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Orders for aircraft put on hold

By Xin Dingding (China Daily)
Updated: 2009-01-07 12:03

Chinese airlines added 120 aircraft to their fleets last year, 14 fewer than planned, Yang Guoqing, deputy chief of the Civil Aviation Administration of China (CAAC), told an annual working conference Tuesday.

The fleets now total 1,254 airplanes, he said.

"We encourage airlines to cancel or delay 2009 aircraft orders," he said.

"It is the duty of airlines to cut capacity, defer plane orders, return leased aircraft and ground or sell older planes," he said.

Domestic airlines lost more than 7 billion yuan ($1 billion) in the first 11 months of last year, according to the CAAC.

The industry has been hit hard by the economic slump.

Last year, Chinese airlines carried 192 million passengers, up 3.3 percent on 2007; and 4.03 million tons of cargo, up 0.2 percent, the CAAC said.

In previous years, growth averaged 15 percent, it said.

The numbers of passengers traveling on international and regional flights to Hong Kong and Macao were down on previous years, Yang said.

"The environment for airlines is worsening and some have fallen into insolvency," he said.

The CAAC has taken measures to lift the industry out of its difficulties, including controlling transport capacity, not approving any new airlines before next year, and returning funds and taxes already paid by airlines.

Airlines can save up to 900,000 yuan a month by not buying new aircraft, Li Xiaojin, an economist specializing in the aviation industry, told China Daily earlier.

While some airlines have responded to the call to delay orders, others have said they will add to their fleets.

Huang Bin, board secretary of Air China, said last month that the airline will stick to its schedule for the time being, but will accelerate the phasing-out of older aircraft, and cut some routes and flights.

An anonymous industry insider said airlines are afraid of lacking capacity when the market improves so do not want to cancel aircraft orders.

According to airlines' plans, 241 new planes are expected to join the fleets this year, including 16 deliveries deferred from last year, while 43 planes will be phased out, Yang said.

The CAAC will approve more commuter flights, like the Beijing-Shanghai express, to help airlines compete with high-speed rail services, he said.

With the new measures in place, the CAAC expects airlines to carry 220 million passengers this year, up 11 percent on last year; and 4.37 million tons of cargo, up 8 percent, he said.