The civil aviation industry is soaring, drawing strength from a surge in air traffic.
The sector generated 4.16 billion yuan ($640 million) of net profit in April, skyrocketing 53.8 percent from a year ago, according to data from the Civil Aviation Administration of China. Of this total, airlines earned 3.18 billion yuan ($489.2 million) and airports raked in 510 million yuan ($78.5 million), growing 57.9 percent and 11.1 percent, respectively, from the same period last year.
The bright performance was in large part because of a significant run-up in transportation needs. In April, passenger volume surged 13 percent year on year to 24.37 million, and cargo volume edged up 2.6 percent from the previous year to reach 478,300 tons.
But one cause for concern was climbing prices of jet fuel, which makes up around 40 percent of airlines' costs, said Li Lei, a senior analyst with the China Securities Co. Ltd.
The devastating earthquake in Japan also dealt a blow to airlines that have high revenue exposure to Japanese routes, such as China Eastern Airlines and Air China, said the international investment bank Morgan Stanley, in a recent report.
While they tried to lure more customers, Chinese airlines need to strengthen value-added services, such as in-flight retail sales, baggage handling and hotel bookings, said Michel Brekelmans, a Shanghai-based partner with the L.E.K. Consulting.
Those services contribute barely 1 percent to profits of airlines in China, far below the 35 percent in developed countries, he said. |