Civil Aviation Administration's Airport Charge Reform Plan: Positive and Negative Impacts on Both Sides

After the introduction of the "Civil Airport Charge Reform Plan" draft for comments in 2005, the Civil Aviation Administration of China launched a revised draft in a year. We believe that this revision will have a negative impact on airport companies with domestic flights, and positive for airlines with domestic flights.

At present, our airport toll system implements two sets of charging systems for domestic airlines and foreign airlines. The difference between domestic airlines and foreign airlines' charging systems is reflected in two schemes: First, domestic airlines and foreign airlines do not charge fees. Consistently, domestic airlines charge fees for aircraft landing fees, passenger service fees and various ground service charges, while foreign airlines do not have passenger service fee charges; second, domestic airlines and foreign airlines have relatively large fees. The difference is that the take-off and landing charges of foreign airlines are about three times that of domestic airlines. The main purpose of the airport charging policy reform is to unify the rates of domestic airlines and foreign airlines. On the whole, the revised foreign exchange charges and the inland air transportation charges were unified in the revised draft, and the foreign air transportation charges were moved closer to the internal navigation.

Impact: Different inside and outside

The fee for this revision has a relatively large adjustment. The adjustment is reflected in the adjustment of the toll rate and the adjustment of the charging standard. For example, the charging standard for security inspection fees has changed. The existing scheme is charged for the inland navigation according to the maximum deadweight of the aircraft. Foreign Airlines is charged according to the classification of ordinary aircraft and wide-body aircraft. The adjusted fee is charged according to the number of people actually loaded by the aircraft and the number of tons of cargo. Aircraft landing fees and passenger service charges are generally reflected in changes in the toll rate.

Compared with the current implementation plan, the revised draft for foreign airlines has dropped by about 50%, and there are certain differences in the standards for different models. The passenger service fee is a newly added aviation fee, which has a great impact on the comprehensive fee level of foreign airlines and increases the overall level of foreign airlines. There are also major changes in the security inspection fee and the current implementation plan. The current security inspection fee is based on the fixed fee for each flight of the aircraft. The passenger baggage in the revised draft is collected according to the head, and the security inspection fee for the cargo mail is charged according to the actual number of tons of cargo carried. The safety inspection fee for passenger baggage has been raised significantly. For example, the B767-200 and B777-200 models commonly used in China Airlines flights are simulated and the comprehensive level of aeronautical aviation charges is increased by about 50%.

The revised draft stipulates that the aeronautical services charges for Mainland Airlines International and Hong Kong and Macao flights departing from the Mainland (inbound) airports will be implemented at 70% of the foreign air fare standards. Domestic airlines flying international routes are B757-200, A340 and other aircraft with a maximum takeoff weight of more than 100 tons. The cost of take-off and landing of such aircraft has not been adjusted much, but the passenger bridge fees, security inspection fees and passenger service fees have been relatively large, which has led to an upward adjustment of the comprehensive charges for foreign airlines. According to the revised draft plan, the increase in the level of the external line charges is about 40-50%.

The take-off and landing fees for the internal navigation line have been greatly reduced, and the downward adjustment is around 50%. The passenger service rate is the same as the current implementation plan, but the revised version is based on the actual load factor, while the current plan is based on a 65% fixed load factor. At present, the passenger load factor of the internal airlines is expected to be above 70%. Considering the impact of the passenger load factor, we judge that the passenger service fee for the internal navigation line is increased by about 10%.

The “Revised Draft” will have a positive impact on airlines with a large proportion of domestic routes. It is more advantageous for China Southern Airlines, Shanghai Airlines and Hainan Airlines, which are mainly domestic routes, and for airlines with a large proportion of international business. Certain negative effects.

The impact of the Revised Program on airport companies should take into account the proportion of airports' internal and external flights. Due to the upward trend of international flight charges for foreign airlines and China Airlines, the overall domestic flight charges of China Airlines are downward trend. Therefore, the impact on Shanghai Airport and Capital Airport, which account for a large proportion of international flights, is positive. Baiyun Airport, Shenzhen Airport and Xiamen Airport have a negative impact on neutrality.

The program still has variables

The decline in the internal airline charges has a great impact on small and medium-sized airports: there are not many domestic profitable airports, and many small and medium-sized airports have poor profitability. At the same time, small and medium-sized airports are mainly domestic flights, and the revised draft plan is for small airports that are at a loss. The negative impact is greater.

The future plan will still be the result of the game between the airline and the airport: the first draft for comments is beneficial to the airport company, and the revised draft is in favor of the airline. After this consultation draft, the direction in which the program will develop will still depend on the game between the airport company and the airline. Judging from the level of domestic airlines' charges, the aircraft's take-off and landing charges are much lower than the international flight charges, and the rate level has a large room for improvement. In the long run, we judge that China's airports are charging upwards for inland fares.

Due to the current poor profitability of the middle and lower airports, the plan to reduce the internal airline charges will encounter opposition from many airports. We judge that the final plan still has variables.

(Tianxiang Investment Consulting Co., Ltd.)

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