A restructured Air China Group aims to become the top airline in Asia and the world by 2010, according to its president Li Jiaxiang.

People of the Tibet Autonomous Region greet travellers with hada, a long piece of silk used as a traditional greeting gift for friends by Tibetans, at the Gonggar airport in Lhasa, the capital of Tibet. [newsphoto.com.cn]

Li told China Daily that his company will co-operate more with domestic and overseas competitors to form a much wider air network.

"Air China intends to be listed abroad when the conditions are right," Li said.

Air China now owns 125 aircraft, 386 air routes and makes over 3,300 regular flights per week.

"Our business has doubled since the reorganization last October," said Li.

Its routes and those of China Southwest Airlines and China National Airlines are currently being restructured.

New Air China

Li said the new Air China is also looking for a chance to join a global aviation alliance.

The president said his company is trying to create an attractive flight environment for passengers.

He said people flying Air China's international flights will now not only get service with a smile, but French flair from their cabin crew.

Staff have adopted new uniforms in the first half of this year.

"This clearly signals to our passengers that our services have been combined," said Li.

French designer Olivier Lapidus beat more than 20 rivals in a public tender to win the right to design the uniform.

Another development for Air China is the trend in the civil aviation industry to separate passengers and cargo.

Air China plans to build the country's largest air freight company with Hong Kong Citic Taifu Company and Beijing Capital Airport Group.

Registered capital for the joint venture will be 2.2 billion yuan (US$270 million), with Air China as the biggest shareholder.

The joint venture will own four Boeing-747 cargo planes and employ about 1,200 staff. The air routes will reach 29 cities, including New York and Frankfurt, in 19 countries.

Air China's annual cargo business is worth more than 3 billion yuan (US$370 million), a quarter of its total income.

China Eastern Airlines

China Eastern Airlines has almost fully recovered after the business slump caused by the SARS outbreak, said Ye Yigan, chief executive officer of the airlines.

"Our domestic flights have nearly returned to normal and overseas ones are also approaching previous levels," he said.

Ye is satisfied with the carrier's performance in July, August and September, saying sales are expected to exceed those of the same period last year. Ten shuttle flights a day between Shanghai and Beijing are now more than three-quarters full and the Shanghai to Hong Kong route has almost two-thirds occupancy.

"Business will be boosted by the golden holiday week around National Day which falls on October 1," he said.

Ye, also president of China Eastern Airlines Group Company, is confident sales in the latter half of this year will also be better than those of the same period last year.

But he confessed sales, although good, cannot make up for the "heavy losses the airline suffered during the SARS period."

It lost 1.25 billion yuan (US$151 million) in the first half of this year due to the drop in passenger numbers.

Travel agencies were able to close their doors when SARS hit. But airlines still had to pay the high rental and loan interest for their leased aircraft even when they were not operational, Ye said.

He said China Eastern had to spend 18 million yuan (US$2.18 million) daily on loans and interest before any other expenditure.

"But we are confident we will achieve our goals because our staff support the company," he said.

During the SARS period, administrative costs were reduced and staff salaries cut by about a fifth. But when sales went up in July, the airline immediately increased its employees' salaries.

As one of China's three major airlines, the Shanghai-based China Eastern has completed its strategic development blueprint that requires an annual 8 per cent growth rate.

"The growth rate is a must. Otherwise, the airline can't match the city's economic development," Ye said.

The carrier expects to achieve sales of 27 billion yuan (US$3.26 billion) by 2005, becoming one of the world's top 30 airlines.

Its plan is to increase its fleet of 160 aircraft to 194 to transport 27.55 million passengers in 2005.

Ye said after the September 11 tragedy, China Eastern ordered 30 planes including 20 A320s and 10 Boeing 737-700s. Eighteen of these aircraft will be delivered this year, seven next year and five the following year.

"The airline is considering ordering more planes, including A300-600s," he said.

The fleet expansion should benefit the domestic flight network.

"Shanghai will be the airline's hub so more passengers can transfer to local airports more easily," he said.

At present, the carrier has a 30 per cent share of the Shanghai market. It is expected to reach 40 per cent within three to five years.

Ye told China Daily the airline wants to expand regional air routes to China's neighbours, with more flights added to Japan, South Korea and India. A new air route to Moscow is expected to start next year.

In August, China Eastern restored its twice daily flights from Shanghai to Singapore, daily service to Paris and four flights a week to Sydney.

While consolidating routes to the United States, France and Australia, it is also preparing to set up a new air route to London next year.

China Southern Airlines

Guangzhou-based China Southern Airlines, also one of the country's three biggest airlines, will purchase four Boeing 737-800 passenger planes and another two Airbus 319-100 before the end of the year.

The new aircraft will be put into service on both domestic and international routes from 2004, according to Yan Zhiqing, president of China Southern Airlines.

The airline will also import six Boeing 737-700 and a Boeing 777-200 model in 2004 and another Boeing 737-700 in 2005.

Two new cargo aircraft will be bought and several small planes leased for domestic regional air routes this year.

"The new purchases reflects China Southern Airlines' great confidence in the future aviation market," Yan said.

China's aviation market has bounced back since June when Beijing and Guangdong were removed from the World Health Organization's SARS-affected area list, Yan said.

The passenger flow between Hong Kong and the mainland is expected to increase sharply, according to Yan, spurred on by a new economic partnership agreement that takes effect next year

China Southern Airline, which went public on the Shanghai Stock Exchanges in early July, has raised enough funds to boost its aircraft fleet, Yan said.

The company has raised 2.7 billion yuan (US$325.3 million) on China's A share market.

The airline is now negotiating with government departments and airports at home and abroad to start more domestic and international flights in the years ahead.

China Southern Airlines now has international air routes to Hong Kong, Japan, the United States, Europe and East Asia.

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