Caixin
Aug 09, 2012 08:03 PM

Regional Airport Expansion Cleared for Takeoff

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(Beijing) – Throwing financial caution to the wind, local governments across China are throttling forward with airport construction projects as part of a nationwide push to expand regional air service.

A State Council order July 8 to "appropriately advance" civil aviation through airport construction projects added fuel to the government's latest five-year plan for the transportation industry.

The plan calls for adding 70 airports mainly in central and western parts of the country by 2015, compared to 33 built nationwide between 2006 and 2010. In addition, 101 existing airports are to be renovated or expanded.

This rising wave of infrastructure activity is focusing on regional airports that would handle fewer than 500,000 passengers a year and serve small communities including tourist destinations and mining areas, said Huang Min, basic industries director at the National Development and Reform Commission (NDRC).

Eleven projects have been approved by the central government so far, according to the NDRC website.

Finding financiers, builders and appropriate air strip sites are among the immediate challenges for local governments that have joined the initiative, since locals are expected to take the lead for each project and match central government allocations.

Even greater challenges lie ahead, according to aviation experts who spoke with Caixin, since local governments will be expected to finance airport and equipment upkeep, as well as hire qualified staffers to keep planes flying safely.

These challenges are set against the backdrop of existing gaps. For example, it's well-known that "many small airports in China are primitive" and pose "safety risks," an industry veteran told Caixin at a recent conference. In his opinion, "it's best not to fly from big cities like Beijing directly to small airports."

And in general, local governments that invest in regional airports can seldom expect to break even: About 80 percent of China's airports were unprofitable last year, costing taxpayers a combined 1.7 billion yuan, according to the central government's Civil Aviation Authority (CAA).

Do It Now

Thus, CAA Director Li Jiaxiang says there's plenty of room for growth in China's airport sector.

Only about 300 airports serve the country, Li said in Beijing on July 20, compared with 19,000 in the United States. Even Brazil and India are better served by civil aviation infrastructure, he said.

"We need to improve now," Li said.

Deputy Finance Minister Li Yong said 64.1 billion yuan was spent to build airports and air traffic control facilities nationwide as part of a more than 90 billion yuan civil aviation outlay between 2006 and 2010. That was twice the amount spent during the previous five years.

"The civil aviation industry is fundamental and strategic" for China's economy, he said.

Thus, in a show of Beijing's support, CAA last year signed strategic cooperation agreements with several local governments to accelerate airport construction.

In general, CAA's Development Fund splits the cost with local governments. But locals may foot most of the bill: CAA provided 300 million yuan for airport construction projects in Henan Province in 2006, for example, while local governments put up 450 million yuan.

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