Rail weakens airline profit growth in China

Chinese airlines postponed delivery of 60 aircraft in 2011

The steady growth in profit among Chinese airlines is expected to be slower this year. One of the main reasons: passengers are choosing high-speed trains instead. China’s airline profits increased by 300% in 2010, but in 2012 they are expected to rise by just 5.1% to CNY45.6 billion (US$7.2 billion). In addition to the rising competition from domestic rail services, airlines are also facing the same challenges as other airlines around the world, according to Li Hun, vice director of the Civil Aviation Administration of China. These include oil prices, a weakening global air market and air companies’ poor capabilities to deal with sudden challenges.
While the number of air passengers is forecast to increase by 8.2% in 2012, passing 290 million, Chinese airlines postponed the delivery of 60 aircraft in 2011. In 2012, deliveries will likely not exceed 150.
Caixin Online
[pictured: Shenzhen Airlines, China’s fourth biggest airline, due to join Star Alliance by the end of 2012]