Authorities in Beijing have unveiled plans for a mega aviation infrastructure construction spree that includes 45 new airports over the next five years.
Li Jiaxing, the head of Civil Aviation Administration, China’s industry regulator, told reporters that the new investments would take the total number of airports in the country to 220.
However concerns have been raised about overcapacity, given that most of China’s existing airports are currently losing money.
Li Jiaxing, who is also a vice minister for transport, said that the government would invest Rmb1500bn ($228bn) in aviation between 2011 and 2015, although he did not disclose how much of that would go to airports.
According to Reuters, Li Jiaxing, who is a former chief executive of the country’s biggest airline Air China, admitted that 130 of the country’s 175 existing airports were currently loss-making, with the combined loss amounting to Rmb1.68bn.
Analysts warn that although demand for air travel has grown rapidly over the past decade as the purchasing power of Chinese consumers has risen, the expansion in airport infrastructure has become one of a number of potential sources of over-investment across the economy.
But officials argue that the new mega airports in some of China’s major cities have quickly found themselves operating near to capacity because of rising traffic.
Goldman Sachs also forecasts that passenger demand will rise by 15 percent this year, as the growing middle class in China travels more.
Another cause for concern in the country’s rapid roll-out of its high-speed rail network has also raised questions about over-investment. This month an investigation began into the minister of railways Liu Zhijun for “a severe violation of discipline”, according to the Financial Times.
Supporters of the huge railway investment argue that the growing capacity of the passenger network will free up space on the existing network for cargo transportation.
However, the new high-speed rail routes, such as the Wuhan-Guangzhou line, which cut the journey time from 10 hours to three hours, are also a strong competitor for the aviation sector.
One potential market for China’s new airports could come from smaller aircraft, after the government announced in November that civilian aircraft could fly in airspace below 4000m. The decision could prompt a big increase in the use of helicopters and light aircraft.
Source: BTN
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