BEIJING, June 7 /Xinhua-PRNewswire/ -- CCID Consulting, China's leading research, consulting and IT outsourcing service provider, and the first Chinese consulting firm listed in Hong Kong (stock code: HK08235), recently found that revenues from the main operations of the China's entire civil aviation industry surpassed 200 billion Yuan in 2006 and the total profits marked nearly 10 billion Yuan. CCID Consulting analyst Liu Xu predicts that the civil aviation industry will maintain an overall relatively high-speed growth from 2006 through 2009. During this time the Beijing 2008 Olympic Games and other factors will lead to big-margin increases, though in 2009 the industry will experience a small recession. Besides continuous high-speed growth, China's civil aviation industry will demonstrate the following trends over the next few years:
Courier services will become a new growth point in cargo transport.
Courier services will increase relatively rapidly in the next five years, except for document delivery, which will decrease due to the popularity of "courier" delivery through the Internet. World air cargo transport will increase 6% in the next 10-20 years, while courier services will increase twice as much, that is, 12%. Courier services in the Asia-Pacific region, however, will increase by a minimum of 18% annually. China's courier market is currently equivalent to the added European markets and is expected to show the highest market increase at 36%. Currently 390,000 foreign enterprises and over 1 million Chinese enterprises need to communicate on a daily basis, the majority of whom have foreign trade documents, international payments, and transfers completed by international courier. Most experts predict that the compound growth rate of China's international courier service will reach 30% over the next five years.
Low-cost aviation has great prospects.
The Civil Aviation Administration of China (CAAC) has statistics showing that China's civil aviation industry does not have many steady passengers. In 2005, airline passengers made an average of 6.2 flights. The annual passenger flow reached 138 million, with a stable passenger flow of 23 million, a small figure in comparison with the 1.3 billion population of the country. In addition to this, developments in tourism and business have added significant momentum to the increase in passenger flow. While most tourists and businessmen are sensitive to price, a market foundation is laid for developing low-cost aviation in China.
It is obvious that current policy restrictions and the high cost of oil pose serious difficulties for low-cost aviation. To better develop low-cost aviation in China, it is necessary to enhance cost management and raise the added value of products. Low-cost aviation, the third tier of civil aviation, will make breakthroughs in market shares in the next five to 10 years.
Transport expansion of airlines can satisfy demand growth.
In general, airlines arrange expansion of their transport on the basis of predictions of their future business. In China, airplane purchases are affected to a large extent by political factors. Optimistic predictions based on explosive growth demands for civil aviation in 2004 and diplomatic and strategic arrangements of the state were conducive to a large increase in the number of planes purchased by Chinese airlines in 2005. By December 20, 2005, the annual number of planes purchase reached 497, with a maximum annual transport capacity equalling the whole of China's civil aviation industry for 2004.
With fast increases in air travel and cargo transport in the next 20 years, China's plane fleet will be more than three times today's size in 2025, increasing from 1030 planes in 2005 to 3900 planes. In the next 20 years, Chinese airlines will add 2880 new planes to their fleet, with a total worth of 280 billion US dollars. 2200 of these will service the ever-increasing domestic market, including passenger planes and cargo planes. Mono-aisle planes will increase the most with 1840 planes 90% of which will service the Chinese market and 10% of which will service medium-to-short-distance international markets originating from Chinese ports. The next biggest increase will be medium-sized dual-aisle planes with a total of 660. Since Chinese airlines strive to increase flight frequency and direct flights for international passengers, 60% of these planes will be applied to China's international flights and the rest will be used domestically. Regional jets were in third place with nearly 10% of the increase, at 290 planes, only a very small percentage of which will serve international markets. Last but not least, large planes had an addition of 90, accounting for about 3% of all new planes added to China's airlines. 1/3 of the large planes were cargo planes, which will support the skyrocketing air cargo market. A very small number of large planes will specifically service the domestic market, whereas the rest will serve long-distance international markets.
The competitive structure will stabilize.
The competitive structure of China's civil aviation industry will become relatively stable in the next five years. Because of preferential policies and the entry of flight routes between large hub cities, the three major airline groups hold control of the best resources and will continue to hold the largest market shares. Among the three airlines, Air China shows the strongest momentum for development. The Beijing 2008 Olympic Games and increases in Chinese citizens flying internationally will make Air China, whose flights account for half of all international flights in China, the biggest winner in the next few years. Hainan Airline (just about to be renamed Da Xinhua Airline) and Shanghai Airline in the second tier will have to face competition from low-cost aviation and foreign airlines. Judging from the current operational statistics, the former shows better prospects for development than the latter.
About CCID Consulting
CCID Consulting Co., Ltd. (also known as CCID Consulting), the first Chinese consulting firm listed in the Growth Enterprise Market of the Stock Exchange (GEM) of Hong Kong (stock code: HK08235), is a direct affiliate of the China Center for Information Industry Development (hereinafter known as CCID Group). Headquartered in Beijing, CCID Consulting has so far set up branch offices in Shanghai, Guangzhou, Shenzhen and Harbin, with over 300 professional consultants and industry experts. The Company's business scope has covered over 200 large- and medium-sized cities in China. Apart from home market development, CCID Consulting is establishing international cooperation links across the United States, the Asia-Pacific region and Europe, by setting up agents in the U.S., Japan, South Korea, Australia, Singapore, Italy and Russia, with the aim of going global.
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