China's Big Three -The rise of competition

摘要

The Chinese government is increasing the pace of aviation liberalisation, but as competition increases and fuel prices rise, the Big Three airlines - Air China, China Eastern and China Southern - are facing a difficult year. Although the Big Three all saw an improvement in financial results in 2004 compared with SARS-affected 2003, many analysts believe this year's figures may be disappointing. The major reason for this pessimism is rising fuel prices - the government regulates fuel supplies in China, with the result that it is up to 20% more expensive than on the global market. In addition, the government has (so far) barred Chinese airlines from levying fuel surcharges. China Southern and China Eastern in particular could both could plunge into a loss this year as a result of rising fuel prices, and both airlines' shares have fallen by almost one-third so far in 2005 (although Chinese airlines tend to perform better in the second half of the year than in the first, so share prices could recover).