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Contents
Getting the timing right
2
The current situation Checking in for growth
4
Market share
6
Ownership
8
Investment considerations Revenue patterns
10
Deal considerations
12
Tax structuring and financing
14
What's on the horizon? Standardisation and liberalisation
16
Cargo and logistics hubs
18
China’s airports rising through the ranks
19
Outlook: Geographic and demographic trends
20
China’s top 50 airports
22
About KPMG
23
Contact us
24
© 2006 KPMG, the Hong Kong member firm of KPMG International, a Swiss cooperative. All rights reserved.
2 Checking in: Airports in China 2006
Getting the timing right
As China’s middle class has grown, the country has witnessed a steady increase in air travel, both for business and leisure. Disposable income and an increased desire to travel are resulting in ever greater volumes of air traffic in the skies above China.
potential for cargo volumes. The following government statistics reveal the scale and potential of China’s airport sector: • Total passenger throughput for all airports in China in 2005 reached 284 million, up from 242 million in 2004 2. • Freight tonnes rose to over 6.33 million tonnes in 2005, compared China is a vast country, with a growing and increasingly mobile middle class.
with 5.23 million in tonnes in 2004. • The Civil Aviation Administration of
These are the vital ingredients for growth
China (CAAC) expects passenger and
of China’s airport capacity.
cargo traffic to grow at an average 14 percent per year until 2010 and
The recent signs of possible overcapacity
then to grow at 11 percent per annum
at certain airports are likely to be short-
until 2020 3.
lived. On the contrary, the recent expansions and redevelopments of some
China currently has 142 civilian airports.
of China’s largest airports may only be a
The market is skewed towards the
foretaste of what is to come. Volumes, on
largest 10 airports, which together
a per capita basis, are still relatively low.
possess a 60 percent share of passenger
A citizen in the United States makes an
volumes. Seven of these are located
average of 2.2 trips by plane every year,
along the eastern seaboard. The pattern
1
but the figure is just 0.06 for China .
is similar for cargo, with the five leading airports accounting for 64 percent of total
China’s world-renowned trade and growth
volumes 4.
story also illustrates the growth and
________________________________ 1 2 3
2 KPMG’s Code of Conduct: Performance with integrity
4
Global Market Forecast 2004-2023, Airbus Press Centre Xinhua Financial Network News, 1 March 2006 “China plans airport expansion,” Wall Street Journal, 1 March 2006 CAAC 2004 Air Traffic Statistics
© 2006 KPMG, the Hong Kong member firm of KPMG International, a Swiss cooperative. All rights reserved.
Checking in: Airports in China 2006
3
Figure 1: Graphical map of the largest 30 airports (passenger throughput per annum)
Harbin
Urumqi Shenyang Beijing Dalian Tianjin Qingdao
Taiyuan Jinan Xi’an Zhengzhou
Shanghai Pudong
Nanjing Chongqing Chengdu
Hangzhou
Wuhan Changsha
>20 million passengers
Guiyang
Guilin
Kunming
Shanghai Hongqiao Ningbo Wenzhou
Fuzhou Xiamen
Guangzhou Shenzhen
6-20 million passengers 3-6 million passengers <3 million passengers
Sanya
Hainan
Source: CAAC official statistics 2004
By 2020, more than 40 percent of the
• The market for freight is fluid and
The multi-layered nature of the
country’s anticipated 1.4 billion population
evolving. Cargo is the fastest growing
approval process requires realistic
will live in urban areas 5. As new cities
area within China’s aviation industry.
planning.
spring up, small provincial airports will
The potential exists for new airports to
need to expand or brand new airports will
emerge as hubs for the freight
be built in their place. Public estimates
industry, and these can be supported
Since 2002 foreign investors have
indicate RMB140 billion (US$17.4 billion)
or developed with foreign investment.
been able to invest in the construction
of investment is needed in airport infrastructure over the next five years 6.
• Ownership restrictions are in place.
and operation of amenities including • There is potential for consolidation.
airport terminals and runways,
There are a large number of local
with a maximum equity interest of
This report cites several themes relevant
airport companies, some of whom are
49 percent 7.
to potential investors:
seeking to consolidate. This report provides an introductory • Investors are considering alternatives
overview of the airport sector, and some
airport revenues. Most Chinese
to equity. Joint ventures, strategic
discussion of key issues facing investors.
airports’ economic models are currently
alliances and other partnerships give
It concludes by identifying some further
based on revenues from core aviation
investors an opportunitity to team up
trends and developments on the horizon.
activities. There is significant potential
with local airport groups and ancillary
Many foreign investors see enormous
to develop associated areas of business,
companies, to apply international
upside potential for China’s airport sector.
most notably retail and real estate.
expertise and helping to optimise flow
As such, they are keeping a close eye on
management.
opportunities, while waiting patiently for
• There is potential to diversify
the right deal. As regulations change and
• Rising volumes will create parallel opportunities in ancillary services.
