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By TBM Staff | Beijing

Beijing Capital International Airport performed without fault in the lead-up to and during the 2008 Summer Olympics, with reports the ‘mass exodus’ after the closing ceremony is also progressing smoothly. This is a great credit to the planning and execution of airport officials. According to a Centre for Asia Pacific Association (CAPA),as predicted in the Monthly Essential China, 2008 is proving a challenging year for Beijing Capital International Airport Co Ltd (BCIACL), as rising costs and slowing traffic take the shine off the airport operator’s earnings.

Just days before the Olympic Games' opening ceremony, on July 29, 2008, BCIACL issued a profit warning, stating net profit for the six months ended June 30, 2008 may decrease significantly as compared with the CNY 567 million net result in the previous corresponding period.

The company was quite explicit in the reasons behind the expected fall in profit, including:

  • The implementation of the restrictions on flight throughput of the Beijing Airport by the CAAC in Quarter One of 2008;
  • The weakening of aviation transportation demand, due to the slowdown of the global economic growth;
  • The cancellation of flights or the postponement of increase of flights by certain airlines due to the high price of jet fuel; and
  • The substantial increase in operating costs of the Company, due to the commencement of operation of Terminal 3 (T3) and related facilities of Beijing Airport.
In January 2008, BCIACL announced plans to invest CNY 26.9 billion to acquire T3 from its parent company.

Traffic continues to weaken

The weakness in traffic reported by BCIACL continued into July 2008. The airport operator reported (August 21, 2008) the following traffic highlights in July 2008:

  • Passenger numbers: 4.9 million, -4.6 per cent year-on-year;
  • Domestic: 3.8 million, -4.6 per cent;
  • International: 1.1 million, -4.5 per cent;
  • Cargo volume: 105,000 tonnes, +1.3 per cent;
  • Aircraft movements: 38,900, +6.7 per cent.

Domestic throughput has been bouncing around in negative territory since February 2008, but the international slowdown has occurred more recently and is of concern.

Beijing Capital International Airport passenger numbers growth (% change year-on-year): August 2007 to July 2008

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Source: Centre for Asia Pacific Aviation and BCIACL

Undoubtedly some of this reduction can be attributed to restrictions on inbound and outbound travel during the period, but cargo volumes have also slowed, rising just 1.3 per cent in July 2008.

Beijing Capital International Airport passenger numbers growth vs cargo volume growth: (% change year-on-year): August 2007 to July 2008

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Source: Centre for Asia Pacific Aviation and BCIACL

Aircraft movements however continue to pick up, suggesting carriers are either operating smaller aircraft more frequently to/from Beijing, or suffering load factor reductions – or both.

Beijing Capital International Airport passenger numbers growth vs aircraft movement growth (% change year-on-year): January 2007 to July 2008

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Source: Centre for Asia Pacific Aviation and BCIACL

In contrast to Beijing, Athens enjoyed a pre-Olympics traffic surge, while Sydney’s traffic prior to its Olympics in 2000 was consistently positive.

Passenger numbers growth at Sydney (2000), Athens (2004) and Beijing Capital International Airport (2008): % change year-on-year

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Source: Centre for Asia Pacific Aviation, Sydney Airport, Athens International airport and Beijing Capital International airport

Overall, BCIACL expected to handle about 5.56 million people during the Olympic Games – or growth of around eight per cent on August 2007 throughput. It remains to be seen if traffic will hit these targets, with indications from airlines that bookings for travel during the Olympics period had fallen short of expectations. Both Sydney and Athens reported further growth in demand after the Olympics – a situation many officials in Beijing will be hoping is repeated in 2008.

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