30 Maret 2013

[300313.EN.AIR] 'Merging China's Big Air Cargo Units Good Idea, But Too Many Obstacles'

CHINA EASTERN Airlines general manager Ma Xulun has dismissed suggestions that plans are afoot to merge the airline's cargo services with those of Air China and China Southern Airlines.

But it's the best solution, he said, though too fraught with obstacles, and therefore there was no plan to take such a course at this time, he told Xinhua.

Mr Ma allowed that China Eastern is in talks with a number of provinces in cooperation on local air business and has received active responses, adding that feeder services are not sustainable without local government subsidies.

The three carriers continue to suffer from weak cargo demand. Traditional air freight faces increasing difficulties, said Mr Ma, adding that airlines must now think beyond offering air cargo services alone and create a more comprehensive logistics service.

China Eastern Airlines has been reorganising its cargo business since last year and is expecting better performance this year.

The airline also signed a cooperation agreement with the local government of Qinghai last June, under which Qinghai would be responsible for buying or renting aircraft and the application for new routes that would be operated by China Eastern.

Feeder services were not keeping up with the development of local carriers, he said, noting that imported feeder aircraft are subject to higher tariffs and value added taxes than large and medium passenger aircraft, all of which result in higher costs.

Mr Ma suggested tax cuts and appealed for local government subsidies and other financial support, saying a different mindset was needed to focus on regional hubs and create feeder routes to mesh with larger ones.

Mr Ma also disclosed that China Eastern is planning to reduce its debt-asset ratio to about 70 per cent. As of the third quarter of last year the carrier's debt-asset ratio has been as high as 78.5 per cent.

Source : HKSG, 26.03.13.

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