China Airports Build: Too Many Too Fast?

Overview

As part of the Chinese government 5-year plan, China is building many airports. A plan that includes the construction of 82 new civil airports and the expansion of 101 existing Chinese airports, totaling more than 230 airports by the end of 2015 with an estimated 80% of China’s population living at less than 100 km of an airport.

Undeniable Need for Airports

As China’s population becomes wealthier and tourism quickly expands, China will certainly need more airports.  Moreover, due to its large territory, relying on air transport is a necessity; however, if we compare China to the U.S where there are 57 airports per million square meters, China has 19 only.  According to the Chinese Civil Aviation Authority, released figures show a strong continuous growth in 2013, reaching 11% to 354 million passengers.

That's all very nice, but this current situation must be contrasted. China's three airport hubs: Beijing, Shanghai and Guangzhou account for one third of the passenger traffic in China (209 million in 2012), and one half of the country's cargo.

Airport Delays, Losses and Subsidies

Poor organization of the Chinese airspace lead passenger flights to suffer long delays. And they are getting worse with the traffic growth.  Furthermore, Chinese airports are widely unprofitable, even though officials claim the contrary, that they turned a profit of $750 million in 2011.

Recently, it was announced that the Chinese Civil Aviation Authority will grant a subsidy of $180 million to 137 airports in 2014, each receiving between $650.000 and $2.7 million.  That is all nice, but why not improve the current situation first before building more new airports?

Unquenchable Appetite for Airports

Presently, there is a huge investment in high-speed trains which creates competition for aviation so I question the usefulness of new airports in cities already reachable easily by train. But for local administrations, building an airport creates confidence which in turn attracts international companies and high-added value industries and services.

Air Transport’s Network Expansion

When skeptics question the risk of overcapacity, officials raise the argument of a network effect: more flights will come from a larger network, and then more airports will naturally bring more flights. And a possible apparition of more low cost carriers in the country in the near future could completely change aviation’s face.

The least active airports in China are served by 3 to 5 airlines, and generally linked to China’s main airport hubs.  43 airports already have more than 2 million passengers per year -compared to 62 airports in the US- and 24 airports have more than 10 million passengers per year.

Large Spend, Large Projects

To conclude, the number of airport-related projects in China is huge, as the projects themselves can be artificial islands, mountains flattening etc. The investment of the aviation authority in 2013 is expected to be $24.2 billion.  As a result, the environmental damage will also be immense. Nonetheless, since only 193 airports could be counted in China at the end of last year, it seems that numerous projects will face delays. The demand increase will not.

References China’s Airport Building BoomWill China Build 82 Unneeded Airports by 2015China Air TransportBusiness US China Economy AirportsCenter for AviationWorld Civil Aviation Resource Net

Image credit: Vitor Azevedo