By Xin Dingding (China Daily)
Updated: 2008-03-18 13:48

The figures are encouraging but "also dangerous because domestic carriers tend to get complacent and drop their guard", Cao said.

Chinese carrier managers need to make two things very clear.

First, as Li says, the industry's profits should be attributed to the fuel surcharge and the gains from exchange rate changes because of the renminbi's appreciation, "which does not deserve any joy and satisfaction".

Second, the domestic airlines' gains are mainly from the domestic market, which is protected from foreign competitors anyway.

Li, former general manager of China National Aviation Holding Co, realizes it's time to do something. He told a working conference that emerging as a strong power in civil aviation must be the key goal for the CAAC this year, and specific targets and indexes will be mapped out to reach that goal.

Chinese cargo airlines still lag far behind the giants in the industry. Cao said China owned only 50 cargo planes in 2007.

Compared with logistics giants such as FedEx and UPS, domestic cargo carriers lack a widespread network and ability to convince transnational cargo operators that they, too, can deliver on time, Cao said.

The two companies' international air hubs in Shanghai and Guangzhou respectively will come into operation this year.

"After they sort out the ground transportation network in two to three years, their competitiveness in China will be stronger by 2009, and things will get even worse for domestic carriers," Cao said.

He disagrees with some who say China is opening up its skies too fast, causing the loss in international market share.

"Opening the skies is inevitable. The problem is how to compete with others. How to be more competitive is what domestic airlines should think about," he said.

After a month of initial probing since Li's appointment, he encouraged domestic airlines to launch more long-distance flights to Europe and North America and raise international market share.

Li also said the arrival of the new Boeing 787 and Airbus 380 is a good opportunity for Chinese airlines to launch more international flights.

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