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Wednesday, May 14, 2014

Beijing Plans to Spend $14 Billion on Second Airport

(WSJ) Beijing plans to spend around US$14 billion to build a new airport in the outskirts of the city to relieve congestion at its air travel gateway, already the world's second-busiest.

Set to open in 2018, the new airport will have four runways in its first phase and will handle nearly as many passengers as the existing Beijing Capital Airport, according to a newly released environmental-impact report by China's Ministry of Environmental Protection. The plans have provisions for three additional runways as needed.

For decades, Capital Airport has been China's main gateway to the world, home to flag carrier Air China Ltd. and the connection between dozens of major cities. As air travel has surged across the nation, Beijing continues to serve as the main hub for international travel.

But despite several major expansion programs in recent years—including a passenger terminal complex that is one of the world's biggest—the airport continues to struggle to meet demand.

Last year, Capital Airport handled 83.7 million passengers—second in the world only to Hartsfield-Jackson Atlanta International Airport in the U.S.—and well beyond its designed capacity of 76 million passengers a year.

As many as 142 million passengers a year are expected to travel via Beijing by 2020, according to the environmental-impact report. Aircraft manufacturer Boeing Co. predicts that total airline passenger traffic in China will nearly quadruple between 2012 and 2032.

The recent slowdown in China's economy hasn't hit the nation's leisure travel market, as more affluent Chinese tourists travel abroad.

The nation's top three state airlines—Air China, China Southern Airlines Co. and China Eastern Airlines Corp. —carried 13% more passengers in the first three months of 2014 than during the same period a year earlier.

However, robust demand is putting more pressure on many of the nation's already congested airport facilities.

Shanghai Pudong Airport, the nation's third-biggest by passenger traffic, is building two more runways for a total of five. Airports in the southern cities of Guangzhou and Shenzhen are each planning to add a third runway.

Construction of a new Beijing airport, to be located about 29 miles south of the city center, also comes as the nation is seeking to form more airlines, particular budget carriers, to cope with the rapidly growing number of travelers. However, analysts question how effective a new Beijing airport and other infrastructure elsewhere would be if the nation's airspace remains as congested as it is now.

More than 80% of China's airspace is controlled by the military, leaving just a handful of corridors and routes for civilian use, contributing to the bottleneck that results in long and frequent delays, particularly at times of bad weather and military exercises.

"It isn't uncommon for a metropolitan city to have two airports," said Edward Xu, a transport analyst at Morgan Stanley.  But he said the new airport won't be fully utilized if authorities don't relax airspace restrictions and enhance the efficiency of air-traffic control. Because of the airspace congestion, planes in Beijing depart at intervals longer than two minutes on average, says Mr. Xu, much longer than the 45-second intervals at London's Heathrow Airport.

Source: Wall Street Journal by Joanne Chiu


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