Flying High: China's Aviation Industry Looks To The Future

By Andrew Lockhart and Harvey Lau ,Baker & McKenzie

The General Administration of Civil Aviation of China (the CAAC) has forecast strong growth for the country's airline industry. The CAAC predicts average annual increases in Chinese airline traffic of around 10%, which is based on an estimated 7% economic growth per year. The CAAC also anticipates that by 2020 annual revenue tonne kilometres for the country's airlines are expected to reach 84 billion, compared with 16.2 billion in 2002, ranking China's air transport market second in the world.

The country's freight traffic is also expected to grow faster than passenger traffic in the years ahead as the volume of the country's imports and exports increases. Growth will come primarily from the export of consumer and high-tech goods, and the import of capital equipment and high-value manufacturing components, which has increased as a result of foreign direct investment. This growth is likely to be supported by the establishment of new logistics and freight-handling ventures and facilities involving the main Chinese airline companies or their subsidiaries.