China itself is looking to get back into the commercial aircraft market. As part of the current Five-Year plan, turbofan airliners meeting international standards are being developed. Set to come into service in 2006, these new generation airliners will have no foreign components.
China Aviation Industry Corp (AVIC) announced in March, just before SARS hit, that it was planning to do a public share listing, probably in Hong Kong.
The company, which focuses on research, development and manufacturing of civil aircraft and automobile products, has six subsidiaries companies listed on the local stock exchanges. It has plans to develop eight new types of aircraft, including helicopters and passenger jets, in the next three to five years. In March, AVIC's Commercial Aircraft Company (ACAC) began developing a new jet plane for China's domestic market in a joint venture with US-based General Electric. The new jet, to be named ARJ21, is expected to be in service before the Beijing Olympics in 2008.
While China's air passenger market was devastated by SARS in the short term, airfreight is nowhere near as badly affected, just as China's export trade continued with only minimal impact right through the key initial mouths of the crisis. China's airfreight market is hugely attractive to all the main carriers, and even Taiwan's China Airlines has got into the act by jointly investing with China Eastern in a groundbreaking joint venture. China Airlines now holds a 25 percent share of the China Cargo Aviation.China Eastern has a 55 percent share and China Ocean Shipping (COSCO) holds the remainder.
AirChina is also expanding its airfreight operation, recently launching a new joint venture with Beijing Capital Airport Group and Hong Kong Citic Taifu which will become the largest airfreight service in China. The growth of the airfreight market is expected to continue as China's exports move up the value-added chain, making airfreight more and more justifiable in cost terms to exporters. It is not only the aircraft manufacturers who benefit from the continued expansion of China airline industry - there are thousands of contracts associated with airport construction, security and navigation upgrades, and equipment maintenance, and foreign companies are intensely interested in all of them.
In the past few years, China has rebuilt just about all its main passenger terminals, with Beijing International Airport and Pudong airport being the star examples. Japan Bank provided a US$300 million loan for the expansion of Guangzhou's Baiyun International Airport which will become China's largest airport when it opens in October. The French electronics company Thales won a US$100 million contract to upgrade China's air traffic control system, which should be operational by 2004, and other opportunities are in sight. "Another interesting part of the market to be opened to foreign players should have to be the Technical service side, airport lounges, catering, bonus programs," the industry analyst said.
