CRI听力:Building an Air Transportation Company

Gao Yuan Yang, Director of the General Aerial Industry Development and Research Center at the Beijing University of Aeronautics and Astronautics, says private delivery services that set up their own air service team are a positive sign of future market competition and could greatly benefit consumers.

"This is a good thing. I am supportive of this phenomenon. The logistics volume in many of China's second- and third-tier cities and western areas has grown very fast in recent years. The development is highly reliant on air transportation. Building your own air service company can effectively solve the problem of low-speed deliveries in those second- and third-tier cities."

According to statistics from China air aviation administation, China currently has just 91 cargo airplanes. Among them, 47 serve only delivery companies. EMS owns 17, Shunfeng Company owns nine, and Yuantong rents the remaining 21.

Air delivery is more profitable than rail and road transport. Building private air companies may significantly improve the efficiency of delivery firms.

But Liu Shaoxuan, an associate professor from the Antai Economic Management Institute of Shanghai Jiaotong University, says it also increases delivery companies' operating risks.

"This industry is highly dependant on scale. If your business volume is not big enough, establishing your own air service team will greatly increase your operating costs. You may easily get money to run the air company, but management personnel in this field are hard to find."

Other problems can also emerge poor management. Feilishi, a Beijing delivery company, was recently relieved of its agent qualification for second-class air cargo transport because it fraudulently used the cargo confirmation stamp of China Southern Airlines.

Not long ago, the China Air Transportation Association suspended Yuantong, Yunda, Huixing and Qihao from offering air delivery services because they all breached air cargo transport laws.

After having their air transport services suspended, the four companies had to find other companies to sustain their air transport operations.

To compete for the high-end air transport service, Yuantong is now planning to build its own air transport service company.

Yuantong Vice President Yang Xinwei says the company plans to invest 5.5 billion yuan in its new air company over the next 10 years. The headquarters is planned to set up in Xiaoshan of Hangzhou city.

Yang Xinwei says purchasing an air company may also be an option for Yuantong.

"The creation of the new air company is under way. We are now applying for the qualification. Purchasing an air company is also an option. No matter what choice we choose, we are now building the company."

Currently, road transport occupies more than 90 percent of the delivery business in China. The remaining 10 percent is highly lucrative. Besides Yuantong, other companies also hope to seize the business opportunity in air transport to reverse their passive status in the market competition.

For CRI, I am Li Dong.