of inventory. Increasing competition means that manufacturers also have to produce faster and smarter -- a need that opens up promising niches for the logistics companies. At stake is a market for outsourced logistics services in China that consultants at McKinsey & Co. value at US$84 billion, and say could more than double by 2010.

FedEx, UPS and DHL already fulfill similar roles elsewhere. Indeed, as growth sputters for air deliveries in the U.S. market and ground-delivery firms encroach on their turf, the three have identified everyday supply-chain needs such as consolidating freight, managing warehouses and fulfilling orders as dynamic new prospects.

In China, however, they're doing so in a country that is both a high-tech workshop to the world and a quagmire of choked roads, erratic customs practices and frequent corruption.

The challenge of improving a client's supply chain is "geometrically greater" than moving goods quickly from one place to another, says Ron Jordan, the head of business development in Asia for UPS' Supply Chain Solutions unit. UPS, for example, now controls more than 92,900 square meters of warehouse space to help manage inventories for clients in China's industrial heartland around Shanghai and the southern manufacturing hub of Guangzhou.

Inside a UPS warehouse on the outskirts of Shanghai, electric forklifts zip quietly among four-story steel shelves stacked with palettes of data-storage devices from Thailand and bulk bags of fiberglass from Belgium. Nicole Wang, a supervisor, says she authorizes daily deliveries of up to 4,000 boxes of components on behalf of electronic equipment maker Molex Inc., of Lisle, Illinois. Molex itself doesn't need to get involved in the everyday movement of goods, except to alert her about incoming inventory and to verify any incomplete shipping documents.

"It makes perfect sense. Nobody wants to own more square footage than they need," Mr. Jordan says.

DHL, a subsidiary of Germany's Deutsche Post World Net, estimates that its customers can usually save 10% to 20% on their distribution costs by outsourcing management of their supply chains. It already stores emergency spare parts for its clients and inspects products rejected by their buyers as faulty. Increasingly, DHL also makes licensed repairs on damaged goods.

"It's not contributing a huge amount to the bottom line, but it's adding value and helping us build relationships with our customers," says John Mullen, the chief executive officer in charge of DHL's express delivery business in Asia and the Americas. Operating from a hub in Hong Kong, the company plans to enlarge its supply-chain business next year by building three new logistics centers and 16 warehouses to store parts across the mainland.

This push into logistics comes as the big three express companies also ramp up their core business in China. None of them will disclose their financial performance in China, but all say their businesses are growing quickly. Last month, following an air services pact between the U.S. and China, FedEx won approval to double the number of its flights here while rival UPS secured a three-fold increase of its own. Both U.S. companies plan to locate freight-handling hubs in strategic Chinese cities to compete more aggressively with DHL. The potential is enormous: FedEx says each of its daily flights from Guangzhou is already "maxed out" with cargo.

Their respective shares in the emerging logistics market are hard to determine, but each is forging ahead. All three are expanding in China by riding the coattails of relationships they already have with multinational customers elsewhere.

FedEx of Memphis, Tennessee, won the right to manage two "parts banks" for radiotherapy machines built by Varian Medical Systems of Palo Alto, California, by leveraging on experience it gained running a similar facility for Varian in the Netherlands. If a Varian machine in a Chinese hospital breaks down, FedEx processes an electronic order for a replacement part, chooses the part from among 1,000 items in each part bank, and then packs and delivers it to the hospital -- usually all within the same day.

Before FedEx took over this function earlier in the year, a Varian staffer in Shanghai would have to drive to a government-run parts bank and wait there for someone to come and unlock the door. The employee would then rummage for the required part, drive back through dense traffic to Varian's office and -- finally -- chase down a courier to take the item to the hospital needing it. Moving back and forth across this city of 13 million people took so long that the staffer would often postpone trips until there were two or three orders in hand, says Varian's global logistics manager Virginia Boyle.

