World Tourism Organization

Section 7 – Appendices

[Appendix1]

[Appendix 2]

[Appendix 3]

Network externality – An additional route will create external impacts on the existing operation network because of the efficient use of the hub-and-spoke26 networks.

[Appendix 4]

Product externality – Airlines can often enhance their efficiency by collecting and distributing an optimal mix of the complementary products, freight and passenger, via a hub.

[Appendix 5]

Hong Kong permits itself to serve major Asia-Pacific cities within five-hour flying time under its strategic location.

[Appendix 6]

[Appendix 7]

[Appendix 8]

Table : Airlines’ Hedging Positions

Airline

% Hedged

Period

Hedged Price (US$/bbl)

Singapore Airlines

33%

FY2007

Jet fuel at US-82

Cathy Pacific

40%

Until end-2006

N/A

Korean Air

30%

1Q-2006

N/A

EVA Air

50%

Until end-2006

N/A

Air Asia

100%

Until end-2007

WIT less US, min of US-48

Qantas

60%

Until end-2006

WIT at US

Source : Press release

[Appendix 9]

The Five Freedoms of the Air (identified by the Chicago Convention 1944)

First Freedom

The right to fly over another country without landing.

Second Freedom

The right to make a technical landing for refueling, etc., without picking up or letting off revenue traffic.

Third Freedom

The right to carry revenue traffic from the carrier’s base nation to treaty partner’s territory.

Fourth Freedom

The right to carry revenue traffic from treaty partner’s territory to carrier’s base nation.

Fifth Freedom

The right to carry revenue traffic between any points of landing on flights between three or more treaty partner nations.

The Supplementary Freedoms-Not Officially Recognized

Sixth Freedom

This is a combination of Third and Fourth Freedoms.

Revenue traffic flown between two treaty partner nations through carrier’s base nation.

Seventh Freedom

Revenue traffic flown between two nations by carrier of a third nation.

Eighth Freedom

Cabot age rights.

The right to carry revenue traffic between two points within a foreign nation.

Source : Dog anis, R. (2001), The Airline Business in the Twenty-first Century, London.Routledge

[Appendix 10]

Timeline of Recent Developments in the Aviation Sector

2001

2002

2003

2004

2005

“Regulation on Foreign Investment” issued to increase potential for investment in China’s Airports and Airlines.

Consolidation of 10 Airlines to 3 Super-Carriers; Air China (AC), China Southern Airlines (CSA) and China Eastern Airlines (CAE).

Foreign investors allowed investing in the construction and operation of Airports, including Airport Terminals and Runways, with equity interest up to 49%.

Singapore Airlines becomes 1st foreign airlines to win “Fifth Freedom Rights: to operate beyond China to a 3rd country.

Domestic Airlines allowed investing in Airports to a maximum of 25%.

The Airport construction fee, traditionally payable at the Airport, is incorporated into the ticket price.

The Government announces end to subsidies for Domestic Airports. And introduces new domestic investment regulations in a bid to stimulate private investment in Aviation industry, while retaining ownership of the air traffic control system.

[Appendix 11]

Existing Ownership in China’s Airports

Airport

Listed In

Ownership Details

Beijing Capital International Airport (CIA)

Hong Kong

CIA is under the direct management of The Civil Aviation Administration of China (CAPAC) and controls and has stakes in over 20 other Chinese Airports, Paris Airport Authority currently indirectly holds a 6.6% stake.

Shanghai International Airport

(operates Honhqiao & Pudding Airports)

Shanghai

Owned by the Shanghai Airport Authority, 39% in public shareholding.

Guangzhou Baryon

Shanghai

One of four Airports owned by the Guangdong Airports Management Corporation, 45% in public shareholding.

Shenzhen Baan

Shenzhen

Owned by Shenzhen Airport Group, 45.3% in public shareholding.

Hainan Milan

Hong Kong

Copenhagen Airports acquired 20% stake in November 2002.

Hangzhou Xiaoshan

Hong Kong Airport Authority agreed to acquire 35% stake in March 2005.

