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China Aviation Industry Opportunity Analysis

December 2013 | 145 pages | ID: C04984DBAE0EN
Kuick Research

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Aviation industry in China began way back in 1951 with some domestic travel and agricultural services being their primary goals. Greater growth happened much later in the mid seventies. The industry posted major growth in its revival phase between 1977 and 1996. After 1996, there was a general period of growth in the economy and this reflected in the volume of general aviation operations and services that have increased throughout China each year. It has shown double digit growth in aircraft numbers and in the number of flight hours since 2001 while consumer aviation has been growing at a rate of 21% since 1996.

In recent years China has emerged as dominant player in global aviation sector driven by supportive government policy framework. The extent of contribution from the aviation sector can be derived from the fact that from 2008 to 2013, the total throughput, passenger throughput and the cargo & mail throughput in China had respectively grown more than 15%, 16% and 13% year-on-year whereas the average global growth was around 5%-6% in all segments year-on-year. China's civil aviation system is the second largest global aviation system after the US while the total transportation throughput and the passenger throughput of China's civil aviation is ranked fifth. The aviation growth seen in China is the highest growth in the world in this sector. In the global market, China is the second largest national air travel market and also the fastest growing. To meet the demand of the market, China buys more than 100 new passenger jets every year and this forms more than a tenth of the world’s total demand. While this indicates a huge domestic market, the country is keen to develop and promote its local manufacturers of aircrafts.

It is expected thatChinawould spend about a quarter of a trillion dollars in the next few years, to build the aerospace industries in the country. It is expected to be the biggest market for the aircraft giants Boeing and Airbus, even though the country has a strong focus on localizing manufacture of aircrafts. With more than two-thirds of the worldwide airports now under construction being inChinanow, the country has laid out ambitious plans and investment targets in the field.

“China Aviation Industry Opportunity Analysis” research report discusses following aspect related to aviation industry in China:
  • Aviation Industry Overview
  • Civil, Commercial & Defence Aviation Overview
  • Ongoing Aircraft Developments in Aviation Industry
  • Civil & Commercial Aviation Fleet Strength
  • Industry Emerging Trends
  • China Civil Aviation Law
  • Opportunities & Issues to be Resolved
  • Key Airline & Aircraft Manufacturers

1. CHINA AVIATION INDUSTRY OVERVIEW

2. CIVIL AVIATION INDUSTRY

2.1 Industry Overview
2.2 Ongoing Development Projects

3. COMMERCIAL AVIATION INDUSTRY (AIRCARGO & CHARTER SERVICES)

3.1 Industry Overview
3.2 Ongoing Development Projects

4. DEFENCE AVIATION INDUSTRY

4.1 Industry Overview
4.2 Ongoing Development Projects

5. AVIATION INFRASTRUCTURE

5.1 Civil Aviation Fleet
5.2 Commercial Fleet
5.3 International & Domestic Airports

6. EMERGING TRENDS

6.1 Utility Aviation
6.2 Focus on Domestic Manufacturing
6.3 Aviation Industrial Park
6.4 Aviation Subsidy
6.5 Increasing Investments
6.6 Maintenance, Repair & Overhaul Market

7. AVIATION INDUSTRY MERGERS & ACQUISITIONS

7.1 China Aviation Industrial Fund
7.2 M&A Activities

8. FUTURE OF AVIATION INDUSTRY

8.1 Opportunities Ahead
8.2 Key Issues to be Resolved
8.3 Fleet Requirement

9. CHINA CIVIL AVIATION LAW

9.1 General Provisions
9.2 Nationality of Civil Aircraft
9.3 Rights of Civil Aircraft
9.4 Airworthiness Management of Civil Aircraft
9.5 Airmen
9.6 Civil Airport
9.7 Air Navigation
9.8 Public Air Transport Enterprise.
9.9 Public Air Transport
9.10 General Aviation
9.11 Search and Rescue and Accident Investigation
9.12 Liability for Damage to Third Parties on the Surface
9.13 Special Provisions Governing Foreign Civil Aircraft
9.14 Application of Law to Foreign Related Matters
9.15 Legal Liability
9.16 Supplementary Provisions

10. REGULATORY & POLICY FRAMEWORK

10.1 Civil Aviation Administration of China
10.2 Ministry of Transport

11. AIRCRAFT MANUFACTURES

11.1 Commercial Aircraft Corporation of China
11.2 Changhe Aircraft Industries Corporation
11.3 Shaanxi Aircraft Company
11.4 Xi'an Aircraft Industrial Corporation
11.5 Shenyang Aircraft Corporation

