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Small airports to get govt backing in China

By Xin Dingding (China Daily)
Updated: 2009-04-22 07:47

Small airports are expected to receive government subsidies after being reclassified as public infrastructure under a new regulation.

The regulation stipulates that governments at all levels must take necessary measures to support airports from July 1.

China had 160 civil airports last year, and plans to have 244 by 2020.

The regulation is expected to benefit small airports because large ones are profitable.

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China has 103 small airports - those that serve less than 1 million passengers a year - and it's been estimated that 91 percent are losing money.

Industry sources said the regulation would save these airports, which are State-owned enterprises but are managed as private businesses. They handled just 6.4 percent of total passengers in 2006.

Small airports in Inner Mongolia on average spend at least 7 million yuan ($1 million) on operating costs annually, but make less than 2 million yuan in revenue, said Han Zhiliang, president of Inner Mongolia Civil Airports Group.

The group manages 10 airports, nine of which are small, regional airports.

"All of the airports suffered a loss last year," he said.

Wang Jian, secretary-general of China Civil Airport Association, said many survive on subsidies from local governments.

The Civil Aviation Administration of China also began subsidizing small airports last year, but the amount is limited.

A number of airports which did not secure local government funding - which has not been mandatory until now - have been closed.

"Small airports need local governments' support because they are built more out of a strategic need than the need for profit," Wang said.

"Some of China's large airports are listed companies. The regulation may lead to changes in airport charges, which will affect their performance."

New airport projects worth 200 billion yuan will begin in 2009 and 2010 as part of the economic stimulus package.

But there is concern that pouring millions of yuan into new airports in poor regions will be a waste of money if it benefits very few passengers.