Rising passenger volume and the strong yuan spurred profits in China's civil aviation industry by 66 percent in the third quarter of this year, domestic carriers and airports earned a total of 9.1 billion yuan (US$1.22 billion) in profit from July to September, and revenue rose 12.5 percent to 73.6 billion yuan. Domestic passenger traffic was 126 mln persons, up 15.8 pct year-on-year, while international passengers increased by 24.6 pct to 12.47 mln. Domestic cargo rose 10.2 pct year-on-year to 2.074 mln tons and cargo carried on international routes was 805,000 tons, up 24.6 pct.

Details: Profit soars 66% amid air carriers

The three largest airports – Beijing Capital International Airport, Guangzhou Baiyun International Airport, and Shanghai Pudong International Airport keep their former competitive pattern in 2007, and each indicator remains ranking the forefront of domestic airports.

However, with the development of middle and west area of China, CAAC gives more policy supports to the airports in middle and west China. In recent years, the airports in Chengdu-Chongqing, Kunming and Xi’an remain the 15% growing speed in passenger throughput. The western triangle airport group gradually shapes, and enhances the power to compete with the airport in Beijing-Tianjin, the Pearl River Delta, and Yangtze River Delta areas.

Asia-Pacific and Middle East are still the fastest developing areas in the global aviation industry. At present, the airports in Asia-Pacific and Middle East only have taken up 25% of the global airports, while the population takes up 60%. Especially, those emerging markets such as China and India will keep increasing, which would bring great demands for aviation industry. According to the 11th-Five-Year plan, before 2010, the domestic airport will increase to 180, adding 38, which increase 27% comparing to the same period. We believe that the domestic airport industry will keep booming in the next five years.

Fraport has purchased 24.5% shares of Xi’an Airport, and Changi Airports International (CAI) set up a joint venture company with Shenzhen Airport aiming to manage much more medium and small-sized airports in China. With the joining of foreign airport managerial experts, they bring the new operation ideas, which are very helpful for promoting the operation pattern and managerial levels of domestic airports. In addition, with the competition of three global alliances taking shape in China, competition between the airports extends to airport groups, and airports and surface transport industry.

China's airport retail sector is expected to experience "eruptive growth" in the next three to seven years. Several major airports in Beijing, Shanghai and Guangzhou, have already begun restructuring their retail sectors. They have adopted similar strategies - expanding commercial areas, cutting the cost of travelers' necessities and introducing high-end consumer products.

Details: Airport retail is potential 'gold mine'

It is necessary to construct hub route network for the airlines to strengthen the competitive power. On the other hand, it also enhances the radiation functions of airports. Through the widespread of the trunk routes, airports can provide intensive and extensive air network for the passengers, which greatly improves the regional competitive power. And it also expands the operation scales, and extends the potential of the domestic airports. In addition, the opening of the traffic rights does not only bring in the competitive pressure for the airlines, and it also brings in the great opportunity for the airports, especially for those hub airports.

In 2008, development of domestic airports will be spurred by the factors such as assets integration, Beijing Olympics and capacity expansion.