Xiamen Gaudi

Shanghai

Owned by Xiamen International Airport Group, 25% in public shareholding.

[Appendix 12]

Gross Domestic Product (China 1978-2004)

Data in this table are calculated at current prices.

Year

Gross National Income

Gross Domestic Product

Per Capita GDP

Percentage Change

Primary Industry

Secondary Industry

Tertiary Industry

(100 million Yuan)

1978

3,624.10

1,018.40

1,745.20

860.50

379.00

1979

4,038.20

1,258.90

1,913.50

865.80

417.00

10.03%

1980

4,517.80

1,359.40

2,192.00

966.40

460.00

10.31%

1981

4,860.30

4,862.40

1,545.60

2,255.50

1,061.30

489.00

6.30%

1982

5,301.80

5,294.70

1,761.60

2,383.00

1,150.10

525.00

7.36%

1983

5,957.40

5,934.50

1,960.80

2,646.20

1,327.50

580.00

10.48%

1984

7,206.70

7,171.00

2,295.50

3,105.70

1,769.80

692.00

19.31%

1985

8,989.10

8,964.40

2,541.60

3,866.60

2,556.20

853.00

23.27%

1986

10,201.40

10,202.20

2,763.90

4,492.70

2,945.60

956.00

12.08%

1987

11,954.50

11,962.50

3,204.30

5,251.60

3,506.60

1,104.00

15.48%

1988

14,922.30

14,928.30

3,831.00

6,587.20

4,510.10

1,355.00

22.74%

1989

16,917.80

16,909.20

4,228.00

7,278.00

5,403.20

1,512.00

11.59%

1990

18,598.40

18,547.90

5,017.00

7,717.40

5,813.50

1,634.00

8.07%

1991

21,662.50

21,617.80

5,288.60

9,102.20

7,227.00

1,879.00

14.99%

1992

26,651.90

26,638.10

5,800.00

11,699.50

9,138.60

2,287.00

21.71%

1993

34,560.50

34,634.40

6,882.10

16,428.50

11,323.80

2,939.00

28.51%

1994

46,670.00

46,759.40

9,457.20

22,372.20

14,930.00

3,923.00

33.48%

1995

57,494.90

58,478.10

11,993.00

28,537.90

17,947.20

4,854.00

23.73%

1996

66,850.50

67,884.60

13,844.20

33,612.90

20,427.50

5,576.00

14.87%

1997

73,142.70

74,462.60

14,211.20

37,222.70

23,028.70

6,054.00

8.57%

1998

76,967.20

78,345.20

14,552.40

38,619.30

25,173.50

6,308.00

4.20%

1999

80,579.36

82,067.46

14,471.96

40,557.81

27,037.69

6,551.00

3.85%

2000

88,254.00

89,468.10

14,628.20

44,935.30

29,904.60

7,085.74

8.16%

2001

95,727.85

97,314.80

15,411.80

48,750.00

33,153.00

7,651.44

7.98%

2002

103,935.33

105,172.34

16,117.30

52,980.19

36,074.75

8,214.02

7.35%

2003

116,741.22

117,390.17

16,928.10

61,274.12

39,187.95

9,111.00

10.92%

2004

136,584.28

136,875.87

20,768.07

72,387.19

43,720.61

10,561.00

15.91%

Average

13.89%

a) Since 1980, the difference between the Gross Domestic Product and the Gross National Income
(formerly, the Gross National Product) has been the net factor income from abroad.

Source: National Bureau of Statistics of China

[Appendix 13]

Proposed New Airport Projects in China

Airport

Province

Investment Amount (RM)

Status

Other Details

Haikou

Hubei

N/A

Construction underway

Kunming

Yunnan

16 Billion

Construction underway

23 million capacity by 2015, rising to 40 million by 2020.

