China’s Civil Aviation Industry

This is another post of our industry analysis series at China Business Watch, and you can read our trend analysis post 6 Industry Trends of 2008 in China for a better understating of the big picture.
Today China may present the greatest civil aviation market opportunity in history. In 2006, CAAC (Civil Aviation Administration of China) transported 160 million passengers. In the first half of this year, growth was 19.6% over the same period last year, and cargo traffic grew over 15%. By 2010, the number of airplanes is expected to nearly double over the 2006 level – just 5 years.
In 1980, just at the beginning of her great “opening up” to the outside world, China’s civil aviation industry comprised only about 140 airplanes and ranked 35th in the world in tons-per-kilometer. With average annual growth of some 17% since then, China has jumped all the way to the number
Today China may present the greatest civil aviation market opportunity in history. In 006, CAAC (Civil Aviation Administration of China) transported 160 million passengers in the first half of this year.
Further, China expects to see a total of between 2,300 to 3,000 total civil aircraft in operation by 2025. This, in turn, means airport expansions, new airports, growing maintenance centers, more skilled workers, and so on.
Just between now and 2010, China will train some 6,500 new pilots. China’s airports are overtaxed – she has only500, compared with about 20,000 in the US, and 2,500 in Brazil, for example. And aircraft maintenance and refurbishment has been moving to China fast,
In an attempt to pick up market share, Airbus recently began construction in Tianjin of a complete assembly plant for its A320, with an estimated total investment of over a billion dollars. The project is a joint venture between Airbus and a company formed by China’s two big aviation companies – AVIC 1 and AVIC 2. Airbus will hold a 51 percent majority stake in the JV, although the final joint venture contract has not yet been signed. The intent is to begin production in 2009 and manufacture a total of 300 planes by 2016 – all to be purchased by China. Airbus’s decision has already attracted nearly a dozen other aircraft companies to locate nearby.

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