Aviation industry set to fly high - ResearchInChina

Date:2007-12-27liaoyan  Text Size:
A BOOMING tourism market will lead China's aviation industry to a peak in the next few years thanks to big events such as the 2008 Olympic Games in Beijing and the 2010 World Expo in Shanghai.

The two events will undoubtedly draw more visitors to the host cities. Five million overseas visitors and more than 120 million domestic travelers are expected to visit Beijing next year, according to the organizer of the Beijing Olympic Games.

The Shanghai World Expo is expected to draw 70 million visitors, the city's officials have said.

The events will benefit the host cities' aviation industry as well as neighboring cities, which will profit from a spillover effect.

The country is expected to be the most popular tourism destination in the world in 2015, when domestic airports will handle 450 million passengers annually.

In the third quarter of this year, domestic carriers flew 52 million passengers, a rise of 15.3 percent year on year, according to the General Administration of Civil Aviation.

A rising passenger volume and a strong yuan led profit to rise 66 percent in the third quarter of this year to 9.1 billion yuan (US$1.23 billion), the administration said.

The appreciation of the yuan is another key fact that secures profit for the carriers. The yuan has climbed more than 10 percent against the US dollar since a peg was scrapped in July 2005, which cuts the repatriated value of US dollar-denominated debts for the airlines.

China's swelling trade surplus has triggered pressure from the United States and European countries for the yuan to appreciate even more.

Stephen Green, a senior economist at the Standard Chartered Bank (China) Ltd, expects the yuan will appreciation aggressively against the US dollar next year.

"We revised our forecast to 7.4 by the end of this year and 6.84 by year end of 2008," Green has said.

However, the industry isn't free from the impact of surging oil prices.
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