DHL developed a Web-based program for just-in-time deliveries to a company that makes power-supply equipment for cellphones and computers. The client, Astec Power of Carlsbad, California, can now monitor each component and analyze the costs of a single item at any point in its supply chain, enabling it to squeeze expenses "tremendously," said the company's logistics development manager Terry Chan. Supplies now take 40% less time to reach its factory in the southern Chinese city of Shenzhen. At the same time, Astec Power, a division of Emerson Network Power, has more than doubled its output.

"The problem is that the regulatory environment hasn't really caught up to support" this larger logistics role, said David Cunningham, president of FedEx's Asia Pacific Division.

Delayed customs clearances also vex producers, and customs practices can vary in different parts of the country. Exporters frequently subdivide big shipments into several smaller batches, then ship each consignment by a different route to try to minimize the risk of a major hold-up. Industry specialists say some customs officials demanding bribes deserve part of the blame.

Truckers must obtain a separate approval from authorities in each province they enter. And the sheer number of trucking firms is a challenge. China has 2.7 million trucking companies, according to the U.S.-China Business Council. Many are mom-and-pop outfits with just one vehicle.

"Their drivers don't wear uniforms, and their trucks may be 20 years old," says DHL's Mr. Mullen. "But some of them are charging only 20% of what we do."
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Old November 26th, 2004, 08:54 PM   #76
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China Eastern Flight Makes Emergency Landing - Report
26 November 2004
Dow Jones International News

SHANGHAI (AP)--A China Eastern Airlines (CEA) jetliner with 300 passengers aboard made an emergency landing in southern China after its cabin pressurization system failed, a newspaper reported.

No one was hurt Wednesday when the China Eastern Airbus A300, flying from Shanghai to the southern Chinese island of Hainan, was diverted to the southern city of Guangzhou, the Yangcheng Evening News reported.

Passengers felt nausea and discomfort in their ears before the captain announced problems with the cabin pressure and diverted the flight, the newspaper said in its Thursday edition.

China Eastern's publicity office referred questions to a spokesman who it said wasn't immediately available.

The incident came just days after a China Eastern Bombardier CRJ-200 crashed Sunday in northern China, killing 55 people.

Investigators are looking for the cause of the disaster, but say they have found no evidence of terrorism or other intentional damage.
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Old November 29th, 2004, 04:11 AM   #77
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Shanghai airport on verge of surpassing passenger count in HK
Murray Bailey
29 November 2004
South China Morning Post

In the battle for regional airport supremacy, Hong Kong looks safe compared with its neighbours.

But a little further away, Shanghai looks likely to overtake Hong Kong this year.

Traffic recorded at Shanghai's two airports has come a long way fast.

Last year, when traffic in Hong Kong was hit harder by Sars than was Shanghai, Hong Kong was still ahead for the whole year - counting nearly 27 million passengers compared with Shanghai's 25 million.

But this year has been a different story, with Shanghai reporting a record year, according to data from the Airports Council International.

The passenger count between Hong Kong and Shanghai varied by only a few thousand for the first seven months of the year.

But with Shanghai growing much faster, it seems certain to overtake Hong Kong by year-end. Closer to home, Guangzhou is expected to expand quickly with its new airport.

At present, it has little more than half of Hong Kong's passenger count. Moreover, expansion of new routes and new airlines can be a slow process.

The most recent expansion at Guangzhou has been with flights from its home-base airline China Southern and its subsidiaries, although foreign airlines are expected to steadily add and expand services to Guangzhou. And some of that growth will result in losses to Hong Kong.

The growing competition between the bigger airports - such as Guangzhou, Hong Kong, and Shanghai - may mean that smaller airports in the region will lose out.

For instance, despite their smaller size (which would usually mean faster percentage growth), both Macau and Shenzhen are growing at a slower pace this year than the big airports.

And, given the fall in traffic last year as a result of Sars, Macau's 37 per cent growth this year can be seen as less than impressive.

If Cathay completes its planned 10 per cent purchase of Air China - whose group includes Air Macau and Dragonair - the three SAR airlines may work together.

Currently they are fierce commercial rivals. How are they doing?