• The government has largely
new projects get underway, investors can
Specific ancillary areas, such as
transferred airport ownership to the
benefit from a trusted advisor to identify
catering, ramp handling, cargo handling,
provincial level. Investors need to
a suitable route into this exciting market.
engineering and maintenance services
identify and engage with owners and
are already attracting investment
stakeholders at both the national and
interest.
local level, to ensure deal success.
________________________________ 5 6 7
Global Market Forecast 2004-2023, Airbus Press Centre “China unveils aviation leap forward,” Airline Business, April 2006 “China to allow higher foreign stakes in air sector,” Reuters, 2 July 2002
© 2006 KPMG, the Hong Kong member firm of KPMG International, a Swiss cooperative. All rights reserved.
4
Checking in: Airports in China 2006
The current situation
Checking in for growth
The growth rate of air travel in China has
China has risen by more than 40 percent
averaged over 15 percent per annum over
in the past five years 10, triggering growth
the past four decades and has the
in a range of service industries. Transport
potential to sustain a similar rate for at
and communications have become the
8
least another decade . Both inbound and
fastest growing items in the Chinese
outbound travel is on the rise. The
household budget, now representing
volume of outbound flights has grown on
ten percent of total consumption
average 22 percent per year over the past
expenditure 11. As a projection of current
five years, and will continue to outpace
trends, international tourist departures
growth in inbound travel 9.
will surpass tourist arrivals in 2008.
One reason for this remarkable growth is
While international departures originating
that urban per-capita disposable income in
within China are growing faster than
Figure 2: Acceleration of urbanisation in China
Urban population as % of total population
60%
Forecast
50% 40% 30% 20% 10% 0% 1950
1960
1970
1980
1990
2000
2010
2020
2030
Figure 3: Departures overtake arrivals 80
Forecast
70
Passengers (millions)
China offers the potential for explosive growth in internal and outbound travel. These growing volumes will transform travel and tourism in Asia Pacific and beyond.
60 50 40 30 20 10 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 International tourism arrivals International tourism departures
Source: “China, travel and tourism background and forecast – International arrivals and departures,” EIU Business Asia, 24 October 2005
________________________________ 8 9 10 11
EUROPA: Communication Civil Aviation Policy Towards People’s Republic of China, November 2005 Aviation News, Centre for Asia Pacific Aviation China Statistical Yearbook, 2005 Global Market Forecast 2004-2023, Airbus Press Centre
© 2006 KPMG, the Hong Kong member firm of KPMG International, a Swiss cooperative. All rights reserved.
Checking in: Airports in China 2006
5
inbound travel, China’s own tourism
it easier to travel for private purposes
At current rates of growth such
potential is also impressive. In 2004 China
than ever before. China’s manufacturing
overcapacity is likely to be a short lived or
overtook Italy to become the world’s
sector is spurring similar growth of air
localised phenomenon, but investors
fourth-largest international tourist
cargo volumes and capacity. Freight
should be aware that timing the entry into
destination, according to the World
tonnes surged 19 percent in 2005, to over
the market is crucial to success. The
12
13
Tourism Association . International travel
6.3 million tonnes . CAAC believes cargo
CAAC wants to build a further 44 new
is a key revenue driver for major airports.
throughput could exceed 10 million
airports over the next five years 15, so the
The government’s policies place the
tonnes by 2010, an even faster pace than
location and development of these new
travel and tourism sector as one of the
passenger traffic 14.
projects will have an important impact on
key pillars of the growing service industry
the commercial prospects for existing
with specific measures to encourage
Many of China’s largest airports, including
foreign investment.
Beijing, Shanghai Pudong and Hongqiao,
facilities.
Guangzhou and Tianjin, have recently Until recently, the majority of Chinese
augmented or rebuilt their terminal
people travelled for business. However
buildings. There is a similar story among
this has changed dramatically in recent
smaller, less used airports, many of
years. China’s urban population is finding
which have spare capacity. In some cases utilisation rates are below 50 percent.
________________________________ 12 13 14 15
World Tourism Organisation: International Tourist Arrivals by Country of Destination; www.world-tourism.org Xinhua Financial Network News, 1 March 2006 “China in mad rush to build more airports as passenger numbers keep soaring,” Aviation Buyer China, November 2005 “China to boost spending on airports as air traffic grows,” Dow Jones Newswires, 28 February, 2006
© 2006 KPMG, the Hong Kong member firm of KPMG International, a Swiss cooperative. All rights reserved.
6 Checking in: Airports in China 2006
Market share
Of China’s top 10 airports by passenger volume, seven are located in coastal regions. The largest 10 airports account for 60 percent of passenger and cargo volumes.
