Chinese airports are owed at least 6 billion yuan ($878 million) in late fees as the country’s money- losing carriers delay paying bills to preserve cash.

“Many airlines are passing their financial difficulties onto airports,” Wang Jian, secretary general of the China Civil Airport Association, said by phone today. Beijing Capital International Airport Co., operator of the nation’s largest airfield, was owed more than 800 million yuan at the end of October, he added.

Chinese airlines have postponed paying fees as they struggle to cope with less-than-expected travel demand. China Southern Airlines Co., the nation’s biggest carrier, and other domestic airlines posted combined losses of 4.2 billion yuan for the first 10 months of the year, according to the Civil Aviation Administration of China.

“Airlines are taking advantage of these late payments as no- interest loans,” Wang said. The 6 billion yuan figure is a “conservative estimate,” he added.

Most of the delayed fees are more than three months late, Wang said.

Air travel in China rose 2.4 percent in the first 10 months to 159.7 million passengers. That trailed the regulator’s forecast for a 14 percent full-year increase, as carriers were forced to cancel hundreds of flights because of natural disasters and the Beijing Olympics.

THE KINGFISHER Airlines set an international landmark after its first direct flight (IT-001) to London took off from the Bangalore International Airport at 9.20 am in the morning on Wednesday (September 3). The Airbus (A330-200), which has a non-stop journey to London’s Heathrow Airport, had a delayed departure because of the inaugural ceremony and related functions.

The Airbus has 217 seats, including 30 in the first class and 187 in the premium class. In its first journey, not a single seat remained vacant.

Just three months after launching flights to Houston, its second U.S. gateway in the U.S. in addition to New York Kennedy, Emirates is expected on Thursday to announce that it will inaugurate new flights to Los Angeles this fall.

On Sept. 1, Emirates expects to become the first Gulf region carrier to fly to the U.S. West Coast when it launches flights from Dubai to Los Angeles. It intends to use the 777-200LR on the route, the same type of aircraft it is using to fly to Houston. The aircraft will be configured with eight First Class suites, 42 lie-flat Business Class seats, and 216 Economy Class seats.

The Los Angeles flights will be the longest in its network, taking 15 hrs. 55 mins. to fly to Los Angeles and 16 hrs. 35 mins. to return.

Nigel Paige, senior VP of commercial operations, North America, says “this opens a whole are of the U.S. for us.” Los Angeles was chosen not only because of its large catchment area, but also because of Hollywood and Dubai’s ties to the film industry, he said.

The aircraft will include some special features, such as the ability to call other seats, as well as to download photos onto the video screen from a digital camera.

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Singapore Airlines will begin operating all-business-class services to Los Angeles and New York in May, in a move it says will create an airline-industry first. The initiative will represent the first time any airline has operated an all-business-class service between Asia and the United States, Singapore Airlines (SIA) said.

SIA plans to convert the five Airbus A340-500 jets it currently operates on nonstop flights to both U.S. cities into all-business-class configuration. At present each A340-500 seats 181 passengers in two classes — business class and SIA’s ‘Executive Economy’ class — but will replace this configuration with a single-class interior that contains 100 of the airline’s new business-class seats.

SIA’s new all-business-class flights will replace the existing daily nonstop services that it operates to Los Angeles and New York using the A340-500s. Singapore Airlines said it is changing the services to all-premium-class flights because of “consistently strong demand from business travelers.” On its Los Angeles-Singapore route, SIA will increase to daily all-business-class service by late September. The conversion program requires each of the five aircraft to be retrofitted in turn and to allow the conversions to be carried out Singapore Airlines will not operate its Tuesday nonstop flights from Los Angeles between mid-May and late June. The carrier also operates Vancouver-Seoul-Singapore service and on March 20 SIA is launching Houston-Singapore one-stop service with 777-300ERs. The new service will route via Moscow.