When compared with 2002 - to lose the distortion caused by Sars - it seems that in broad terms, Air Macau is struggling, Cathay is doing well, but Dragonair is storming ahead.

Some returns, however, show there are some less-obvious areas of concern.

Over the first three quarters of this year, all three were filling less of their capacity than in 2002 - considered a danger sign when there is downward pressure on fares and freight rates, as there is today.

Yet Cathay, despite being the biggest of the three, is filling a greater portion than its smaller rivals - a comfortable 77 per cent for the passenger measure, and 72 per cent for passengers and cargo.

Load factors at both Air Macau and Dragonair run in the 60s, and are particularly weak in traffic measures that include freight.
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Old November 29th, 2004, 09:15 PM   #78
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www.chinaview.cn 2004-11-29 08:21:17

Lufthansa plots strategy for more market share

BEIJING, Nov. 29 (Xinhuanet) -- German-based global aviation giant Deutsche Lufthansa AG (Lufthansa) is brewing a bold long-term business strategy to further tap into the fledgling but promising Chinese market, thanks to the new and more liberal Sino-German aviation pact, company executives said.

"We will boost our flight capacity to China by 50 per cent from now to 2007, because of the new market-opening deal between China and Germany," Thierry Antinori, executive vice president marketing & Sales of Lufthansa, told China Daily in an interview recently.

The senior marketing manager, however, was tight-lipped on details about Chinese destination cities that Lufthansa intends to fly, China Daily reported Monday. "I'd better not give our opponents any clue about our good ideas," Antinori said.

A senior official with the General Administration of Civil Aviation of China (CAAC), the country's aviation watchdog, told China Daily recently, on condition of anonymity, that China and Germany have already reached a more open aviation agreement, granting passenger and cargo carriers from both sides more freedom to fly to each other's market.

"The new agreement is a good move, since it makes change and will strengthen relationships between China and Germany. It is in line with the robust economic relationship between the two countries," Antinori said.

Despite being quite ambitious in its new business expansion plan, the German flagship carrier makes it crystal clear that rather than attempting to make instant money, it would gradually take advantage of the new market-opening aviation agreement.

"We will take off step by step with the new market growth. Once the market growth is enhanced, we can embrace the opportunity for further business expansion," Wolfgang Mayrhuber, chairman and chief executive officer of Lufthansa, said.

"(Therefore) we will continue to maintain a gradual business expansion strategy in China. If we dump capacity, the ticket price will come down and our local business in China will become not profitable," Mayrhuber said.

The unidentified official from CAAC also disclosed that similar negotiations with more European countries, such as Spain, about possible market-opening aviation pacts will be held by the end of this year, which means maybe more competition for Lufthansa.

"No, we are not afraid. Instead, we are open to competition, as long as the competition is fair. In fact, we are not afraid of more competition. We have established our position as a global carrier, and our hubs Frankfurt and Munich are located in the centre of Europe, which give us an geological upper hand in international transfer flights," Antinori said.

To cement its status as a global airliner, Lufthansa will offer its first class passengers a new dimension in travel from December 1. Concierge services, limousine-transfer direct to the aircraft, an exclusive ambience with gourmet restaurant and personal attention for guests from arrival at the airport right through to take-off are the special features of the service.

The exclusive service starts on the ground in Frankfurt, in the newly-built First Class terminal and in new First Class lounges.

Lufthansa is leading other European competitors in China in terms of flights available locally. It flies to Beijing, Shanghai and Hong Kong from both Frankfurt and Munich as well as to Guangzhou from Munich via Shanghai and offers a total of 41 weekly flights.

Lufthansa has been co-operating with Air China since October 2000. It flies to the Chinese mainland's major hubs Beijing, Shanghai and Guangzhou (via Shanghai) through code sharing agreements with Air China.

Also through recently expanded code sharing, Lufthansa can reach second tier cities like Dalian, Chengdu, Hangzhou, Nanjing and Xi'an.

