Economy

Aircraft maker eyes China's regional aviation market

(Xinhua)
Updated: 2011-01-20 16:43

BEIJING - China's fast expanding regional aviation market is attracting the attention of global aircraft makers, as it is expected to grow rapidly in the next few years with the government moving to tap its potential, said world leading jet maker Embraer.

Guo Qing, vice-president of marketing for Embraer China, said Embraer is "very optimistic" about the future development of China's domestic regional aviation market, especially in the country's underdeveloped regions.

Embraer, the world's fourth-largest aircraft maker, last week signed an agreement with China Development Bank (CDB) Leasing and China Southern Airlines (CSA) to sell 10 E-190 jet planes to CSA, China's largest airline by fleet size, which will be put into service on routes in the country's northwestern Xinjiang Uygur autonomous region. CDB Leasing is a platform of CDB in leasing business.

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The announcement came after China decided to scrap airport construction fees for domestic short-haul flights beginning this year, which aimed to boost the aviation market in the country's economically less-developed areas, especially the central and western regions.

Regional jets are smaller inter-city aircraft with 50 to 110 seats and flight ranges of 600 to 1,200 kilometers.

The exemption on fees included eight models of regional aircraft, including Embraer's Embraer regional jet (ERJ) series, covering 844 air routes that connect 129 Chinese airports, 64 percent of which are in central and western China.

"The move reflects a clear government stance on regional aviation market development," said Guo, noting that the policy would bring residents in remote regions wider access to aviation services with lower travel costs.

The Civil Aviation Administration of China (CAAC) is expecting the new policy to benefit almost 10 million passengers each year. Previously, passengers would pay 10 yuan ($1.5) as airport construction fees for each trip on the flights with the eight aircraft models.

Embraer said in a market forecast late last year that China's domestic carriers would need a total of 950 regional jets with 30 to 120 seats in the next 20 years, accounting for 14 percent of the global demand during the period, the second only after Europe.

Thus far, 80 Embraer aircraft are being used on air routes in China, while the company will deliver 29 E-190 jets in the coming years, said Guo.

The fact that Embraer is expecting the future economic growth in China's less developed regions would result in rising demand on efficient transportation is another factor for Embraer to continue to bet on China's regional aviation market, as China's high-speed railway construction boom had not reached the country's far-flung areas.

Although some observers believe that it takes time to see the government policy's actual effect on the market, but the continued expansion of airports in West China is very likely to drive up demand for regional jets from short-haul airlines.

The CAAC is planning to build 32 new airports, rebuild and expand 24 others, as well as relocate nine more in west China in the 12th Five-Year-Plan period (2011-2015).

Xinjiang, where Embraer's newly sold E-190 jets would be flying, for instance, will build six more airports in the next five years, according to local aviation authorities.

There are currently 16 airports in Xinjiang.