The Asian Development Bank (ADB) is making its first foray into
the airport business in China, said the Manila-based lender in a
press release on Friday.
The project will involve a 50-million-US-dollar equity
investment from ADB in HNA Airport Holding (Group) Co. Ltd., a
private company primarily invests in airports and airport
operations.
ADB is co-investing in HNA Airport Group with funds managed by
Pacific Alliance, including ARC Capital Holdings Ltd. and Pacific
Alliance Asia Opportunity Fund Ltd., said the multilateral
development finance institution.
The investment will assist HNA Airport Group secure the
confidence of international investors and attract more funds to
continue expanding in the airport sector. While the company has
already achieved significant success and has established a sound
reputation in the industry, it is still at the onset of its planned
expansion.
The project will support HNA Airport Group's expansion and
capital expenditure plan to privatize, rehabilitate, expand,
upgrade and operate small- and medium-sized airports in the less
developed central and western regions of China, ADB said.
"Private sector participation accompanied by funding and
experience is clearly needed in the development of the airport
sector in the country, especially in the central and western
regions," said Sherwin Pu, investment specialist of ADB's Private
Sector Operations Department.
Experienced foreign operators focus on large airports in the
coastal region to create synergies with their existing operations
and minimize investment risks. As a result, potential investors and
operators of small- and medium-sized airports are likely to come
from the domestic side of the industry. But local industry members
are typically new with limited financial resources, and this
constrains their capacity to develop a large number of projects.
Priority needs to be given to qualified local investors,
particularly in the central and western regions, said the bank.
"The country currently has the second largest civil aviation
market in the world, after the United States. The demand for
travel, for both work and leisure, is projected to increase at an
unprecedented pace due to increased labor movement flexibility and
disposable income growth," said the specialist.
China's air passenger transportation throughput, measured in
revenue passenger-kilometers, will grow 8.4 percent annually during
2007-2026, while air cargo transportation turnover, measured in
freight ton-kilometers, will increase at an annual rate of 10.5
percent, ADB said.
As of the end of 2006, the country has 146 civil airports in
operation. The government's 11th Five-Year Plan (2006-2010)
requires the construction and expansion of some 60 airports, mostly
in the western region. Some US$17.7 billion in capital expenditure
is needed for civil airports under the 11th Five-Year Plan.
(Xinhua News Agency January 5, 2008)