(China Daily)
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Old November 30th, 2004, 07:43 AM   #79
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Busy skies over the 'factory of the world'
Paloma Khan
29 November 2004
International Freighting Weekly

Lufthansa Cargo, British Airways World Cargo, UPS and FedEx are just some of the operators to increase frequencies to China, with more planning to follow suit next year.

FedEx opened a new Chinese HQ in Shanghai last month in response to the "explosive growth" in the market, says David Cunningham, president AsiaPacific.

"China has taken shape rapidly, but still has great capacity for growth, and much of this remains untapped. Air cargo figures from China are 10 times greater than a decade ago.

FedEx recorded a 52% increase in export volumes from China during Q2 of this year. It operates 23 weekly flights from the US to China, the most dedicated cargo flights between the two countries operated by any of the integrators, says Cunningham.

He has approached the US Department of Transport to consider awarding FedEx six more, including one to Guangzhou, hoping to gain a share of the 12 new slots awarded to the US last month.

"We are working on the best way to expand our hub operations in Asia. We have been holding discussions with the Guangzhou Baiyun International Airport Company and the relevant government officials." The integrator also has plans to open eight additional joint-venture branch offices in China between June next year and May 2006. Its ultimate goal is to add 100 new cities.

Lufthansa Cargo introduced a thrice-weekly freighter from Frankfurt to Guangzhou at the beginning of this month in a bid to be closer to the huge number of manufacturers operating in and around the city widely considered "the factory of the world". Previously goods would be trucked to Lufthansa's cargo hub at Hong Kong.

"We have actively been trying to expand our presence in southern China, particularly around the Pearl River Delta. If services take off the way we expect, we will add more frequencies next year, " says Frank Naeve, general manager sales, greater China, Hong Kong and Taiwan.

"Business out of China is booming at the moment and we are seeing one of the biggest high seasons ever.

October is normally quiet and it looks likely to go on into next year." One of reasons he has such high hopes for next year is the abolition of textile quotas by the WTO from 1 January.

Previously, there was a ceiling placed on the value of textiles any one country could export. Financial analysts believe countries with competitive advantages, like low labour costs, natural resources and geographical proximity to importing countries, will at last be able to realise their export potential.

China is one country predicted to benefit from the change in rules. According to Chiedu Osawake, director of the textile division at the WTO, the combined value of China's textile and clothing exports was US$53bn ( t41bn) in 2001, $62bn ( t48bn) in 2002 and $73bn ( t56bn) last year.

Naeve hopes Lufthansa can win a share of any extra garment volumes. "There is an expectation of a boom in textiles from China because of volume and price ratio." Like every other airline, Lufthansa's trade is largely westbound from Asia, with European retailers stocking up for Christmas having a significant impact on cargo volumes, at times creating a capacity shortage. "Certainly it's tight from Shanghai and Hong Kong, but it's not as bad in Beijing, " says Naeve.

"Eastbound, the market is not as positive but we combat this by making additional stops – in the Middle East, for example, " he adds.

Despite the carrier's push into southern China, Hong Kong remains its major regional cargo hub, with 17 freighters a week between Hong Kong and Frankfurt, shared with Cathay Pacific.

Naeve is keen to point out that the new Guangzhou service is not taking cargo away from the Hong Kong flights and that there is still plenty of cargo for all Lufthansa's frequencies.

With five freighters from Shanghai to Frankfurt, and an additional four serving Shanghai and Beijing, in cooperation with Air China Cargo, the carrier has the market covered, but plans to continue expanding.

"We are not moving away from Hong Kong. We believe it will remain important, but we constantly look at new points to serve with freighters. We are looking at the next city to develop now. Our growth pattern is to serve new markets as well as cementing our position, " adds Naeve.

British Airways World Cargo saw a 20% increase in volumes last year, much of which was driven by an increase in freighter schedules. "Out of Hong Kong, we moved from five a week to seven during the second half of the year, " says Chris Chan, area manager operations and commercial for China/Hong Kong, Taiwan and the Philippines.