Beijing Capital International Airport, ranked
ahead of the 2008 Olympic Games.
first in terms of passenger throughput and
This would make Beijing one of the
aircraft movement in 2005, with 41 million
world’s biggest airports; in 2005
passengers. However, Shanghai Pudong
Atlanta handled 85 million passengers
surpassed all its domestic rivals in cargo
and just four others – Chicago O’Hare,
volume. In 2005 it handled 1.86 million
London Heathrow, Tokyo Haneda and
tonnes, more than double that of Beijing.
Los Angeles – handled over 60 million
By comparison, Hong Kong handles over 3
passengers 16.
million tonnes per year (see table, page 7).
• Shanghai Pudong International Airport
Between 2002 and 2004 some 90 airports
has announced a new expansion
were corporatised, prompting rapid
project which, once complete, will
capitalisation and capacity increases.
triple its capacity to 60 million
For example:
passengers 17.
• Beijing Capital International Airport’s
• Hangzhou Xiaoshan International
expansion project is now underway
Airport is working on the second
and aims to double the airport’s annual
phase of its expansion project to add a
capacity to 60 million passengers
new terminal and runway. • Xi’an Xianyang International Airport is
Figure 4: Airports’ market share by passenger traffic
expected to start the second phase of its expansion project soon.
All other airports
11%
Beijing 14%
• Chengdu Shuangliu International Airport is planning to build a second Shanghai Pudong 9%
runway and second terminal building with funds raised from private investors.
Top 11-30 28%
Guangzhou 8%
• Guangzhou Baiyun, which opened in August 2004, is already ranked as Shanghai Hongqiao 6%
Hangzhou 3% Xi’an 3% Hainan 3%
Shenzhen 6%
China’s third largest airport for both passengers and freight.
Chengdu 5% Kunming 4%
Source: CAAC official statistics 2004
________________________________ 16 17
Airports Council International provisional 2005 statistics; www.airports.org “Shanghai plans to expand two terminals after traveller volume rises,” South China Morning Post, 2 January 2006
© 2006 KPMG, the Hong Kong member firm of KPMG International, a Swiss cooperative. All rights reserved.
Checking in: Airports in China 2006
7
Traffic volumes for China’s largest airports Airport
Passengers (millions) 2004 2005
Beijing Capital
34.88
41.00
668,690
782,066
Shanghai Pudong
21.02
23.66
1,642,176
1,857,119
Guangzhou Baiyun
20.33
23.56
506,988
600,603
Shanghai Hongqiao
14.89
17.80
294,020
359,594
Shenzhen Baoan
14.25
16.28
423,270
466,476
Chengdu Shuangliu
11.69
13.90
213,039
251,017
Kunming Wujiaba
9.80
11.82
171,013
196,530
Hangzhou Xiaoshan
6.34
8.09
128,208
165,917
Xi’an Xianyang
6.36
7.94
73,368
83,256
Hainan Meilan
7.48
7.03
66,582
60,590
37.14
40.74
3,088,300
Hong Kong
2004
Cargo (tonnes) 2005
3,400,000*
* Official estimate Source: CAAC, Hong Kong International Airport Annual Report
© 2006 KPMG, the Hong Kong member firm of KPMG International, a Swiss cooperative. All rights reserved.
8
Checking in: Airports in China 2006
Ownership
Limits on foreign ownership and tariff structures are key considerations for would-be investors.
China’s airports employ nearly 50,000 people and have assets worth 18
• Setting domestic and international aviation tariffs
approximately US$4.8 billion . The
The CAAC’s control over tariffs means
majority remain fully state-owned,
it retains significant influence over
through the CAAC and local government
their largest source of revenues. This
entities. In 2002 the CAAC transferred
situation is expected to change and
ownership to provincial governments.
will affect the future financial
Management control over these jobs and
performance of Chinese airports.
assets largely passed to its provincial offices.
• Administering airport construction fees
Only a handful of airports are listed or
The CAAC collects these fees in a
have foreign investment, but several
centrally administered fund and then
others have announced they would
disburses money back to airports.
welcome a strategic partner. A number of Chinese airports are looking to foreign
• Setting and monitoring standards
investors not only to provide capital, but
The CAAC formulates all standards
also international management expertise.
governing safety, security and other operational issues within airports.
The role of the CAAC continues to evolve. Having once owned and managed the
• Airspace administration and air
entire aviation sector, the CAAC now
traffic control
discharges more administrative and
The CAAC grants airlines the rights to
regulatory functions. Today its remit
use certain routes and administers air
spans the following areas:
traffic within China’s borders. These functions are likely to remain under the
• Central planning for airports
close supervision of the CAAC. The
The CAAC has the power to approve
CAAC is also involved in representing
construction or redevelopment of
China in international negotiations
airport facilities, including terminals
relating to civil aviation and airspace.
and runways. It liaises with other government bodies in the planning of supporting infrastructure.
