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Aviation History
2003
2003 - 2004.PDF
Cover st< BIGC RIS BETTER In a nine-page special to coincide with Aviation Expo China in Beijing from 17-20 September, we begin by looking at China's aviation market, which has seen more change in a short period than any other country NICHOLAS IONIDES / SINGAPORE XIAMEN AIRLINES 42 16-22 SEPTEMBER 2003 FLIGHT INTERNATIONAL In recent years many of China's air lines have merged as part of a sweep ing consolidation exercise. Its dozens of state-owned manufacturing compa nies have revamped their operations, airport and air traffic management infra structure is being improved, the regulatory environment is being radically overhauled and ground-breaking liberalisation efforts are being tested. This is necessary as the still-developing market continues to expand and many believe the revamp will be a success because China in no small part can draw on the experience of other countries. "They are consolidating 20 years of evo lution in the European and North American markets into just a few years," says Derek Sabudin of the Australia-based Centre for Asia-Pacific Aviation. "It hasn't been an easy process, but it has occurred more quickly than we thought it would," he says. The most visible element of the market's radical overhaul has been consolidation of the airline sector - a massive undertaking. In the late 1980s China split the former Civil Aviation Administration of China (CAAC) airline into six regional arms, cre ating Air China, China Eastern Airlines, China Northern Airlines, China Northwest Airlines, China Southern Airlines and China Southwest Airlines. Deregulation, China-style The industry was further deregulated as provincial and municipal governments were allowed to establish their own carri ers. Many did so with just one aircraft and no airline experience, causing safety trou bles and financial woes for the industry as a whole, just as domestic traffic was grow ing at over 10% annually. The CAAC began to consider consolida tion in the early to mid-1990s after a spate of high-profile accidents, and at a time when more than 30 airlines were flying in China, saying over-capacity and unviable ticket discounting were causing huge losses to the industry. However, only a handful of small mergers took place, causing the CAAC to get tough - especially after the Asian economic crisis that began in mid- 1997 pushed more airlines into the red in the following two years. In July 2000, the CAAC announced that the 10 carriers under its direct administra tion would be merged into three large groups, around Air China, China Eastern and China Southern, in a move aimed at eliminating "disorderly" competition. Airlines immediately began scrambling to find partners, and under the consolida tion blueprint that followed, Air China agreed to merge with China Southwest and China National Aviation (owner of Zhejiang Airlines); China Eastern's parent www.flightinternational.com
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