Changbaishan

Jilin

309 Billion

Approved

Terminal Size: 8,000m2

Chaoshan

Gunagdong

2.3 Billion

Approved

Passenger Capacity 5 million

Dailian

Liaoning

15 Billion

Approved

Terminal Size: 200,000m2, Passenger Capacity 20 million

Jixi

Heilongjiang

150 Billion

Proposed

Terminal Size: 1,500m2, Passenger Capacity 110,000

Hefei

Anhui

2.5 Billion

Proposed

Passenger Capacity 9.5 million

Tonghua / Baicheng

Jilin

N/A

Proposed

Proposal to build network of 4 new airports in Jilin Province

Source: AV News (www.avbuyer.com.cn), Reuters and SinoCast Business News

[Appendix 14]

Development of Tourism (China 1999-2004)

Item

1999

2000

2001

2002

2003

2004

Total No. of travel Agencies

7,326

8,993

10,532

11,552

13,361

International Travel Agencies

1,256

1,268

1,310

1,349

1,364

Domestic Travel Agencies

6,070

7,725

9,222

10,203

11,997

No. of Staff & Workers of Travel Agencies

108,830

164,336

192,408

229,147

249,802

International Travel Agencies

47,153

68,093

72,801

89,128

100,742

Domestic Travel Agencies

61,677

96,243

119,607

140,019

149,060

Total No. of Tourist Hotel

7,035

10,481

7,358

8,880

9,751

Total No. of International Tourists
Arrival to China (10,000 person-times)

7,280

8,344

8,901

9,791

9,166

10,904

Percentage Change

14.63%

6.67%

9.99%

-6.38%

18.96%

Foreigners

843.23

1,016.04

1,122.64

1,343.95

1,140.29

1,693.25

Overseas Chinese

10.81

7.55

Compatriots from Hong Kong & Macau

6,167.06

7,009.93

7,434.45

8,080.82

7,752.73

8,842.05

Compatriots from Taiwan

258.46

310.86

344.20

366.06

273.19

368.53

Toursits (Overnight Visitors)
(10,000 person-times)

2,704.66

3,123.60

3,316.67

3,680.26

3,297.05

4,176.14

Total No. of Domestic Resident
Outbound (10,000 person-times)

923.24

1,047.26

1,213.44

1,660.23

2,022.19

2,885.00

For Private Purpose

426.61

563.09

694.67

1,007.39

1,481.09

2,298.00

Total No. of Domestic Tourists
(10,000 person-times)

71,900

74,400

78,400

87,800

87,000

110,200

Percentage Change

3.48%

5.38%

11.99%

-0.91%

26.67%

Tourism Earnings

International Tourism Earnings

(100 million USD)

140.99

162.24

177.92

203.85

174.06

257.39

Percentage Change

15.07%

9.66%

14.57%

-14.61%

47.87%

Domestic Tourism Earnings (10 million Yuan)

2,831.92

3,175.32

3,522.36

3,878.36

3,442.27

4,710.71

Percentage Change

12.13%

10.93%

10.11%

-11.24%

36.85%

a)Prior to 2000, the total no. of tourist hotels is the no. of hotels concerning foreign affairs.

Source: National Bureau of Statistics of China

Appendix 15]

List of Approved Destinations

1983

1988

1990

1992

1998

1999

2000

2002

2003

2004

2005

2006

Hong Kong

Thailand

Singapore

Philippines

Korea

Australia

Japan

Nepal

Germany

Greece

N. Mariana Islands

Mongolia

Macau

Malaysia

New Zealand

Vietnam

Indonesia

India

France

Fiji

Tonga

Cambodia

Malta

Maldives

Netherlands

Vanuatu

Grenada

Myanmar

Turkey

Sri Lanka

Belgium

United Kingdom

Bahamas

Brunei

Egypt

South Africa

Luxembourg

Chile

St. Lucia

Croatia

Portugal

Jamaica

Hungary

Spain

Russia

Pakistan

Italy

Brazil

Cuba

Austria

Mexico

Finland

Peru

Sweden

Antigua & Barbuda

Czech Republic

Barbados

Estonia

Laos

Latvia

Ukraine

Poland

Slovakia

Slovenia

Cyprus

Denmark

Iceland

Ireland

Norway

Romania

Switzerland

Liechtenstein

Ethiopia

Zimbabwe

Tanzania

Mauritania

Tunisia

Seychelles

Kenya

Zambia

Jordan

Source: CNTA

[Appendix 16]

