On the impact of the 13th Five-Year Plan on industry prospects:
In terms of market growth, we believe that the 13th Five-Year Plan poses a rare development opportunity for civil aviation. Although macroeconomic growth is slowing, there is great market potential as demand remains strong through key drivers such as the implementation of the three national strategies, pushing for airspace reform, new airport construction and expansion, and increased domestic consumption. At the same time, the market is set to undergo a huge structural transformation, driven by rapid growth in business and leisure travel and an increase in international travel over domestic travel.
Regarding industry competition: first, changes will occur in the global competitive landscape and new forms of competition will emerge. Bilateral or joint ventures, equity alliances and other cooperative partnerships will grow beyond current business relationships and code-sharing agreements. Second, domestic deregulation has spawned a number of local aviation companies and low-cost airlines, and domestic competition has intensified significantly. Third, these domestic companies are aggressively expanding into the international market. European and American airlines who have completed mergers and reorganization are strengthening competition and the rise of Middle Eastern airlines has further bolstered the landscape.
On Air China’s opportunities and challenges in 2016:
The opportunities facing Air China in 2016 are primarily: the promotion of the three national strategies, namely the coordinated development of the Beijing-Tianjin-Hebei metropolitan region, the “One Belt, One Road” strategy and the Silk Road Economic Belt, along with increased domestic consumption, greater urbanization, economic structural transformation, and a further easing of visa restrictions. Main challenges include: volatile oil prices, exchange rate fluctuations and geopolitical shifts.