________________________________ 18
Squire Sanders Legal Council China Update, December 2003
© 2006 KPMG, the Hong Kong member firm of KPMG International, a Swiss cooperative. All rights reserved.
Checking in: Airports in China 2006
9 9
Timeline of recent developments in the aviation sector
2001
2002
2003
2004
2005
“Regulation on Foreign Investment” issued to increase potential for investment in China's airports and airlines. Consolidation of 10 airlines into three super-carriers; Air China, China Southern Airlines and China Eastern Airlines.
Foreign investors allowed to invest in the construction and operation of airports, including airport terminals and runways, with equity interest up to 49 percent. Airport ownership transferred within the CAAC from the central to the provincial level.
Singapore Airlines becomes first foreign carrier to win “fifth freedom rights” to operate beyond China to a third country.
Domestic airlines allowed to invest in airports to a maximum of 25 percent. The airport construction fee, traditionally payable at the airport, is incorporated into the ticket price.
The government announces end to subsidies for domestic airports. The government introduces new domestic investment regulations in a bid to stimulate private investment in aviation industry, while retaining ownership of the air traffic control system.
© 2006 KPMG, the Hong Kong member firm of KPMG International, a Swiss cooperative. All rights reserved.
10
Checking in: Airports in China 2006
Investment considerations
Revenue patterns
The control of tariffs and the narrow scope of revenues are issues for China’s airports. Nevertheless, the evidence suggests that most airports operating at or close to full capacity are profitable.
Airport groups are organised by province
China has signed bilateral agreements
and often consist of a number of
with a number of countries to liberalise
companies with cross-holdings.
international passenger and freight
Subsidiaries may have several third-party
services:
investors which are in turn involved in areas where foreign investment is
• The CAAC granted “Fifth Freedom
restricted. As the CAAC restructures
Rights” to Hainan Island in 2004,
airport tariffs, it has pledged to abolish
allowing foreign airlines to stopover
the current two tier structure, which sets
and pick up passengers and cargo.
different fees for domestic and foreign
This could allow the island to take
carriers.
advantage of the more advanced budget airline sector linking Hong
The mainstay of most airports’ revenue
Kong and Southeast Asia.
comes from aviation tariffs and airport construction fees. These are set
• The government may extend these
nationally by the CAAC. One way to
rights to other key provincial airports.
develop the breadth of airports’ income
It recently announced it will provide
streams is by opening up the aviation
unlimited access for foreign carriers
sector as a whole to greater competition.
operating to six regions in Western
Foreign access is starting to increase.
China.
© 2006 KPMG, the Hong Kong member firm of KPMG International, a Swiss cooperative. All rights reserved.
Checking in: Airports in China 2006
11
control measures. New investment in
to RMB475 million 19. It has also benefited
agreement with the U.S., enabling the
terminals and increased capacity will
from a government decision in February
countries’ airlines reciprocal access by
entail a minimum staffing requirement for
to relax a ban on late night flying.
2010. This may have a knock-on impact
the airport’s functions, irrespective of
Shanghai Hongqiao Airport is one of the
on established transit hubs in the
volumes. Depreciation on a terminal and
most heavily utilised airports in China,
region, such as Hong Kong and Tokyo.
equipment tends to be heavy.
aided by its favourable location relative to
• In 2004 the government signed an
the larger Shanghai Pudong International Investors are also looking for
There are other factors affecting revenue
Airport. Overall, the picture is improving.
opportunities to diversify and strengthen
patterns. Many airports were previously
Load capacity in the sector has risen
non-aviation revenues in areas such as
dependent on subsidies, awarded at the
steadily from its low point during the
retail, transport and cargo handling
discretion of the government. As these
SARS scare in Spring 2003.
facilities.
are being phased out the need for alternative investment sources and
For most airports, the revenues from
financing, as well as international
retail and handling services remain
management expertise, may increase.
relatively low by international standards. The local restrictions on management to
Many of the airports which have achieved
adjust tariffs to reflect changing supply
high capacity utilisation have also yielded
and demand conditions means they are
healthy profits. In 2005 Shenzhen Baoan
sometimes restricted to focusing on cost
Airport saw profits jump by 22.4 percent
________________________________ 19
“Shenzhen Airport Ranked 1st by Profits,” Sinocast Daily News, 19 January 2006
© 2006 KPMG, the Hong Kong member firm of KPMG International, a Swiss cooperative. All rights reserved.
12
Checking in: Airports in China 2006
Deal considerations
While the government has indicated that it will deregulate tariffs, other regulatory considerations remain.