Areas Opened for individual Visits to Hong Kong

Date

Areas Opened

Jul-03

Guangdong:

Donguan, Zhongshan, Jiangmen, Foshan

Aug-03

Guangdong:

Guangzhou, Shenzhen, Zhuhai, Huizhou

Sep-03

Beijing, Shanghai

Jan-04

Guangdong:

Shantou, Chaozhou, Meizhou, Zhaoqing, Qingyuan, Yunfu

May-04

Guangdong:

Zhanjiang, Shaoguan, Heyyuan, Maoming, Yangjiang, Jieyyang, Shanwai

Jul-04

Jiangsu:

Nanjing, Suzhou, Wuxi

Zhejiang:

Hangzhou, Ningbo, Taizhou

Fujian:

Fuzhou, Xiamen, Quanzhou

Mar-05

Tianjin Chongqing

Sep-05

Sichuan:

Chengdu

Shandong:

Jinan

Liaoning:

Shenyang, Dalian

Source: www.hkjn.com.hk

[Appendix 17]

*1.00 imperial ton is equal to 0.907 metric tonnes

[Appendix 18]

Section 8 – Bibliography

[1] AAstocks.com, 分析師 – 中國航空業今年併購活動料活躍, 26th July 2006 http://hk.tom.aastocks.com/eng/News/category.asp?catg=ALL

[2] British Airways (BA), Annual Report 2005

[3] Andrew Herdman – Director General of the Association of Asia Pacific Airlines (APA), Asia-Pacific aviation faces obstacles despite growth, The Standard, 7th March 2006

[4] Spacedaily.com, Asia Aviation to Defy Global Trend in 05

http;//www.spacedaily.com.news/aerospace-05a.html

[5] Dog anis, R. (2001), The Airline Business in the Twenty-first Century, London : Rutledge

[6] Schwieterman, J.P. (1993), Air Cargo and the Opening of China-New Opportunities for Hong Kong, Hong Kong : Chinese University Press.

Economies of scope are similar to economies of scale, but emphasize the number of products, such as the number of routes, that carriers offer, rather than the absolute size of their operations.

[7] British Airways (BA 2006), America urged to scrap ownership rules

http;//www.britishairways.com/travel/bares/public/neigh

[8] Guardian (2006), Security services and police to get UK air passenger details in advance

http://www.guardian.co.uk/airlines/story/0,,1693586,00.html

[9] Yahoo (2006), Airlines Industry Profile

http://biz.yahoo.com/ic/profile/770_1600.htm

[10] Hill (2005), International Business: Competing in the Global Marketplace, 5/e, McGraw Hill

[11] BBC News (2003), Union fears for call centre jobs

top://news.bbc.co.uk/1/hi/Scotland/2863257.stm

[12] Wit and Meyer (1998) Strategy – Process, Content, Context, Thomson Business Press

[13] Cathy Pacific Airways Limited (CX), Annual Report 2006

[14] Johnson and Scholes (1999), Exploring Corporate Strategy, Prentice Hall

[15] Bloomberg, Air Canada Seeks Investors as Li Signals Withdrawal, 2nd April 2004

[16] Power T, and Jerkin, G (1999), Battle of the Portals, Academy

[17] Virgin Atlantic (2006) http://www.virgin-atlantic.com/en/gab/index.jsp;jsessionid=DWphYK2kXHL6rbpvGhqFSvSc20vpZVLXctn5MTzy4ZGlBSq9pLzY!-1083164120,

[18] Airsider.Com, Cathy Pacific’s “Silver Bullet”, 19th May 2006

http://www.airsider.ch/files/2006/0506/014/cxsilverbullet.htm

[19] Cathy Pacific Airways Limited (CX) website

http://www.cathaypacific.com/cap/inch/what onboard

[20] Guardian (2005, a), Ministers try to broker BA strike peace, 23rd August 2005

[21] China Statistical Yearbook 2005

[22] Global Market Forecast 2004-2023, Airbus Press Centre

[23] Xingu Financial Network News, 1st March 2006

[24] World Tourism Organization; International Tourist Arrivals by Country of Destination;

www.world-tourism.org

[25] “China plans airport expansion”, Wall Street Journal, 1st March 2006

[26] Ovum, T.B. and Trachea, M. (1991), Airline Deregulation in Canada, New York:

New York University Press.

