Beijing Airport profit takes off but carriers suffer
Alman Loong
August 30, 2005


Higher demand for air travel in China fueled a 17 percent profit rise at Beijing Capital International Airport in the first half, but surging oil prices dragged the country's two largest airlines, China Eastern Airlines and China Southern Airlines, into a loss.

Beijing Airport, China's biggest airport operator, said net profit rose to 400.6 million yuan (HK$384.46 million) in the first six months from a restated 341.4 million yuan while turnover slid 4.3 percent to 1.31 billion yuan.

China Eastern Airlines, the country's second-largest carrier, said net loss for the first half was 410.5 million yuan reversing a 488.7 million yuan net profit a year ago. It expects a profit for the first nine months after the government let airlines add surcharges on domestic tickets and r　eval　ue the Chinese currency in the third quarter.

China Southern Airlines, the mainland's largest airline, reported a net loss of 907 million yuan from the revised 1.03 billion yuan loss it reported last Friday due to "typographical errors.'' It expects a smaller loss in the second half.

China's fast economic growth has prompted more air travel, boosting Beijing Airport's net fees and charges by 14 percent to 916.4 million yuan.

Its net non-aeronautical revenues, on the other hand, fell 30 percent to 396.2 million yuan as the firm sold its retail, restaurants, and advertising units. But increased air traffic failed to help airlines offset surging fuel costs. China Eastern said it spent 3.3 billion yuan on fuel in the first half, up 44 percent on a year ago, cutting its gross profit margin by 7.46 percentage points. China Southern's total unit costs rose 17 percent year on year in the first half due to a 35 percent rise in unit jet fuel costs.

China Southern director Xu Jiebo said Monday the airline will spend five billion yuan in the second half of this year on fuel. He expects the passenger traffic volume to increase 12 percent to 40 million as demand is usually higher in the second half.

To ease the burden brought by high fuel prices, the Chinese authorities announced that airlines were allowed to add surcharges on tickets for domestic flights from August 1. PetroChina, Sinopec Corp and HNAplan to set up a venture to break the jet fuel monopoly of China Aviation Oil Holding.