CRI听力：2009-A Tough Year for China s Private Airline Sector

But the cold winter for the country's private airline sector has not passed. It is still facing a challenging year as it's confronted with financial problems and a slump in market demand.

Dan Dan has the details.(www.hxen.net)

Among all of China's private airlines, 'Spring Airlines' is widely believed to be enjoying the best business. But the company's profits fell sharply last year and this month has even seen them offer free tickets in a bid to attract more passengers.

Professor Zheng Xingwu, from the Civil Aviation University of China, says a significant drop in demand is a serious problem to the entire aviation industry.

"As we all know, the global financial turmoil has affected the economy of many countries. As a result, the number of people taking a business trip or travelling by air has decreased.

Especially since the third quarter of last year, the market for international passengers and cargo flights has shrunk dramatically."

But unlike state-run airlines that can receive capital injections from the government when there's an emergency, private airlines can easily get into financial trouble once their business hits hard times. Turning to the banks for help, as described by Lan Shili, chairman of a private aviation company 'East Star Airlines', is a painful process.

"It's very difficult to get loans from domestic banks. They regard the aviation industry as a high-risk one. Therefore, they practice a rather stringent policy."

Besides difficulties in raising funds, Professor Zheng Xingwu says some government policies are turning out to be unfavorable for private airlines.

"Some policies still favor those state-owned airlines, especially when it comes to the allocation of resources, like air routes, timetables and the recruitment of foreign pilots."

In addition to the disadvantages, private airlines in China are also facing other problems like shareholder squabbles and management problems. However, Lan Shili, the chairman of 'East Star Airlines', remains confident about the future of the industry. He says the space for them to cut costs remains large and private airlines actually have some advantages over their state-run counterparts.

"For many years, state-owned enterprises were run under a planned economy. They planned out their ticket prices and airline routes a year in advance. And it's not that flexible to make changes after a plan is fixed."

'Spring Airlines' has suggested that private airlines join forces to combat the damage from the worsening economy. But will that work out? Maybe 2009 will provide us with the answers.

Dan Dan, CRI news.