[1] AAstocks.com,分析師中國航空業今年併購活動料活躍, 26th July 2006

[2] British Airways (BA), Annual Report 2005

[3] Andrew Herdsman – Director General of the Association of Asia Pacific Airlines (APA), Asia-Pacific aviation faces obstacles despite growth, The Standard, 7th March 2006

[4] Spacedaily.com, Asia Aviation to Defy Global Trend in 05

3 Andrew Herdsman – Director General of the Association of Asia Pacific Airlines (APA), Asia-Pacific aviation faces obstacles despite growth, The Standard, 7th March 2006

[5] Dog anis, R. (2001), The Airline Business in the Twenty-first Century, London.Routledge

[6] Schwieterman, J.P. (1993), Air Cargo and the Opening of China-New Opportunities for Hong Kong, Hong

Kong: Chinese University Press.

[7] British Airways (BA 2006), America urged to scrap ownership rules

[8] Guardian (2006) – Security services and police to get UK air passenger details in advance

[9] Yahoo (2006) – Airlines Industry Profile

9 Yahoo (2006) – Airlines Industry Profile

[10] Hill (2005), International Business: Competing in the Global Marketplace, 5/e, McGraw Hill

[11] BBC News (2003), Union fears for call centre jobs

[12] Wit and Meyer (1998), Strategy – Process, Content, Context, Thomson Business Press

10 Hill (2005), International Business: Competing in the Global Marketplace, 5/e, McGraw Hill

[13] Cathy Pacific Airways Limited (CX), Annual Report 2006

10 Hill (2005), International Business: Competing in the Global Marketplace, 5/e, McGraw Hill

[14] Johnson and Scholes (1999), Exploring Corporate Strategy, Prentice Hall

2 British Airways (BA), Annual report 2005

9 Yahoo (2006) – Airlines Industry Profile

[15] Bloomberg, Air Canada Seeks Investors as Li Signals Withdrawal, 2nd April 2004

[16] Power T, and Jerkin, G (1999) Battle of the Portals, Academy

14 Johnson and Scholes (1999), Exploring Corporate Strategy, Prentice Hall

2 British Airways (BA), annual report 2005

17 Virgin Atlantic (2006)

10 Hill (2005), International Business: Competing in the Global Marketplace, 5/e, McGraw Hill

13 Cathy Pacific Airways Limited (CX), Annual Report 2006

18 Airsider.Com, Cathy Pacific’s “Silver Bullet”, 19th May 2006

14 Johnson and Scholes (1999), Exploring Corporate Strategy, Prentice Hall

2 British Airways (BA), Annual Report 2005

10 Hill (2005), International Business: Competing in the Global Marketplace, 5/e, McGraw Hill

19 Cathy Pacific Airways Limited (CX) website

20 Guardian (2005, a), Ministers try to broker BA strike peace, 23rd August 2005

3 Andrew Herdsman – Director General of the Association of Asia Pacific Airlines (APA), Asia-Pacific aviation faces obstacles despite growth, The Standard, 7th March 2006

21 China Statistical Yearbook 2005

22 Global Market Forecast 2004-2023, Airbus Press Centre

23 Xingu Financial Network News, 1st March 2006

24 World Tourism Organization; International Tourist Arrivals by Country of Destination; www.world-tourism.org

25 “China plans airport expansion”, Wall Street Journal, 1st March 2006

26 Ovum, T.B. and Trachea, M. (1991), Airline Deregulation in Canada, New York: New York University Press.

Credit:ivythesis.typepad.com