BIZCHINA / Weekly Roundup
Ground reality
By ZHOU WEIRONG (China Daily)
Updated: 2006-08-14 06:23
The central government has set limits on the scale of airport
construction for the next five years, but that isn't stopping investors
from Hong Kong to Amsterdam from seeking a piece of eastern China's
airports.
While the government warns that some of China's airports are being
sustained by state coffers, there's been a recent flurry of deals in the
sector. That could spell short-term losses for investors, say analysts,
but the injection of foreign cash and skills might eventually pay off.
Foreign investors will bring advanced management experience and help
local airports strengthen their cost control, says Xu Changle, deputy
director of the Shanghai-based Institute of Yangtze River Basin
Development.
Earlier this month, the Shanghai Airport Authority (SAA) announced that
the Hong Kong Airport Authority (HKAA) may sign an agreement with SAA
this month to buy a stake in Shanghai Pudong International Airport's new
freight zone to participate in its freight-handling business.
The size of the stake has not yet been decided and other airlines can
still bid for a share in the freight zone, Hong Kong-based newspaper Wen
Wei Po quoted SAA's vice-president Li Derun as saying.
Though the SAA is not in need of capital, it still "agrees in principle"
to the HKAA purchase, considering its "strong interest" and the Closer
Economic Partnership Arrangement (CEPA) between Hong Kong and the Chinese
mainland, Li says.
The new freight zone, Freight Zone Phase Two, is currently under
construction in the west of the Pudong Airport and is to be completed in
2007. It is expected to extend to 2 kilometres in length and have the
capacity to handle 3 million tons of freight when it's finished.
The existing freight zone is 51 per cent-owned by the SAA, 29 per cent by
German airline Lufthansa, and the rest is owned by Shanghai-based
joint-venture freight forwarder JHJ International Transportation Co.
Taiwan-based Eva Air is another investor who is interested in the air
cargo business in the Pudong airport.
Last month, Eva Air announced that it has received approval from the
Taiwan Investment Evaluation Committee to purchase 25 per cent of the
shares of Shanghai International Air Cargo Co Ltd held by Sino Prime Ltd
at a total cost of US$3.88 million.
Based in Shanghai's airport, Shanghai International Air Cargo Co Ltd was
issued an Air Operator's Certificate and Operation Specification from the
General Administration of the Civil Aviation Administration of China
(CAAC) East China Bureau at the end of June.
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