By Lu Haoting (China Daily)
Updated: 2007-08-10 15:07

Chinese airlines raked in an aggregate profit of 1.54 billion yuan in the first half of this year thanks to brisk market demand, appreciation of the renminbi and lower jet fuel prices.

The strong performance in the first six months, usually a slack season for the airline industry, could be a prelude to continued robust growth in the next three years, analysts said.

Chinese carriers have seen first-half losses over the past two years. The industry's aggregate loss for the first half last year skyrocketed to 2.57 billion yuan on record-high oil prices.

"Strong market demand brought by China's fast economic growth is the main driver (of this year's results)," said Ma Xiaoli, an aviation analyst with CITIC Securities.

Chinese carriers transported 86.7 million passengers and 1.82 million tons of cargo from January to June, up 16.7 percent and 15.3 percent over the same period last year, according to the General Administration of Civil Aviation, the industry regulator.

Average passenger loads were at 73.9 percent during the first half of 2007, a year-on-year increase of 1.6 percent.

"Besides the sound economic growth, the Chinese airline industry will benefit a lot from a series of global events in the coming three years," Ma said. The three events are the 2008 Olympic Games in Beijing, the 2010 Shanghai World Expo and the Asian Games Guangzhou in 2010.

The CAAC expects China's aviation industry to maintain an average annual growth rate of 14.6 percent during the 11th Five-Year Plan period (2006-10).

"The growth rates for last year and the first half of this year have exceeded that expectation," Ma said, adding that a capacity increase in the coming three years would be stable despite brisk market demand.

"The CAAC and Chinese airlines' planned capacity increase for the 11th Five-Year Plan period is based on their previous forecast of a 14.6-percent annual growth rate. They are unlikely to significantly change their original plans," Ma said.

"On the other hand, due to the global aviation industry revival, Boeing and Airbus have sold so many aircraft that it is difficult for them to respond to short-term needs and their production positions are basically sold out till 2010," Ma added.

The renminbi appreciation has also helped Chinese airlines cut costs, analysts said.

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