The World of Chinese - - Editor’s Letter - BY DAVID DAW­SON

China's avi­a­tion growth has been sky-high for decades now, but is a reck­on­ing on the hori­zon? Short­ages threaten fu­ture growth while pri­vate oper­a­tors want to get in on the ac­tion. TWOC takes a look at where all the tur­bu­lence is com­ing from

The air­line’s name was Lucky Air, but at least one pas­sen­ger didn’t find this aus­pi­cious enough. In Oc­to­ber, a 76-year-old woman board­ing a flight in An­qing, An­hui prov­ince, de­cided to toss some coins into the jet’s engine as she boarded, in a mis­guided ef­fort to en­sure good for­tune. The flight was grounded for safety rea­sons, and pas­sen­gers had to wait un­til the next morn­ing for a resched­uled flight. It wasn’t the first time this type of be­hav­ior

has oc­curred: An­other pen­sioner in Shang­hai threw coins into an engine in June, lead­ing to fur­ther de­lays for pas­sen­gers.

The in­ci­dent was a lit­eral demon­stra­tion of the mul­ti­tudes of prob­lems that can ground China’s flights—even the toss of a coin. As the in­dus­try strains un­der the weight of its own growth, prof­its and de­par­ture times are get­ting ever more fickle.

Short­ages of pi­lots and airspace loom, and re­form is des­per­ately needed, as even the might­i­est play­ers in the sec­tor strug­gle with an in­creas­ingly dif­fi­cult busi­ness en­vi­ron­ment.

Take China South­ern, Asia’s largest air­line, which recorded over 60 bil­lion RMB in rev­enue in the first half of this year, an 11 per­cent in­crease over the same pe­riod last year. Yet the air­line’s prof­itabil­ity de­creased, thanks to grow­ing oper­a­tional costs like jet fuel. The air­line still made 2.77 bil­lion RMB in the first half, but that was down 11 per­cent from 2016.

And China South­ern is one of the lucky ones. Hong Kong car­rier Cathay Pa­cific is still com­ing to terms with the bil­lion RMB loss it posted for the first half of this year, in what its own an­a­lysts, cited in the South China Morn­ing Post in Oc­to­ber, dubbed the air­line’s “worst op­er­at­ing re­sults in his­tory.” It came af­ter Cathay had posted a loss of half a bil­lion RMB in 2016.

Cathay is at­tempt­ing to slash salaries in or­der to cope (af­ter al­ready shed­ding 600 staff), but there are al­ready ob­vi­ous signs of why this mea­sure is a risky one.

It’s dif­fi­cult to quan­tify the size of the pi­lot short­age in China, given the rapid changes in the in­dus­try, but an­a­lysts have in­di­cated that, on cur­rent pro­jec­tions, China will need 5,000 new pi­lots ev­ery year for the next 20 years, and it’s un­cer­tain whether global sup­ply will be able to keep up with that de­mand.

So when Cathay Pa­cific’s at­tempts to cut salaries be­came known, re­cruit­ment com­pany Lon­greach Avi­a­tion or­ga­nized a road­show event in what was a overt at­tempt to poach Cathay Pa­cific’s un­doubt­edly dis­grun­tled pi­lots on be­half of main­land air­lines. (The road­show event, planned for Oc­to­ber, was abruptly shut down, with the re­cruiters blam­ing “le­gal is­sues.”)

The pi­lot short­age has its up­sides, for pi­lots at least. Pi­lot Zhang Lin (pseu­do­nym) told TWOC that fly­ing had be­come a pop­u­lar ca­reer choice, and “one as­pect is def­i­nitely the high salary.”

“A huge part of that salary comes from ex­pe­ri­ence,” he said. “A cap­tain will earn more than a co-pi­lot. Salaries across the var­i­ous air­lines are dif­fer­ent. Big air­lines in China are not the best in the busi­ness, in terms of salaries.”

