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September 23, 2009

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Home » Business » Transport

Europe route to grow air cargo business

AIR China Cargo launched a new route between China and Europe yesterday as part of the nation's efforts to stimulate business in weak sectors such as air freight.

A Boeing 747 jet will serve the route - from Shanghai-Beijing to Vienna-Milan - three times a week, the cargo arm of Air China, the nation's flagship international carrier, said yesterday.

"We have seen a recovery in the global cargo business, so we plan to enhance our presence in Middle and Southern Europe," said Yao Jun, president of Air China Cargo.

"But it's still too early to predict when the route will be profitable because freight rates are still 20 percent to 30 percent lower than a year earlier despite recovering demand," he added.

The carrier has been transferring its major cargo fleet to Shanghai, the world's fourth-largest city by cargo volume.

About 70 percent of Air China's cargo business is out of Shanghai.

Yao also said the cargo business would benefit from stimulus policies implemented by the country's aviation regulator.

The Civil Aviation Administration of China said in a proposal on Monday that it planned to grant a three-year grace period for airlines that launch new international cargo routes.

During the period, rival airlines won't be allowed to operate on the same routes.

Carriers that open new international cargo routes will also be granted subsidies and higher freight rates on domestic routes to better reflect market demand and costs.

"Domestic carriers have suffered from extremely low rates in the domestic cargo market and fierce competition from overseas rivals on international routes," Yao said. "The new policies signal regulatory support for us."

China's air cargo volume, which was damped by waning global demand, recovered in August with 18.1 percent growth from a year earlier. That followed a year-on-year expansion of 3.2 percent in July.


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