China’s airports are state-owned
• Land ownership
enterprises (SOEs). Whenever an SOE or
For a foreign invested enterprise, the
any part of one is sold to a foreign
land status will have to be changed to
investor, a statutory valuation is required.
“granted” before the company can
This can have a significant impact on the
invest. This can entail a significant
ultimate price paid by the buyer for an
premium from the buyer.
investment. Since 2002 foreign companies have been able to invest in the
• Retail
construction and operation of amenities
Foreign ownership of duty free outlets
including airport terminals and runways
is not permitted. These outlets are
with equity interest up to 49 percent.
supervised and regulated by the China Duty Free Corporation, an SOE.
Several individual airports and groups of
Investment in other forms of retail
airports have been corporatised and listed
outlet is more widely permitted.
on local exchanges; this has been the main route for foreign investment in the
Most of China’s airports operate on a
sector. To date the only unlisted airport
relatively traditional business model,
with substantial foreign interest is
combining revenues from ground
Hangzhou Xiaoshan, where the Hong
handling, aviation fees and retail. To date,
Kong Airport Authority has agreed to take
the limited role played by foreign
a 35 percent stake, subject to final
investors has also been somewhat
government approval.
traditional, taking the form of minority equity stakes in the listed airport groups.
Foreign investment restrictions apply to
While it is now relatively straightforward
many areas associated with the aviation
to do this, investors are also exploring
sector. As a result restructurings,
more innovative roles. In 2005 the
including the extraction of certain
International Air Transportation
subsidiaries, may be required before an
Association (IATA) studied a number of
investment can be cleared by the
airport privatisations in Europe, Asia and
government. Restricted areas may
Latin America. It concluded that airports
include the following:
can often improve their performance and efficiency by outsourcing management,
• Air traffic management
without a wholesale transfer of assets to
The government has not given
private ownership. In China, these
indication that it will allow foreign
solutions could include forming asset-light
participation in air traffic management.
joint ventures to facilitate management or strategic cooperation.
© 2006 KPMG, the Hong Kong member firm of KPMG International, a Swiss cooperative. All rights reserved.
Checking in: Airports in China 2006
13
Existing ownership in China’s airports Airport
Listed in
Ownership details
Beijing Capital International
Hong Kong
BCIA is under the direct management of the CAAC and controls and has
Airport (BCIA)
stakes in over 20 other Chinese airports. Paris Airport Authority currently indirectly holds a 6.6% stake.
Shanghai International Airport
Shanghai
Owned by the Shanghai Airport Authority, 39% in public shareholding
Shanghai
One of four airports owned by the Guangdong Airports Management Corp,
(operates Hongqiao and Pudong airports)
Guangzhou Baiyun
45% in public shareholding Shenzhen Baoan
Shenzhen
Owned by Shenzhen Airport Group, 45.3% in public shareholding
Hainan Meilan
Hong Kong
Copenhagen Airports acquired 20% stake in November 2002
Hangzhou Xiaoshan
–
Hong Kong Airport Authority agreed to acquire 35% stake in March 2005
Xiamen Gaoqi
Shanghai
Owned by Xiamen International Airport Group, 25% in public shareholding
Source: Bloomberg, HSBC Brokering (Data Services) Ltd.
© 2006 KPMG, the Hong Kong member firm of KPMG International, a Swiss cooperative. All rights reserved.
14 Checking in: Airports in China 2006
Tax structuring and financing
Investing in China requires careful examination of existing financial performance and consideration of a range of structuring options.
What opportunities exist to secure a
• Minimising leakages
return on investment? Investing directly
For operating retail outlets, how can
in a Chinese airport is a lengthy
the supply chain of the investee
commitment. Obtaining clear financial
company be reorganised to minimise
information is important at the
turnover tax leakages?
pre-acquisition stage. • Exit routes It is important for foreign investors to
How can the investment holding
include tax structuring as part of this
structure can be organised to provide
overall evaluation before deciding to
a flexible exit route, minimising capital
invest in an airport. Tax structuring aims
gains tax upon disposal? This could
to identify, address and, where
require the creation of a special
necessary, minimise tax leakage to
purpose vehicle to hold the investment.
investors. These leakages can occur throughout the investment cycle, from
The State Administration of Taxation (SAT)
acquisition to disposal.
is seeking to apply its tax policies more consistently. That may include applying
The following issues need to be addressed
more uniform collection procedures to
during the tax structuring phase:
state owned enterprises such as airports. A change in ownership status, combined
• Choice of structure
with the increasingly rigorous approach
How can the investment in the
from the SAT, could result in a changing
Chinese investee company can be
tax position. The intertwined structures
structured to take advantage of tax
among many airport companies could
holidays or incentives? The choice of
lead to non-arm’s length transactions
investment holding structure may be
across the group, entailing further transfer
affected by the investor’s home
pricing risks.
country tax consequences. Structuring can also help to minimise cash trap issues, since it will dictate the minimum level of working capital the investor needs to maintain.