A quick web search re­veals mul­ti­tudes of va­can­cies. There’s an A320 cap­tain po­si­tion in Hangzhou, be­ing of­fered 25,833 USD per month, af­ter tax, with 45 days of paid leave. A first of­fi­cer is wanted in Tian­jin for

B747s, for 11,200 USD per month, but with in­creas­ing an­nual bonuses over the term of the three year con­tract.

“The main rea­son [for the pi­lot short­age] is the rapid devel­op­ment of the in­dus­try in re­cent years,” says Zhang. “Af­ter grad­u­a­tion, it takes a pi­lot five to eight years to be­come a pro­duc­tive as­set. The air­lines sim­ply don’t have enough pi­lots in re­serve,” he said. “We of­ten hear cases of for­eign pi­lots be­ing re­cruited as well.”

There are cer­tainly perks for for­eign pi­lots work­ing in China. CNN late last year cited one Amer­i­can pi­lot, Jeff Gra­ham, who had been work­ing 80 to 100-hour months in the US. Af­ter switch­ing to a job based in Shen­zhen, he worked 50-hour months for triple the salary.

But even as the num­ber of com­mer­cial pi­lots grows, the airspace they are oc­cu­py­ing re­mains star­tlingly small. The ma­jor­ity of China’s airspace is con­trolled by the mil­i­tary due to the de­fense-ori­ented avi­a­tion sys­tem de­vised in the 1950s.

A 2012 pa­per in the jour­nal of trans­porta­tion tech­nolo­gies, writ­ten by academics from North­west­ern Polytech­ni­cal Univer­sity, in China’s avi­a­tion in­dus­try cap­i­tal of Xi’an, makes clear the divi­sion be­tween schol­ars who ad­vo­cate for a closed-off mil­i­tary-con­trolled airspace sys­tem, and those push­ing for a more open one.

This de­bate has long been at the core of avi­a­tion re­form. “From the per­spec­tive of the use of airspace, its spe­cific char­ac­ter­is­tics are re­flected as that the need for mil­i­tary avi­a­tion comes first and the need for civil avi­a­tion comes se­cond,” the academics wrote, ad­ding that this is the con­cept of “ab­so­lute se­cu­rity.”

Those push­ing for open­ness still need to ac­knowl­edge the im­por­tance of the se­cu­rity as­pect, but con­tend that “ab­so­lute se­cu­rity” is un­re­al­is­tic. The pa­per char­ac­ter­izes this side of the de­bate as ar­gu­ing that “the con­cept of ‘ab­so­lute se­cu­rity’ for airspace leg­is­la­tion has caused un­eco­nomic re­sults such as se­ri­ous waste of airspace re­sources, and low uti­liza­tion of airspace, and it is bound to hin­der China’s civil air trans­port in­dus­try.”

The fric­tion be­tween these ide­olo­gies con­tin­ues to­day, etched out in state maps of China’s airspace. As pi­lot, and for­mer China cor­re­spon­dent James Fal­lows points out in his book China Air­borne, maps of Chi­nese airspace are con­sid­ered too sen­si­tive for for­eign eyes. “But if you could look, you’d see at once that the ar­eas not con­trolled by the mil­i­tary are rel­a­tively thin, crabbed cor­ri­dors con­nect­ing the big­gest cities,” he wrote. “All the rest has been off lim­its to ev­ery­one ex­cept the Peo­ple’s Lib­er­a­tion Army.”

The lack of civil­ian airspace is partly why the seven worst air­ports in the world for de­lays are all in China. Not only are civil­ian flights kept on nar­row cor­ri­dors, which lim­its their op­tions in the event they need to change course, but there are also fre­quent in­stances of pas­sen­gers be­ing told that flights have been can­celed due to “mil­i­tary ex­er­cises.”

The space avail­able for civil­ian flights has in­creased, but civil­ians aren’t privy to know­ing how much big­ger it’s got­ten. “The growth in flight den­sity has been greater than the growth in airspace,” Zhang said. “But I’ve ob­served over the course of my ca­reer and in re­cent years, both the route den­sity and airspace have in­creased.”

