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  Official magazine of ACI
Wednesday, 09 December 2009 13:25

China’s big build

Written by  Joe Bates

chinasbigbuild

Planned airport development in Mainland China shows no sign of slowing down, writes Joe Bates.

Whatever way you look at it, China’s stated intention to invest more than $68 billion on building nearly 100 new regional airports by 2020 is, quite simply, mind-boggling.

No other country can match the huge development programme, but then again nobody else has China’s population – 1.3 billion people or 20% of the world’s population – or its future economic growth potential. If the big build is going to happen, an average of nine or ten new airports per year will have to be completed over the next decade. The new airports will mean that 80% of the nation’s population live within 100 kilometres of an airport – a remarkable achievement for a country the size of China.

The government decided to embark on the massively ambitious development programme in 2008 after a decade of rapid economic growth began to create bottlenecks in China’s aviation infrastructure. And with demand expected to grow by at least 10% per annum between now and 2020, the need for new airports cannot be understated.

Among the 92 projects currently being considered by the Chinese Government are plans for a second gateway in Qingdao (Shandong Province) and new gateways at Guyuan (Ningxia Hui Autonomous Region), Wushan (Sichuan Province), Hefei (Anhui Province) and Xigaze and Yushu in Tibet.

Elsewhere, the Yunnan Airport Group is reported to be on the lookout for global strategic investors to fund a new $2.9 billion airport in Kunming while GE Capital Aviation Services (GECAS) has set up a joint venture with Guangdong Airport Management Corporation to build a new $500 million airport at Chaoshan (Guangdong Province).

A recent economic stimulus package from the Chinese Government is expected to act as a catalyst for large-scale airport development in China, with many new capacity-enhancing projects either being launched or their completion accelerated, triggering a new wave of real estate development programmes either within or just outside the perimeter fence.

Indeed, many cities are expected to use the economic stimulus package as an opportunity to upgrade their ground transportation links and, in this regard Hongqiao International Airport in Shanghai provides an eye-catching illustration.

In addition to the airport’s masterplan to add a new $2.2 billion terminal, runway and 600,000 tonne capacity cargo complex by March 2010, the municipal government has unveiled plans to build an enormous ground transportation hub (the Hongqiao Comprehensive Transport Centre) that will be capable of handling over one million passengers daily as well as boasting a residential area and office complex.

Other Chinese cities and airports are watching the project with interest and are expected to try and follow Shanghai’s concept and approach in their own ‘airport city’ developments, though few may match the magnitude or duplicate the value of the Hongqiao programme.

Elsewhere, Shenzhen Bao’an International Airport has unveiled plans to build a second runway and new 500,000sqm terminal on land reclaimed from the sea by 2012 and Zhengzhou Xinzheng International Airport and Shenyang Airport are planning new terminals.

In western China, Chengdu Shuangliu International Airport recently completed its capacity-doubling $2 billion runway.

Hangzhou, Changsha, Chongqing, Wuhan, Nanjing and Xiamen are among quite a few airports in China about to reach the “magic threshold” of 10mppa, and all have planned or ongoing development projects designed to ensure that they keep pace with demand.

Though most regional airports in China do not make an ‘operating profit’, because they are viewed as key economic assets by local governments, support for the projects and consequently funding is not expected to pose much of a problem.

Indeed, most airports and their owners (provincial and municipal governments) are likely to take advantage of the cheap commercial loans available from China’s domestic banks.

‘Non-profitable’ regional airports are also expected to receive additional funding from central government via the General Administration of Civil Aviation of China (CAAC).

Foreign investment is encouraged, although there has not been much take up to date. Reasons for the lack of overseas investment in Chinese airports vary from ‘cultural differences’ to higher than expected internal rates of return (IRRs). However, there is certainly no indication that airport development in China has suffered as a consequence.

China really is the land of opportunity.

Airport World 2009 - Issue 6

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