BAWC also operates a weekly freighter from Shanghai, stopping at Mumbai and Delhi. "It is certainly performing up to the commitment put forward in the business case.

"The split between Shanghai and India is 80% and 20% respectively. We are seeing a lot of electronics and hi-tech components out of Shanghai and there is certainly a growth in garments.

"There is a general increase in cargo from the manufacturing areas around the Yangtze River Delta." BAWC serves southern China with bellyhold capacity on its 17 weekly passenger services out of Hong Kong, and northern China, with a four-times-a-week passenger service from Beijing.

Chan believes the Hong Kong market is strengthening. "It has gone through an economic reform and is more of a service industry.

"However, Hong Kong will continue to be the logistics centre for the Pearl River Delta because of its airline frequencies and also the seaport infrastructure, which will take a long time to recreate on the mainland."
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Old November 30th, 2004, 07:55 AM   #80
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Air China plans cost cuts, fuel hedging after IPO
By Daisy Ku

HONG KONG, Nov 29 (Reuters) - Air China Ltd. aims to save up to 1 billion yuan (US$121 million) by 2007, or 2 to 3 percent of its operating costs, partly through stepped-up hedging of fuel purchases, fund managers said on Monday.

Investors learned of the airline's plans in its marketing of an initial public offering in Hong Kong and London worth up to $1.1 billion, which is expected to draw heavy demand in a cash-rich Hong Kong market. The Hang Seng index hit a three-and-a-half year high on Monday.

The state-run carrier also expects to generate savings from more efficient use of its fleet and centralised purchasing, management told a marketing luncheon on Monday, according to fund managers who were there.

The Beijing-based carrier, the biggest and last of the big three China airline companies to list, said it planned to hedge 22-50 percent of its jet fuel next year, compared with 25 percent in 2004, fund managers said.

Jet fuel accounted for 28 percent of Air China's operating cost in the first half of 2004, up from 20 percent in 2003.

The company intends to save 200-230 million yuan in 2005 by hedging more jet fuel purchases, fund managers said.

For every US$1 increase in crude oil prices, Air China's net profit will drop more than 5 percent, underwriter China International Capital Corp. (CICC) said.

LOWER COST

Chinese carriers have historically paid a 60-70 percent domestic premium above the Singapore price on jet fuel. However, due to this year's rapid surge in global oil prices, the current premium has narrowed to 5 percent.

"Air China makes good profit despite the high oil price. Its earnings will improve when the oil price drops," said Apex Capital Management director Alex Au.

Air China said in its preliminary prospectus that net profit would jump 13.3 times to 2.29 billion yuan in 2004 as it recovers from the deadly SARS epidemic of 2003.

CICC expects Air China's earnings to climb by 13 percent to 2.6 billion yuan in 2005 and by 20 percent to 3.1 billion in 2006.

Air China, the first big carrier to complete the integration of its mergers under a consolidation of China's airline industry, absorbed China Southwest Airlines and Zhejiang Airlines in 2003.

As a result, its unit costs are 3.7 percent and 13.2 percent lower than those of rivals China Eastern Airlines and China Southern Airlines, respectively.

Air China plans to use 4.8 billion yuan of its proceeds to buy 14 planes and the remainder to repay debt.

Fund managers said the company plans to pay 10 to 15 percent of its profit as dividend in the future. The company makes no dividend commitment in its prospectus.

The carrier is planning to increase capital spending to 23 billion yuan between 2004 and 2007, resulting in net cash outflows of 818 million yuan and 580 million yuan in 2005 and 2006, compared with a net cash inflow of 898 million in 2004.

Air China is offering 2.805 billion shares, or 31 percent of its enlarged share capital at HK$2.35-$3.10 each, which is 9.96 to 13.14 times estimated 2004 earnings per share of 0.25 yuan each.

Hong Kong's Cathay Pacific Airways will buy 905 million shares, or 32.3 percent of the offering, with a 12-month lock-up period.

Air China shares will begin trading on Dec. 15. Merrill Lynch is also underwriting the deal.
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