Nearly 80% of small airports face huge losses
- By Li Jingrong
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E-mail China.org.cn, October 31, 2014
Nearly 80 percent of small airports in China currently face huge losses and are relying on heavy government subsidies to stay in business, Xinhua reported Wednesday.
Statistics compiled by the news agency show that among the 183 airports in operation across the country in 2012, a total of 134 were deficit-ridden facilities of branch airlines with losses totaling 2.9 billion yuan (US$474.15 million).
A national civil aviation investigation cited the example of a small airport in northeast China's Heilongjiang Province that had an average of five flights arriving and departing per week. That figure actually declined even more after the seven-day National Day holiday at the beginning of October, when only 20 percent of the seats were filled.
In 2013, about 70 percent of Chinese airports handled less than a million passengers, Xinhua reported.
Industry insiders are worried about the falling-off in regional aviation transportation. One analyst cited passenger numbers on Beijing-Zhengzhou flights that have fallen by nearly half since bullet trains went into operation on the route in December 2012. "The challenge from high-speed rail is certainly a major reason for regional flight service losses," said the expert.
Local governments absorb the biggest part of the losses. In some areas, 20 percent of passengers are government officials whose travel effectively subsidizes the airports. Two local governments of Jiangsu Province even issued a document to encourage civil servants to make travel by air as their first choice.
A worker at one local airport said smaller airports depend heavily on government subsidies. "A single round trip on China Southern Airlines, for example, will get about 150,000 yuan in subsidies from the county government, while Air China can get as much as 400,000 yuan."
Surprisingly, despite the gloomy figures, many areas in the country have been unveiling plans to build small airports for feeder flights.
Current practice in the civil aviation industry makes it impossible for an airport with an annual passenger volume below 500,000 to make any profit, and those airports dealing in figures in the tens of thousands or below cannot even self-support daily operations.
A civil aviation official conceded that the fact that more than 80 percent of small airports suffer huge losses reveals the severe imbalance in the domestic aviation industry.
Large airlines ignore regional markets due to low profits. Instead, they flock to large airports in Beijing, Shanghai and Guangzhou, causing congestion. The intensive high-speed rail network now emerging in eastern China only exacerbates this trend.
The Regulations on Administration of Civil Airports, which went into effect in 2009, clearly define the proper role for airport public infrastructure – namely, that airports must take into account the dual attributes of public welfare and profitability, but that the import of social benefits should far outweigh that of the economic benefits.
An aviation official takes a broader view, saying that small airports play an important role in combating natural disasters like earthquakes or floods, and they cannot be entirely governed by market laws. "Even most of the small airports in the United States get government subsidies early on."
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