An Evaluation of the Business and Financial Performance of Air China Limited Between 1 January 2009 and 31 December 2011
Oxford Brookes University
Research and Analysis Project
The business and financial performance of Air China Limited over 2007 to 2009
November 2011
Introduction
Until the 1980s civil airline services in China were controlled by the military. However, the responsibility was turned over to the Civil Aviation Administration of China (CAAC), the market for passenger services and airline in China has boomed. This boom has been driven by growing internal demand for flight services, relaxed restrictions on international trade, a growing tourism industry and the return of Hong Kong to Chinese rule in 1997. As the number of airlines has grown so China has become a major market for the aircraft manufacturers such as Boeing and Airbus. Leading airlines such as Cathay Pacific, Dragonair and China Southern Airlines, revenues have grown annually along with passenger numbers, cargo tonnage and routes. In tandem with this growth has gone the further development of China’s aviation infrastructure with new airports under construction and existing ones being expanded. Growth is virtually assured as the Chinese government has pledged to double the 1994 passenger and cargo totals by 2000 as part of the current Ninth Five Year Plan. China’s domestic airline industry stands in stark contrast to the rest of the Asian players. The current situation leaves China as the most dynamic passenger airline market in Asia at present. Projections of tourist numbers and new aircraft purchases indicate that China will be a major international passenger airline market by any international standard. Thus, it became a keen competitor to Hong Kong airline companies.
China’s per capita will hit USD3,000 by 2010 from USD1,000 in 2001. In the past ten years, there is a big change in the standard of living in Chinese people, the consumption pattern has changed, and there is a trend on continuous growth on the demand of aviation industry in
Research and Analysis Project
The business and financial performance of Air China Limited over 2007 to 2009
November 2011
Introduction
Until the 1980s civil airline services in China were controlled by the military. However, the responsibility was turned over to the Civil Aviation Administration of China (CAAC), the market for passenger services and airline in China has boomed. This boom has been driven by growing internal demand for flight services, relaxed restrictions on international trade, a growing tourism industry and the return of Hong Kong to Chinese rule in 1997. As the number of airlines has grown so China has become a major market for the aircraft manufacturers such as Boeing and Airbus. Leading airlines such as Cathay Pacific, Dragonair and China Southern Airlines, revenues have grown annually along with passenger numbers, cargo tonnage and routes. In tandem with this growth has gone the further development of China’s aviation infrastructure with new airports under construction and existing ones being expanded. Growth is virtually assured as the Chinese government has pledged to double the 1994 passenger and cargo totals by 2000 as part of the current Ninth Five Year Plan. China’s domestic airline industry stands in stark contrast to the rest of the Asian players. The current situation leaves China as the most dynamic passenger airline market in Asia at present. Projections of tourist numbers and new aircraft purchases indicate that China will be a major international passenger airline market by any international standard. Thus, it became a keen competitor to Hong Kong airline companies.
China’s per capita will hit USD3,000 by 2010 from USD1,000 in 2001. In the past ten years, there is a big change in the standard of living in Chinese people, the consumption pattern has changed, and there is a trend on continuous growth on the demand of aviation industry in