© 2006 KPMG, the Hong Kong member firm of KPMG International, a Swiss cooperative. All rights reserved.
Checking in: Airports in China 2006
15
Further considerations for a foreign investor include the following: • Credit quality What are the implications of the target’s narrow revenue base? What opportunities exist to diversify revenues? • The extent of control over revenues and operations Certain existing operators or subcontractors may have a stake or own a segment within the overall airport group. The existence of such intertwined ownership structures will help dictate the most suitable form of foreign investment. • Approvals Incorporating a company locally, taking a smaller equity stake, or entering into alternative management or strategic agreements may offer a simpler route for investors wishing to take an interest in the airports sector, but there can still be a considerable approval process.
© 2006 KPMG, the Hong Kong member firm of KPMG International, a Swiss cooperative. All rights reserved.
16
Checking in: Airports in China 2006
What’s on the horizon? Standardisation and liberalisation
The government has changed many of the rules governing the regulatory and commercial structure of airports. The next step in the process may be to deregulate or standardise tariffs.
The CAAC is currently reviewing airport
opportunity to expand non-core revenues
landing fees, with the aim of creating a
could further enhance investor interest in
more uniform fee structure.
the sector.
The deregulation of ground handling
At present only 30 percent of China’s air
services – airlines no longer have to use
space is open to civil aviation 20. This can
airport services to carry out their ground
cause bottlenecks and impact on airlines’
handling – could happen next year. The
fuel and operating costs.
deregulation of related services and the
Some proposed new airport projects in China Airport
Province
Investment amount
Hankou
Hubei
n/a
Construction underway
Kunming
Yunnan
RMB16 billion
Construction underway
23 million capacity by 2015, rising to 40 million by 2020
Changbaishan
Jilin
RMB309 million
Approved
Terminal size 8,000m2
Chaoshan
Guangdong
RMB2.3 billion
Approved
Passenger capacity 5 million
Dalian
Liaoning
RMB15 billion
Approved
Terminal size 200,000m2, passenger capacity 20 million
Jixi
Heilongjiang
RMB150 million
Proposed
Terminal size 1,500m2, passenger capacity 110,000
Hefei
Anhui
RMB2.5 billion
Proposed
Passenger capacity 9.5 million
Tonghua/Baicheng
Jilin
n/a
Proposed
Proposal to build network of four new airports in Jilin Province
Status
Other details
This information has been collected by KPMG from a number of sources including AV News (www.avbuyer.com.cn), Reuters and SinoCast Business News. It therefore may not be exhaustive.
________________________________ 20
“China clears new lane for planes,” Wall Street Journal Asia, 10 April 2006
© 2006 KPMG, the Hong Kong member firm of KPMG International, a Swiss cooperative. All rights reserved.
Checking in: Airports in China 2006
17
Š 2006 KPMG, the Hong Kong member firm of KPMG International, a Swiss cooperative. All rights reserved.
18
Checking in: Airports in China 2006
Cargo and logistics hubs
China is already the world’s second-
China still has relatively few nationwide
biggest domestic market for air cargo,
freight or logistics organisations, such as
with volumes increasing by 22 percent in
Sinotrans. The main international
2004. Its relative share of global exports
operators are positioning themselves to
will continue to increase over the coming
service this growing Chinese market.
decade. IATA projects China’s cargo
DHL, Federal Express and UPS all have
volumes will grow by an average of
announced aggressive expansion plans
14 percent per year between 2005 and
for China, including tie-ins to key hub
2009, the highest level for any country in
airports.
the world 21.
Figure 5: Top 10 markets by rate of cargo growth, 2005-2009 15%
14.4%
14% 13%
Growth rate
12.5%
12.2%
12%
11.6%
11%
10.7% 10.0%
10%
9.9%
9.7%
9.7% 8.9%
9%
Oman
Czech Republic
India
Mexico
Malaysia
South Korea
Macau SAR
Sri Lanka
Qatar
8%
China
Competitive new logistics hubs will emerge in industrial regions.
Source: IATA: "Passenger and Freight Forecast 2005-2009" October 2005
________________________________ 21
IATA: "Passenger and Freight Forecast 2005-2009" October 2005
© 2006 KPMG, the Hong Kong member firm of KPMG International, a Swiss cooperative. All rights reserved.
