In this joint venture, Shanghai will pay 51 million Yuan for holding 51% of share and Hong Kong will take the rest of the shares which is 49%, the joint venture was named “Shanghai Hong Kong Airport Management Co. This stake structure would remain unchanged for 20 years from 2010.

Han Zheng, the mayor of the Shanghai municipal government, said Shanghai hoped the cooperation would allow the instruction of a sophisticated service and management experience at Hongqiao Airport, enabling it to develop into a highly competitive airport.

Tang Ying-Yen, chief secretary for Administration of the Hong Kong Special Administrative Region government, said it valued and supported the airport project of the two cities, and he believed both sides could benefit from the platform.

The Shanghai government proposed strengthening the economic ties between Shanghai and Hong Kong in 8 sectors including airport, logistics and the world Expo.

The statement also said Hongqiao Airport was building a new terminal that is scheduled to be completed next year, with that the Hongqiao Airport will be expand to 364,000sqm from 82,000sqm.

The airport aimed at 30 million passengers’ flies and 1 million tons of cargo a year by 2015. in 2008, the airport handled 22.9 million passengers and 415,700 metric tons of cargo.

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As is said by Feng, none of the airports which handle less than 500,000 passengers a year achieved break-even. Take the nine small airports that are under the operation of the Inner Mongolia Civil Airports Group in the Inner Mongolia autonomous region for example. They are all reported by Han Zhiliang, the group’s president, to have suffered losses in the last year and the year before.

Compared with the China’s ten largest airports which get 60 percent of the total air passengers, all the small airports throughout the country take the proportion of 6.4 percent in 2006.

Wang Jian, secretary general of China Civil Airports Association, pointed out the reason for the doom of the small airports usually built by the local government in order to promote the investment. They fail to arouse the interest of any airlines because of the inadequate travelers there. Wang said, “If they can secure one scheduled flight each day, it would be fantastic.” He added that, unluckily not even a single plane is put into use for days and more seriously, a few ended in being shut down or deserted.

To better the situation, the central government appeals to expand the domestic demand to stimulate the economic recession and it supports the new-run construction scheme. The Civil Aviation Administration of China (CAAC) made on its website the announcement that 200 billion will be spent on new airport projects in 2009 and 2010. The number of domestic airports will rise from 160 last year to 244 this year. The National Development and Reform Commission (NDRC) gave their ratification to seven airport projects, two of which that are related to small airports gained the consent in January alone.

On the CAAC website, we can find information about the Luoyang airport in central China’s Henan province. It’s said that the number of travelers the airport will be handling would have risen to 760,000 every year with the expense of 270 million yuan.

As for the misgiving that the investment in small airports would be a waste of money, Wang Jian said that the construction of more airports should be strategy-oriented rather than profit-oriented. He showed his attitude in his words — “Small airports like Mianyang played an important role during the May 12 Sichuan earthquake to send rescuers in when roads and railways were broken.”

In the hope of getting rid out of all those obstacles, the CAAC provides subsidies for airlines and airports. And it was conformed by Yang Guoqing, the deputy chief of the organization, last month by saying that 100 small airports will receive support to increase their flights.

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The money will be used to expand existing airports in Shanghai Pudong, Guangzhou, Chengdu and Nanjing and build new ones in many inland cities, including Yan’an city in Shaanxi province and Daocheng in Sichuan province.

A CAAC spokeswoman said that in order to stimulate domestic demand and boost the economy, an additional 3 billion yuan has been granted for airport projects by the central government in the fourth quarter of this year. What is more, the CAAC has determined to expand existing airports and build new ones in western China with the additional money.

Airports in Kunming, Chongqing and Nanning will be expanded, too. New airports will be built in Hechi in the Guangxi Zhuang autonomous region and Tengchong in Yunnan province. These projects would cost 30 billion yuan totally.

The expenditure on ongoing airport projects across the country, however, adds up to 100 billion yuan, the CAAC said.

97 airports have been programmed to be built from 2006 to 2020, while the total number of airports in China will be 244. Once these are finished, 82% of the country’s people will be able to reach an airport in 90 minutes. Till two years ago, only 52% could reach the goal.

Experts say the huge expenditure on airport projects will boost the construction, steel and cement industries in the short term.

6 billion yuan from local governments and other sources could be brought about by 1-billion-yuan investment on airport constructions, according to Li Xiaojin, professor in Civil Aviation University.

But for domestic airlines, whose passenger flow drops consecutively in July, August and September, such investments are “not enough to pull them out of their plight”, said Li Lei, an analyst with CITIC China Securities Co. These airlines want aviation oil price to be lowered and passenger flow to increase. But large-scale airport constructions can do good to the aviation industry, Li said.

According to CAAC earlier this month, it had spent 11.7 billion yuan of the air port construction fee to subsidize airport construction projects and to operate of small airports in western China and maintain airlines regional flights.

Priority would be given to the small-and-medium-sized airports in central and western China, which handle fewer than 5 million passengers a year, said Zhou Laizhen, director of CAAC’s financial department last week. Zhou also added that civil aviation enterprises are capital-intensive. And because of the global financial crisis, many of them are under huge pressure. That’s why they expect subsidies so much.

A total of 122 small-and-medium-sized airports’ number went up after they got subsidies in 2006, and about 70% of which were in central and western China.

Are you interested in the business opportunities in China?

China is one of the world’s great growth markets and is likely to be for many years to come. Foreign companies often face difficulties in assessing Chinese market demand and enacting effective strategies because of the language barriers, culture differences, and high expense.

BPOVIA is the leading virtual assistant and Knowledge process outsourcing (KPO) service provider in China. BPOVIA is the only virtual assistant company ever been nominated for the prestigious “Red Herring 100 Asia” Awards 2008. Combines international perspective with local know-how, BPOVIA can provide our clients China business development service and help our clients doing successful business in China.

Please visit http://www.BPOVIA.com/ for details about our service.