Paul Lewis/BEIJING

Chinese airlines are facing a growing backlog of pending aircraft orders and leases waiting for final approval from the country's civil aviation authority and Government.

All Chinese aircraft orders and lease agreements of longer then one year are required to be submitted to the Civil Aviation Administration of China (CAAC) and the State Planning Commission for approval. Deals are being held up for a variety of political, economic and bureaucratic reasons.

In an attempt to get around the slow approval process, local carriers are increasingly resorting to short-term, 12-month, lease deals. Airlines, however, still need a stamp of approval from the CAAC if they are to avoid paying a crippling 30% withholding tax.

At least eight regional and provincial airlines are awaiting the green light from Beijing to expand their fleets. Deals, which are pending are estimated to involve the purchase and lease of nearly 30 Boeing and Airbus aircraft.

China Hainan Airlines has negotiated an order to add a further four Boeing 737-400s and three -800s to its existing fleet of nine -300/400s. The deal, if approved, would represent Boeing's first Chinese order for its next-generation 737 family.

Shanghai Airlines, having failed to win approval to begin international services, wants to reduce its fleet with an order for four 737-400s and to defer four remaining 767-300s on order. The airline recently offered its single Pratt & Whitney-powered 767 now in service to Hainan.

China Southern Airlines wants to lease three Boeing 777-200IGWs from International Lease Finance (ILFC) to supplement two - 200, as now in service and four on order. It needs the longer-range -200HGWs to launch its new US West Coast services, which it has been forced to postpone until 1997.

Sichuan Airlines wants to lease a further four Airbus A320s to add to the three ILFC aircraft now in service, but this plan has met with opposition in Beijing. Other pending leases include two 737-300s for China General Aviation, two for China Xinhua Airlines and two for Yunnan Airlines, with two more options.

Flag carrier Air China is still awaiting political approval from the State Planning Commission to go ahead with its long-awaited order for up to ten 777s, two more 747-400s and 15-20 737-800s. The deal may go ahead in 1997.

Source: Flight International