MANAGEMENT DISCUSSION OF MARCH 2011 OPERATING DATA

Passenger traffic continued to display steady year-over-year growth across the board in March 2011, contrasting with a slight decline in international traffic. Month-over-month, except for regional traffic, international and domestic traffic recorded a rise. On cargo side, both Revenue Freighter Tonne Kilometres (RFTK) and freighter tonnage carried showed various levels of year-on-year growth. Cargo carried on regional routes showed a slight year-on-year decrease whereas it demonstrated a substantial month-over-month growth.

Passenger capacity, measured in Available Seat Kilometers (ASK), soared 5.9% year-over-year. Passenger traffic, measured by Revenue Passenger Kilometers (RPK), rose by 5.6%. Capacity on international routes surged by 13.6% year-over-year, with RPK rising slightly by 3.3%. Capacity on domestic routes swelled by 1.1%, while RPK rose 6.5% during the same period. Capacity on regional routes increased by 11.3%, with RPK growing 16%. The passenger load factor was 80.2%, slightly down 0.3 percentage points year-over-year. The passenger load factor for domestic and regional routes increased by 4.2 and 3.1 percentage points year-over-year, but international routes decreased by 7.7 percentage point in.

Cargo capacity, measured in Available Freighter Tonne Kilometers (AFTK), rose 5.2% year-over-year in March. Revenue Freighter Tonne Kilometers (RFTK) and freighter tonnage carried increased by 1.8% and 4.8%, respectively, compared with March 2010. The cargo load factor was 60.9% in March, a decrease of 2 percentage points year-over-year.

Starting from 27 March, the company launched new flights between Tianjin and Xi’an (seven times a week) and between Beijing and Dusseldorf (three times a week).

During the month, Air China purchased a total of 270,000 tonnes of jet fuel at an average price of RMB6,789 per tonne, a year-over-year increase of 27%. The average jet fuel purchase price at international airports was RMB6,726 per tonne, and the average purchase price of jet fuel for international flights at the top six Chinese airports was RMB6,825 per tonne, representing 40% and 35% year-over-year increases, respectively. The average jet fuel purchase price for domestic flights was RMB6,797 per tonne, an increase of 21% compared with March last year.

In March, the company made the following adjustments to jet fuel surcharges:

Effective Date (Based on Ticket Issue Date)	Route	Previous Rate (Per Head Per Sector)	New Rate (Per Head Per Sector)
March 1	South Korea to Mainland China (Exclude Shandong province)	USD30	USD42
	South Korea to Shandong province, China	USD15	USD22
	Hong Kong to Mainland China	HKD143	HKD165
	Mainland China to Hong Kong	RMB122	RMB 140
March 5	Malaysia to Mainland China	RMB440	RMB500
March 15	Macau to Mainland China	USD29	USD35

During the month, the company added one B737-800, one A321-231 passenger aircraft, and retired one B737-300 and one A320 aircraft. As of end-March, Air China operated a fleet of 287 aircraft.

＊    Please note that Shenzhen Arilines and Air Macau are excluded from the above figures