Aircraft

Concerns about overcapacity and market volatility have led China's National Development Reform Commission (NDRC) to become more stringent when deciding whether to let airlines increase their fleet size.

Airlines in China need NDRC approval if they wish to add aircraft, but leasing industry sources say the NDRC is now taking longer to grant this approval and is getting more stringent when it comes to checking whether an airline is strong enough financially to commit to more aircraft, has the pilots and other manpower needed to operate the aircraft and has Civil Aviation Administration of China (CAAC) approval to operate on the routes that it has specified.

The NDRC's move comes at a time when Chinese airlines are suffering from pilot shortages, rising fuel costs as well as a sudden fall in domestic and international passenger traffic in May brought on by the Sichuan earthquake and the central Government's clamp-down on the issuing of tourist visas in the lead-up to the 2008 Beijing Olympics.

One Chinese carrier that needs NRDC approval is Hainan Airlines, which this month is due to receive the first of three ex-Cathay Pacific Airways Airbus A340-600s on lease from International Lease Finance.

ILFC said in December that the first A340 would be delivered to Hainan this month, but Hainan says the airline is still waiting to receive the aircraft and that a delivery date has yet to be decided.

He says the airline plans to use the first A340 for the launch of services from Beijing to Cairo in Egypt.

But he adds that because there is so much change in the market at the moment "we may decide to change the aircraft" operated on the route. Hainan also operates Boeing 767-300ERs on long-haul routes.