Cargo tonnes (millions)
3
2
1
0 Denver (DEN) Las Vegas (LAS)
Miami (MIA)
Louisville (SDF)
Taipei (TPE)
Beijing (PEK) San Francisco (SFO)
Indianapolis (IND)
Newark (EWR)
Miami (MIA) Seattle/Tacoma (SEA) Toronto (YYZ) Philadelphia (PHL)
Beijing (PEK)
Kuala Lumpur (KUL)
Brussels (BRU)
Singapore (SIN)
Luxembourg (LUX)
Oakland (OAK)
Orlando (MCO) Tokyo, Narita (NRT)
Tokyo, Haneda (HND)
Dallas/Ft. Worth (DFW)
Newark (EWR)
Detroit (DTW)
Bangkok (BKK)
London, Gatwick (LGW)
Houston (IAH)
Dubai (DXB)
Osaka (KIX)
Hong Kong (HKG)
London, Heathrow (LHR)
Atlanta, Hartsfield (ATL)
New York (JFK) Minneapolis/St.Paul (MSP)
Amsterdam, Schiphol (AMS)
Shanghai, Pudong (PVG)
Haneda, Bangkok and Hong Kong.
Paris, Charles de Gaulle (CDG)
Madrid (MAD) Bangkok (BKK)
Chicago, O’Hare (ORD)
Phoenix, Sky Harbour (PHX)
Amsterdam, Schiphol (AMS)
Singapore (SIN)
New York (JFK)
Frankfurt-Main (FRA) Paris, Charles de Gaulle (CDG)
Frankfurt-Main (FRA)
Los Angeles (LAX) Dallas/Ft. Worth (DFW)
Los Angeles (LAX)
Tokyo, Haneda (HND)
Anchorage (ANC)
Seoul (ICN)
Chicago, O’Hare (ORD) London, Heathrow (LHR)
Tokyo, Narita (NRT)
Atlanta, Hartsfield (ATL)
4
Memphis (MEM)
0
Hong Kong (HKG)
Passenger volume (millions)
Checking in: Airports in China 2006 19
China’s airports rising through the ranks
Beijing Capital International Airport is the Shanghai Pudong is emerging as the
largest passenger airport in China and has major cargo handling airport in China,
been among the world’s 30 largest acting as the gateway for production in
airports for the past five years. It is the the Yangtze River Delta. In 2004 it moved
fourth largest airport for passenger from 26th place into the top 15 globally
volume in Asia Pacific, behind Tokyo and continues to grow rapidly. Excluding
cargo than any airport in Europe.
Frankfurt, Shanghai Pudong moves more
Figure 6: The world’s busiest airports, 2004 100
80
60
40
20
Source: Airports Council International annual statistics; www.airports.org
© 2006 KPMG, the Hong Kong member firm of KPMG International, a Swiss cooperative. All rights reserved.
20
Checking in: Airports in China 2006
Outlook: Geographic and demographic trends
Prospective foreign investors are increasingly looking to second tier airports.
Air travel in China is no longer the
accounts for a very small relative amount
preserve for the elite or business
of total freight volumes 22.
travellers. As income levels rise, more price-sensitive leisure travellers are
By 2015 the United Nations estimates
emerging in the market. These travellers
China will have more than 60 cities with
will drive exponential growth in travel
populations exceeding one million. The
both within China and from China to
implication is clear for the growth of
other parts of Asia Pacific. There are still
airports in second tier cities, as well as for
ten times more people travelling by train
the growth of secondary airports in the
in China than by air, while aviation
main cities, serving internal or budget conscious travellers.
Figure 7: Freight volumes in China by different means of transportation
Roads
12,491
Railways and subways
2,490
Waterway
2,490 6
Aviation 0
2,000
4,000
6,000
8,000
10,000
12,000
Million tons* * One imperial ton is equal to 0.907 metric tonnes Source: China State Communication Department, 2004 statistics
________________________________ 22
â&#x20AC;&#x153;Flight home,â&#x20AC;? Airline Business, January 2006
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Checking in: Airports in China 2006
Airports also have an opportunity to
21
Figure 8: China’s urban population in 2015
establish themselves as hubs for ever rising volumes of cargo, by following consolidation trends within China’s freight and logistics business and aligning themselves to the strongest emerging
Projected population in 2015:
64 cities with more than 1 million people
Total population 1.4 billion
players.
Cities of 8 million or more Cities of 5 million to 8 million Cities of 3 million to 5 million Cities of 1 million to 3 million
Source: United Nations
© 2006 KPMG, the Hong Kong member firm of KPMG International, a Swiss cooperative. All rights reserved.
