Regarding the price of food and merchandise, such a situation also existed in the U.S. for a long time. The cost of food in the airport would be twice as expensive as street prices. Now this has changed with the introduction of "street pricing." BAA USA, a subsidiary of the British company that owns and operates airports in London, developed the Air Mall concept of "street pricing" -- prices no higher than in comparable stores in the surrounding area. The move is designed to dispel the price-gouging image that airport shops have earned over the years.

This concept is now recognized in China as larger and larger percentage of airport revenue comes from non-air related business -- commercial related services. Air travelers tend to be a selective group. Their incomes are 2 to 4 times higher than the national average, and they purchase goods at a higher value. Look at Hong Kong airport, there are lots of luxury stores because there are more wealthy passengers.

Airport plays an important role in making the first impression of a city or the country on visitors. With the development of China's economy, large cities such as Beijing, Shanghai and Hong Kong have built world-class airports. However, many small and medium cities in China do not have an airport. How important is airport construction to a local economy?

It is essential for small cities and outlying areas to have airports. China is very fast in building certain areas of infrastructure, however, the logistics are still far behind what is needed to be globally competitive.

The country still faces the challenge of the lag between coastal areas and inland cities. If the inland cities can have their own airports, and be intimately connected to hub airports in Beijing, Shanghai, and even Hong Kong, they will be able to receive and ship goods quickly and efficiently through the air-network. If inland cities have their own airports and are able to build supporting industrial and commercial areas around them, the large influx of migrants to the costal cities can be decreased.

Some people, especially local officials in small cities, are worried about the flow of passengers. What will they do if it is found that their airport is not going to be used very frequently?

These arguments should be looked at very seriously. Primarily it is because of the passenger traffic. If you just look at the problem from the passenger side, most small cities don't have the income level to be able to fly very frequently. But as China develops, more and more people will reach the income level. This is the 21st century; we should not just look at the next five years, but the next one hundred years. You want to keep these inland cities connected.

There is another thing I often mention, "highways." When you construct a highway on the ground, it requires billions of government dollars. However, a "highway" in the sky is paid for by an individual company. There are as many "highways" in the sky as a company can afford. They connect very quickly and efficiently. The key to commercial success is no longer location, location, location, but accessibility, accessibility, accessibility. The three "A"s are replacing the three "L"s. This is an understanding of airports.

Logistics has become a rising industry with the development of economic globalization. The Kenan Institute, where you currently work, and China's top university Tsinghua have established a joint research center that focused on logistics and economic development. The main courses include supply-chain management, corporate governance, logistic infrastructure and networks and so forth. In your opinion, how are these programs working?

The government is allowing international giants, FedEx, UPS, and DHL to come in and set up their operations. The government is also involved in the training programs where they are using the latest tools and software. It has encouraged partnerships between domestic and international trucking firms. I would like to see a growing bilateral relationship between China and the Western countries. China's advancement in logistics will place it in a much better position on the global stage.