There have also been openly an­nounced ef­forts to rem­edy the is­sues as­so­ci­ated with this short­age of airspace, even if the airspace de­tails them­selves re­main se­cret. In May, Cai Jun, deputy di­rec­tor of the Air Traf­fic Con­trol com­mis­sion (which is ad­min­is­tered by both the State Coun­cil and Cen­tral Mil­i­tary Com­mis­sion), told me­dia that a se­ries of pro­pos­als were be­ing sub­mit­ted to deal with the prob­lem by in­te­grat­ing civil­ian and mil­i­tary airspace bod­ies.

“We un­der­stand that re­form­ing the man­age­ment of the airspace... is an es­sen­tial need,” Reuters quoted him as say­ing. “Push­ing ahead with civil and mil­i­tary in­te­gra­tion is an im­por­tant mea­sure and a re­quire­ment that will help us ad­just to the global air traf­fic man­age­ment sys­tem and ac­cel­er­ate China’s trans­for­ma­tion into an avi­a­tion power.”

Fal­lows points out that the suc­cess­ful in­te­gra­tion of these civil­ian and mil­i­tary net­works will be a chal­leng­ing task be­cause it can’t just be achieved through brute willpower—and that the stakes go beyond the avi­a­tion sec­tor. “Suc­cess in this realm re­ally does re­quire the in­te­gra­tion of a wide va­ri­ety of ‘hard’ and ‘soft’ skills and tech­nolo­gies, and both pub­lic and pri­vate re­sources,” he told TWOC. The pi­lot short­age and in­te­gra­tion of mil­i­tary and civil­ian airspace, ac­cord­ing to Fal­lows, are a mi­cro­cosm of broader is­sues China has to con­tend with as it de­vel­ops into an ad­vanced econ­omy.

Fal­lows points out par­al­lels with the evo­lu­tion of Amer­i­can airspace con­trols: “By the end of World War II, the US mil­i­tary ex­er­cised con­trol over an enor­mous amount of airspace over Amer­ica, a nat­u­ral le­gacy of broader wartime con­trols of the econ­omy. From the mil­i­tary’s point of view, it would have been ‘safer’ and more con­ve­nient to leave all those con­trols in place. But the fed­eral gov­ern­ment ar­ranged a grad­ual and sub­stan­tial shift of airspace from mil­i­tary to civil­ian and com­mer­cial use; oth­er­wise, the air­line and gen­eral-avi­a­tion mar­kets would never fully have de­vel­oped.”

“The next big test for China’s aero­space am­bi­tions is how the gov­ern­ment will han­dle this choice be­tween max­i­mum ‘se­cu­rity’ and greater op­por­tu­ni­ties for an im­por­tant new busi­ness to grow,” he said.

Fal­lows makes the life-or-death stakes of these re­forms clear through an in­ci­dent out­lined in China Air­borne. While fly­ing as a co-pi­lot on a tiny fourseat plane trav­el­ing be­tween Chang­sha and Zhuhai in 2006, he en­coun­tered moun­tains that were higher than the al­ti­tude they had been as­signed by flight con­trol. Thus, they needed to ra­dio for per­mis­sion to climb higher. “On the Gps-based mov­ing map in the cock­pit, we saw the ridge draw closer. We couldn’t legally turn around, since that would be de­vi­at­ing from our clear­ance. Nor—again, with­out break­ing rules—could we de­cide to climb on our own,” he wrote.

“If we kept on straight and level, within ten min­utes we’d crash. Then eight. Then six.” Declar­ing an emer­gency and turn­ing away was one op­tion, but it would have se­vere reper­cus­sions, par­tic­u­larly be­cause, as it turned out, they were be­ing tailed by a mil­i­tary jet.

De­spite re­peated ra­dio re­quests, they were greeted with si­lence. It took a Ja­pan Air­lines pi­lot, who had been eaves­drop­ping, to in­ter­cede on their be­half to get the at­ten­tion of air traf­fic con­trollers, who then granted them per­mis­sion. Fal­lows never found a rea­son for the de­lay, but sus­pected that the flight con­trollers sim­ply hadn’t dealt with pri­vate pi­lots be­fore, so they didn’t know what to do.