22
Checking in: Airports in China 2006
China’s top 50 airports
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50
Airport Beijing Capital Shanghai Pudong Guangzhou Baiyun Shanghai Hongqiao Shenzhen Baoan Chengdu Shuangliu Kunming Wujiaba Hainan Meilan Xi’an Xianyang Hangzhou Xiaoshan Xiamen Gaoqi Chongqing Jiangbei Qingdao Liuting Dalian Zhoushuizi Nanjing Lukou Wuhan Tianhe Shenyang Taoxian Urumqi Changsha Huanghua Fuzhou Changle Guilin Harbin Guiyang Zhengzhou Sanya Wenzhou Jinan Ningbo Tianjin Taiyuan Nanning Nanchang Changchun Zhangjiajie Hefei Xishuang Banna Jinjiang Lanzhou Yantai Jiuzhaigou Lijiang Shantou Huhehaote Lhasa Zhuhai Yinchuan Yanji Wuyishan Xining Zhanjiang
Passengers (millions) 34.88 21.02 20.33 14.89 14.25 11.69 9.80 7.48 6.36 6.34 5.58 5.23 4.81 4.61 4.57 4.33 4.10 3.89 3.80 3.13 2.90 2.73 2.72 2.57 2.53 2.44 2.37 1.85 1.71 1.68 1.65 1.63 1.52 1.32 1.24 1.17 1.16 1.04 1.00 0.90 0.89 0.83 0.82 0.78 0.75 0.70 0.56 0.56 0.45 0.40
Cargo (tonnes) 668,690 1,642,176 506,988 294,020 423,270 213,039 171,013 66,582 73,368 128,208 141,654 87,568 75,498 89,699 117,801 61,378 85,343 48,464 43,133 49,124 21,075 35,084 30,018 27,600 17,055 25,435 32,237 25,524 70,995 28,085 18,567 16,143 15,839 2,905 18,297 4,925 11,562 10,445 11,890 58 691 8,083 12,990 7,130 9,731 5,693 872 831 3,256 1,821
Source: CAAC official statistics 2004
© 2006 KPMG, the Hong Kong member firm of KPMG International, a Swiss cooperative. All rights reserved.
Checking in: Airports in China 2006
23
About KPMG
KPMG International is the coordinating
together with our unwavering focus on
Property & Infrastructure
entity for a global network of
quality, has been the foundation for
KPMG is organised by industry lines of
professional services firms, providing
accumulated industry experience that is
business across our offices to provide
audit, tax, and advisory services with an
difficult to rival.
in-depth industry knowledge and
industry focus. With over 100,000
professionals highly experienced in their
people worldwide, member firms
With our expanding member of offices
sector. We are committed to providing
provide audit, tax and advisory services
and more than 4,200 professionals, our
quality service to our clients. Our Property
from 731 cities in 144 countries.
single management structure across
& Infrastructure line of business has a
China and Hong Kong SAR allows
global network comprising the major
KPMG in China and Hong Kong SAR
efficient and rapid allocation of resources
practices around the world. This network
In 1992, KPMG was the first
wherever you are located. We have the
gives us the ability to provide consistent
international accounting firm to be
largest audit market share, by market
services to our clients, share best
granted a joint venture licence in China,
capitalisation, of both the top 100 Hong
practice and provide thought leadership,
and our Hong Kong operations have
Kong listed companies, and the top 100
while always maintaining a strong
been established for 60 years. This
China A-share listed companies.
knowledge of local issues and markets.
early commitment to the China market,
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24
Checking in: Airports in China 2006
Contact us
For further details, please contact the key Property & Infrastructure professionals at KPMG. We would be pleased to meet and assist you. Andrew Weir Partner in charge Property & Infrastructure China and Hong Kong SAR Tel: +852 2826 7243 e-Mail: andrew.weir@kpmg.com.hk
Jennifer Wong Tax Partner Property & Infrastructure China and Hong Kong SAR Tel: +852 2978 8288 e-Mail: jennifer.wong@kpmg.com.hk
Benny Liu Partner Property & Infrastructure Guangzhou, Shenzhen and Macau SAR Tel: +86 (20) 2237 8118 e-Mail: benny.liu@kpmg.com.hk
Tom Stanley Director Strategic & Commercial Intelligence China and Hong Kong SAR Tel: +86 (21) 5359 4666 e-Mail: thomas.stanley@kpmg.com.cn
Honson To Partner Property & Infrastructure Shanghai and Hangzhou Tel: +86 (21) 6288 1886 e-Mail: honson.to@kpmg.com.cn
Jack Chow Partner IPOs and Capital Markets China and Hong Kong SAR Tel: +852 2826 8066 e-Mail: jack.chow@kpmg.com.hk
Felix Lee Partner Property & Infrastructure Beijing Tel: +86 (10) 8518 9240 e-Mail: felix.lee@kpmg.com.cn
Michael Lai Principal Risk Advisory Services China and Hong Kong SAR Tel: +852 2978 8943 e-Mail: michael.lai@kpmg.com.hk
Š 2006 KPMG, the Hong Kong member firm of KPMG International, a Swiss cooperative. All rights reserved.
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