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Japan Airlines Corp maybuy Airbus’s midsize A350 XWB planes following production delays to Boeing Co’s new 787 Dreamliner, two company sources told Reuters.

Boeing faces increasing customer ire after announcing last month a second delay for the 787, pushing first deliveries back to early 2009, about nine months behind schedule. The industry has been watching to see if any airlines would switch to Airbus.

JAL, one of Boeing’s most loyal customers, had planned to buy 35 787 Dreamliners with an option for a further 20, hoping to cut costs on parts replacement, maintenance and pilot training by focusing its resources on one aircraft. But it could be having second thoughts.

Vietnam’s government has approved the establishment of the country’s first privately owned carrier, setting an important precedent in a market that is forecast to continue growing rapidly in the coming years.

The government at the end of November said it had approved the aviation license application of Vietjet. The new low-cost carrier will be based in Hanoi and will have a secondary base in Ho Chi Minh City. It plans to launch operations late in 2008 or early in 2009 and will use either Airbus A320s or Boeing 737-800s.

Okay Airways (OKAir.net) (Tianjin) on November 28 took delivery of the first brand new Boeing 737-800 direct from Boeing via AWAS (Ansett Worldwide Aviation Services). The first private airline in China also operates two Boeing 737-300F freighters (B-2117 and B-2519) (a third is due) and a lone 737-5Q8 (B-2110). The new B-5366 will operate from Tianjin to Changsha, Kunming, Zhang Jiajie, Guilin, Hohhot, Taiyuan and Harbin.

China’s government reached agreement with Airbus yesterday on firm orders for 110 A320 family aircraft and 40 A330s valued at approximately $15 billion and also signed an MOU with the manufacturer stipulating that Chinese industry will take a 5% stake in A350 XWB production.

China Southern Airlines signed a separate contract for 10 A330-200s. The announcements of the large aircraft order and industrial cooperation on the A350 coincided with high-profile meetings taking place this week in Beijing between French President Nicolas Sarkozy and Chinese President Hu Jintao, both of whom were present for the signing of the MOU by Airbus COO Fabrice Bregier and National Development and Reform Commission Vice Minister Chen Deming.

According to Airbus, the MOU states that Airbus and NDRC will “carry out high-level industrial cooperation on A350XWB development and manufacturing work in order to enhance a closer strategic cooperation relationship between Airbus and the Chinese aviation industry. Airbus confirms its intent to manufacture 5% of the airframe of the A350 XWB aircraft in China.” It added that a joint venture manufacturing plant will be established in Harbin in 2009 with AVIC II subsidiary Harfei Aviation Industry Co. “to produce [A350 WXB] composite material parts and components.”

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China’s airlines and aircraft industry should benefit from a government decision to restrain growth in the country’s civil aviation market, although Western manufacturers could see less demand from the Asian giant.Almost no new airlines will be allowed until 2010 at the earliest as part of a policy aimed at slowing rapid traffic growth that is straining infrastructure and the supply of skilled labor.

The General Administration of Civil Aviation of China says growth in airlines that have already been registered will be controlled—meaning “limited.”

That sounds like bad news for the established carriers, but in fact they will welcome any nationwide capacity restrictions, which can only support yields, although they might also find themselves with more aircraft than needed.

Air China, the country’s leading international carrier, already enjoys profitable pricing thanks partly to the government’s habit of doling out international rights in a miserly fashion for such hot destinations as Beijing and Shanghai.

China Southern Airlines has agreed to order 55 more Boeing 737s for delivery from 2011. The Guangzhou-based carrier says in a Hong Kong stock exchange filing that it entered into an aircraft acquisition agreement with Boeing on 20 August covering the purchase of 55 737-700s and -800s. It says deliveries will take place between May 2011 and October 2013. China Southern has been expanding rapidly on the back of strong demand for travel within China. It has placed several aircraft orders with both Airbus and Boeing over the past year for its own operations and those of subsidiary Xiamen Airlines. Previous orders have comprised 37 737s.

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