On May 23 and 24, China Civil Aviation Development Forum 2012 was held in Beijing. As the forum host, Mr. Li Jiaxiang, Chief of Civil Aviation Administration of China (CAAC), was interviewed regarding the EU Emissions Trading Scheme (ETS) and the future aviation market development in China.

Q: There have been feedbacks that the current capacity of the airports serving metropolitan cities such as Beijing, Shanghai and Guangzhou is "insufficient" while some airports in small or mid-size cities are having trouble getting enough passengers. What is CAAC's plan on the strategic positions of the airports?

A: At present, a number of structural problems exist in the Chinese civil aviation industry. From the prospect of airport development, China still lacks of a benign interactive-development pattern supported by the integration of major international gateways and regional hubs as well as main routes and regional routes. Besides the external influence from the existing policy environment and the internal factor of the industry development, the problems are more of a reflection of China's current economic and social development structural issues in the civil aviation industry.

In recent years, local governments have been trending strongly to open or increase flights to major hubs such as Beijing, Shanghai and Guangzhou. As a result, some major airports have already reached their design capacities. Particularly for the airports serving Beijing, Shanghai and Guangzhou, the operating capacities have already been too saturated during peak hours to satisfy all the demands.

Moreover, most of the small and mid-size airports in China are located at prefecture-level cities. In particular, limited passenger & cargo traffic at airports in the economically underdeveloped areas, the former revolutionary base areas as well as the areas inhabited by minority nationalities adversely constrains the air transportation from meeting the demands of the local economic and social development. The local governments' investment motivations are also crimped by the poor economic performance and development limitation of the small and mid-size airports.

The establishment of an aviation hub network has become critical for the development of the small and mid-size airports. Currently, the main air route distribution in China is the point-to-point structure which distributes the limited passenger & cargo resources at the mid-size and small-size airports to various individual air routes. The air route distribution along with the low flight frequency makes it very difficult to develop the local air transportation market. If the aviation hub network is established, passengers and cargo will be transited through regional hub airports, so that the flight coverage of the small and mid-size airports will be enlarged.

Q: The civil aviation passenger & cargo transportation have been increasing rapidly. However, the problems of insufficient flights and severe losses still exist in some of the small and mid-size airports. Are there too many small and mid-size airports in China?

A: Some people are concerned about the losses of small and mid-size airports and are wondering whether there are too many small and mid-size airports. This question means that the public is still having some misunderstanding regarding the strategic position and functions of the civil aviation industry.

It is a common problem worldwide to make the small and mid-size airports, as well as the regional aviation, profitable. Such difficulty exists in the developed countries as well. By the end of 2011, there are totally 180 certified transportation airports in China with a total profit of 5.3 billion yuan. Among the 180 airports, 135 airports are reporting losses. Within the 135 airports, 119 of them are small and mid-size airports, which account for 87 percent of the total number with a total loss of around 2 billion yuan.

Small and mid-size airports are mostly located at prefecture cities. These airports are covering over 70 percent of the total county regions in China, with thousands of billions worth of direct contributions to their local economies. It is absolutely biased to judge these airports purely from the stand point of the investment return or operation profitability. Instead, the comprehensive effects of the mid-size and small-size airports on the local economy developments should be taken into consideration.

For example, Lianshui Airport in Huai'an Jiangsu broke ground in October 2008 and was put into service in September 2010. From 2008 to 2011, 800 Taiwan-funded projects were attracted in Huai'an which became the fourth largest Taiwan-funded cluster after Shenzhen, Dongguan and Kunshan. Moreover, Huai'an Development District established an airport industry zone with a total area of 12 square kilometers. The industry zone has attracted a 4 billion yuan helicopter construction project and a 1.9 billion yuan electric vehicle project. In 2011, the passenger traffic volume of Huai'an Lianshui Airport reached 230 thousand. Over one year of operation, the airport has achieved the same level of progress that the similar airports normally take more than ten years to realize.

Q: How will CAAC speed-up the construction of airport-focused modern integrated transportation system?

A: Different from ground transportation, there are special requirements in airport location selections. Building integrated transportation hubs based on airports has become an inevitable demand and a development tendency of constructing the modern integrated transportation system.

At the moment, the nationwide deficiency in airports is the lack of connection between the airports and other transportation methods. This lack of integration is limiting the area of the airports' service and influence, which affects the overall utilization of the airport functions. In addition, it puts constraints on the economic development of the airport adjacent areas. This is one of the reasons for the slow growth of the passenger & cargo traffic at some airports.

In some cities, there is only one way going in and out of the airports. Limited transportations are available between the airports and adjacent cities. In some places, public transportations have not even been established for passengers going in and out of the airports conveniently. Some airports have limited range of highways or high toll charges which evidently increases the passengers' burden and logistic cost.

The focus should be on the integration of the airport into the existing high-speed railroad and highway system, to establish efficient links between various transportation methods for passengers' convenience. Multi-dimensional integrated transportation systems should be established at airport terminals to achieve a "zero transition" mechanism.

Q: Starting this year, upon the official initiation of the European Union Emissions Trading Scheme (ETS), EU is requesting all airlines flying in and out of the EU airspace to submit carbon emission data. What's CAAC's position regarding this action?

A: I am not sure how many nations have submitted their carbon emission data to EU, anyway, we haven't and we won't. In recent years, international civil aviation has been developing rapidly, which indicates the ever enhancing cooperation in the global economy. Consequently, related policies should promote, not delay, the development of civil aviation. However, some regulations in ETS do not provide positive thrust to the development of the global civil aviation industry. The Chinese government highly values the promotion of energy saving and emission reduction projects. Adequate methods such as technology innovation, management improvement and equipment upgrade should be taken for the purpose of energy saving and emission reduction, rather than economic actions, such as fines, to restrain the development of the entire industry.