Pressure is mounting for Beijing to relax its freeze on new aircraft orders. It looks as if the Civil Aviation Administration of China will permit two, and perhaps all three big carriers, to place firm orders.

Senior Air China officials recently visited Toulouse and Seattle in anticipation that the CAAC will allow the flag carrier to replenish its empty order book. As a result of the freeze, which was acknowledged by the CAAC last July but actually took effect in late 1993, Air China has no aircraft deliveries slated after this year even though over four years average traffic growth was 26 per cent.

China Southern Airlines also has plans to lease several B747-400s for routes to the US that could be launched by the middle of this year. The Guangzhou-based airline has been talking with operating lessors for over a year.

China Southern says it has CAAC assurances of route awards to San Francisco and Los Angeles. There is some reason to suspect the carrier will launch those services to heighten its US visibility before an initial public stock offering in New York.

China Eastern's fleet plans are less public, but it needs more short-range aircraft. After this year, the only aircraft it has scheduled for delivery are five A340-300s arriving by 1996. China Eastern's traffic growth has slowed in the past three years, largely due to capacity constraints - its narrowbody fleet is less than a quarter the size of China Southern's. With the obvious demand, it would be politically awkward for the CAAC to approve fleet additions for Air China and China Southern without equal treatment for China Eastern.

Air China's visit to Airbus suggests a potential solution to another problem. China Aviation Supplies Corporation, purchasing unit for the CAAC, still has not found a home for six A340s it planned to allocate to China Southern, before the carrier controversially refused the aircraft. With China Southern still intent on an all-Boeing fleet, Air China's apparent willingness to consider Airbus products, despite its own all-Boeing fleet, could see adoption of the orphans by the flag carrier.

China Yunnan's recently announced order for three B767s did not, as some reports suggest, signal an end to China's moratorium. Yunnan's order simply replaces a previously unannounced order by China Aircraft Supplies Corporation on behalf of the airline for the same number of B757s. CAAC's freeze has never applied to such order conversions. Indeed, a more accurate indicator of a potential shift in policy is Sichuan Airlines' attempts to get CAAC clearance to order four A320s.

Whether the CAAC will relax its freeze for carriers other than China's big three is uncertain at the present time. The agency will probably leave the freeze intact but grant exemptions based on single applications - little change from past policy.

Source: Airline Business