12. AIRLINES

12.1 Air China
12.2 China Eastern Airlines
12.3 China Southern Airlines
12.4 China Cargo Airlines
12.5 Shanghai Airlines

LIST OF FIGURES

Figure 2-1: Domestic & International Passenger Throughout (Million), 2010-2013
Figure 2-2: Passenger Throughput by Region, 2013
Figure 2-3: Passenger Load Factor, 2011-2013
Figure 2-4: Passenger Transportation on Domestic Routes (Million km), 2010-2013
Figure 2-5: Passenger Transportation on International Routes (Million km), 2010-2013
Figure 2-6: Midsize & Small Aircraft Utilization Rate (Hours/Day), 2010-2013
Figure 3-1: Domestic & International Air Cargo Throughput (Million Tons), 2010-2013
Figure 3-2: Air Cargo Throughput by Region, 2013
Figure 5-1: Civil Helicopter Fleet, 2012, 2015 & 2020
Figure 5-2: Business Jet/Helicopter Service Market (US$ Billion), 2012-2016
Figure 5-3: Business Jet Potential Customer Base, 2012-2016
Figure 5-4: Helicopter fleet by Company, June’2013
Figure 5-5: Eurocopter Helicopter Fleet by Model, June’2013
Figure 5-6: General Aviation Fleet Size, June’2012
Figure 5-7: Business Jet Fleet, 2010-2013
Figure 5-8: Business Jet Fleet Forecast, 2015 & 2020
Figure 5-9: Number of Airports, 2012 & 2015
Figure 6-1: MRO Market (US$ Billion), 2012-2016
Figure 8-1: Fleet Requirement (Single & Twin Aisle), 2031
Figure 8-2: Fleet Requirement (Large & Regional Jet Liners), 2031
Figure 8-3: Fleet in Services, 2031
Figure 8-4: In Service Turboprop Fleet by Seat, 2031
Figure 8-5: In Service Jet Fleet by Seat, 2031

China's  civil  aviation  industry  revenue  was  more  than  xx  Billion  Yuan  in  2013  while  it touched more than xx Billion Yuan in profit. Though there has been some action in the recent times and plans have been announced, China's general aviation can be said to be currently in its infancy stages. A comparison with a mature market/ country such as US brings out the contrast. For instance China has xx civil airports and most of its general aviation  airports  still  in  the  pipeline  whereas  U.S.  has  xx  civil  airports  and  xx  general aviation (GA) airports. 

In  terms  of  aircrafts,  the  number  of  GA  aircraft  currently  in  China  is  only  about  0.4 percent of the number of GA aircraft in the United States and Chinese general aviation has  an  economic  impact  that  is  only  at  xx  percent  of  that  of  the  United  States  and Chinese GA generates only xx of what GA in US does. Moreover China has a xx ratio with respect to General Aviation aircraft vis-à-vis commercial aviation aircraft and this is far much  lower  than  the  international  average  of  33:1.  All  these  figure  indicate  an  early stage market but also point to the potential and the amount of business opportunities in general aviation. 

China has indicated ambitious plans for the aviation sector in the country which includes an investment of a quarter of a trillion dollars over the next few years. More than two-thirds of the airports now under construction globally are in China and to complement this  China  is  encouraging  home-grown  rivals  to  Airbus  and  Boeing  in  the  civil  aviation space. The 12th Five-Year Plan period (2011-15) is expected to see rapid expansion in China's civil aviation industry. This will be driven by investment in the industry that will exceed US$ xx Billion from 2011 to 2015 with more than xx Billion Yuan investment in civil aviation infrastructure during the five years.

In  recent  times,  civil  aviation  growth  in  China  has  been  steady  and  capacity  supply growth has been higher than usual. This scenario has led to slight oversupply, with the result  that  both  passenger  load  factor  and  fare  level  have  fallen  and  for  the  first  11 months of 2012, the overall passenger load factor dropped by xxpercentage YOY to touch xx%.This  has  been  more  so  on  domestic  routes  while  the  fare  level  leveled  off.  Incomparison,  international  operators  lowered  fare  level  to  draw  in  passengers.  This resulted  in  passenger  load  factor  going  up  or  staying  steady,  though  the  fare  level substantially came down.

Capacity supply is expected to rise steadily at about xx%, so that passenger load factor will remain steady leading to rise in fare levels. The market players in China derive much of their profits from premium class domestic travel which is a strong market segment. This, to some extent, compensates for the money they lose on most international routes especially   to   international   rivals   where   Chinese   carriers   have   just   xx%   of   the international and xx% of the cargo market.



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