Airlines delay paying airport fees

(China Daily)
Updated: 2008-11-14 08:51

The China Civil Airport Association said 29 domestic airlines had failed to pay on time 4.2 billion yuan ($61.7 million) in airport charges by the end of Oct this year.

The Shanghai Morning Post reported Thursday that most of the payments were delayed for at least three months, and some for a year.

On Tuesday, the association named some the country's biggest airlines - China Southern, China Eastern and Air China - on its official website, but later withdrew it.

Only a few airlines were said to have "good credit", such as the Shanghai-based Spring Airlines.

Earlier, Wang Jian, secretary-general of the association, estimated that the total figure for delayed payments could hit more than 6 billion yuan, Guangzhou Daily reported.

Compared to past years, the default this year is "much higher", as the combined delayed payment is usually "less than 1 billion yuan", Wang said.

Experts said the delayed payments are partly because airlines are suffering huge losses amid the global economic slowdown and waning travel market demands.

Earlier reports showed China Eastern, Air China and China Southern had suffered losses of 2.38 billion yuan, 1.99 billion yuan and 884 million yuan, respectively in the third quarter of this year.

A Beijing Times report Thursday quoted China Eastern's board secretary Luo Zhuping as saying the airline had grounded more than 20 aircraft since April because of the sluggish market.

Li Xiaojin, a professor at the Civil Aviation University of China in Tianjin, said: "The huge losses have driven airlines to lower their costs as much as possible, and delaying payment to airports is one way to stabilize their cash flow."

A new policy by the Civil Aviation Administration of China (CAAC) has given the airlines a good excuse to justify their decision, he said.

In March, the CAAC introduced a new policy on airport charges in order to relieve the pressure on airlines caused by soaring oil prices.

The Shanghai airport authority estimated the new policy would lower their annual income by 10 percent.

Instead of setting a uniform price on airport charges like previously, the CAAC set a ceiling price for airports of different levels. This was to allow airports and airlines to negotiate and settle fees among themselves, Li said.

It has resulted in most airports and airlines unable to reach a consensus on fees and sign agreements, he said.

"So, now that airlines are suffering huge losses, they are holding off signing agreements in order to delay payment," Li said.

Wang said many airports are experiencing financial difficulties.

Li agreed. He said some airports are seeking bank loans.

"This has not occurred before, because airports in the past have seldom lacked cash," he said.