In the decade since that in­ci­dent, the sit­u­a­tion has im­proved dra­mat­i­cally, but de­lays are still mount­ing at Chi­nese air­ports. In the first six months of 2017, the pro­por­tion of flights ar­riv­ing on time was 71 per­cent, six per­cent­age points lower than the same pe­riod in 2016, the South China Morn­ing Post re­ported. In June 2017 alone, barely half the flight were on time.

A quar­ter of the haz­ards were re­ported to be caused by “mil­i­tary ac­tiv­ity” while the big­gest pro­por­tion were caused by weather. Zhang points out that within China’s large land­mass, there are vast dif­fer­ences in land­scape and sig­nif­i­cant po­ten­tial for weather de­lays. A fairly re­cent headache has been added to the woes of flight con­trollers, with 800 flights de­layed in the first half of the year due to drones fly­ing too close to air­ports.

There is also the threat of “black flights” by un­reg­is­tered air­craft. In 2014, Wang Xia, sec­re­tary-gen­eral of the China Gen­eral Avi­a­tion Com­mit­tee, told state me­dia that about 60 per­cent of more than 3,300 gen­eral avi­a­tion air­craft in China


were un­reg­is­tered, partly due to the dis­or­ga­nized na­ture of the reg­is­tra­tion process. These flights can pose a se­vere haz­ard to flight safety and also cause de­lays, though few gar­ner me­dia at­ten­tion. An in­ci­dent 2010 in­volved a black flight leav­ing Ji­ax­ing, near Shang­hai. The plane was classed as a UFO and caused mul­ti­ple flights out of Shang­hai Pudong Air­port to be de­layed.

And then, there are the de­lays caused by pas­sen­gers. Due to on­go­ing me­dia re­ports of un­ruly mobs (and coin-toss­ing grannies) at Chi­nese air­ports, Chi­nese trav­el­ers have de­vel­oped an un­for­tu­nate rep­u­ta­tion of be­ing trou­ble­some. This is per­haps un­fair, given the mas­sive num­bers of trav­el­ers and rel­a­tively small num­bers of in­ci­dents, but the in­ci­dents do hint at deeper prob­lems. There have been con­stant re­ports of pas­sen­gers at­tempt­ing to open emer­gency doors dur­ing flights, abuse of flight at­ten­dants, fist-fights be­tween an­gry pas­sen­gers, and de­mands for com­pen­sa­tion for a va­ri­ety of in­con­ve­niences, as pas­sen­gers take to the sky in ever greater num­bers for the first time.

Mean­while, China’s ul­tra-rich look un­likely to take flights on the main air­lines as the pri­vate jet in­dus­try gets off the ground. In Oc­to­ber, China Daily cited Thomas Flohr, founder of pri­vate jet com­pany Vis­ta­jet, as say­ing that 17 per­cent of their cus­tomers now come from China and that the pro­por­tion is grow­ing. “Pri­vate jet busi­ness on the Chi­nese main­land is still rel­a­tively new, and it is our great fo­cus within the Asia-pa­cific re­gion,” he said, ad­ding that the min­i­mum net worth of the com­pany’s cus­tomers is around 200 mil­lion USD, and they tend to be be­tween their late 20s and 50s.

Zhang be­lieves that growth in pri­vate flights is likely to be one of the big­gest changes in the in­dus­try in the com­ing years. “There are still many fac­tors af­fect­ing the devel­op­ment of this in­dus­try, such as pur­chas­ing, op­er­a­tion and main­te­nance, airspace and the state of air­port open­ness, dif­fi­culty re­quest­ing and get­ting ap­proval for flight plans, and so on,” he said. “But the num­ber of busi­ness jet flights has been grow­ing steadily, and air­craft man­u­fac­tur­ers are eye­ing China as a grow­ing mar­ket.”

It would seem that while China’s avi­a­tion sec­tor has well and truly taken off, where it heads next is still up in the air.

A Global 6000 Bom­bardier busi­ness air­craft owned by Wen­zhou busi­ness­man Xu Yu, pur­chased for about 400 mil­lion RMB in 2014

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