Crowded skies, frustrated passengers: Military control of airspace and a risk-averse culture threaten to cripple China’s rapid growth in aviation

Crowded skies, frustrated passengers: Military control of airspace and a risk-averse culture threaten to cripple China’s rapid growth in aviation

Aug 10th 2013 | BEIJING |From the print edition


ON AN average day, more than 1,500 planes take off and land at Beijing’s Capital International Airport, the second-busiest in the world (by passenger traffic) after Atlanta. Many of those take-offs and landings are late. According to FlightStats, a travel industry monitor, China’s big airports have the worst delays in the world, with only 18% of flights from Beijing departing on time in July (arrivals fared better). The strain is showing, especially on the faces of delayed passengers. Tales of airport rage are frequent media and online fodder; most popular are videos of officials or other bigwigs punctuating their impatience with invective and spittle. Planes pull away from gates on time without clearance to take off and remain on the tarmac for up to 30 minutes, just so the flight can say it is not delayed. Such tricks explain why official figures state that 75% of all arrivals and departures were on time in 2012. Independent estimates put the figure closer to 30%. Airline staff often give no reason for delays.Bad weather and technical hitches can cause flight delays anywhere, but two man-made conditions are chiefly responsible for China’s problems. Experts agree they must be put right if China’s aviation industry is to continue growing, but they are so deep-rooted, and so political, that they will not be fixed without the intervention of officials at the highest level.

The first and oldest problem is that China’s armed forces control most of the nation’s airspace—perhaps 70-80% of it. This is especially the case above and around cities, leaving very narrow corridors for aeroplanes to take off, land and navigate nasty weather. The second problem, compounded by the first, is that air-traffic controllers have no incentive to move aeroplanes along efficiently—to “push tin” as Americans say—whereas they are punished harshly for any mishaps. The result is that, even in perfect weather, aeroplanes coming in to land are kept much farther apart in China than in America—as much as 6-10 miles (10-16km) instead of about three.

In bad weather, unable to take alternative routes, planes have to stack up more than they would in America, where almost all the airspace is freely available. Pilots complain that they sometimes cannot steer to avoid a storm because of airspace restrictions. Such constraints mean that fewer planes take off when there is bad weather along a route. On July 22nd a report of a meeting held by China’s Air Traffic Management Bureau was posted online. It stated that planes should be allowed to take off from eight big airports even if it is unclear whether it will be safe to land at their destination, an embrace of risk that shows how desperately officials want to curb delays. (Beijing’s on-time rate for arrivals and departures spiked upwards to 73% in late July, according to one company’s statistics, perhaps as a result of the new policy.)

Safety, safety and safety

The good news is that almost all planes take off and land in China safely. That is no small achievement. In the early 1990s the country suffered a series of plane crashes that shocked officials into an obsessive focus on safety. This tough, inflexible approach—“China values safety, safety and safety,” says one American expert—has served the industry well for two decades. According to Boeing, an aircraft-maker, in the decade up to 2008 China’s accident rate was half that of America.


In 20 years the Chinese market has grown almost 20-fold. Total passenger traffic (arrivals and departures, domestic and international) is now the second-highest in the world, after America, having nearly tripled to 319m in the eight years to 2012 (see chart). New airports open every year. Boeing estimates that China’s fleet of 2,000 planes will triple in the next 20 years. For Chinese skies to accommodate all those new planes, experts say, authorities will have to become much more flexible both about airspace and about methods of air-traffic control.

At a recent seminar in Beijing, American experts explained to Chinese officials the Federal Aviation Administration’s approach to air-traffic control, which involves not punishment but “threat-free” reporting of incidents—to encourage the fixing of problems. In addition, American air-traffic controllers are paid more to work at busier airports, and paid still more to do so efficiently, which includes landing more planes. One American expert notes that in China’s risk-averse political system, a leader who proposes such a system risks being fired (or worse) as soon as there is a crash.

The control of airspace by the air force has been a particularly vexing issue for the Civil Aviation Administration of China (CAAC), which oversees commercial flights. In his book “China Airborne”, James Fallows, an American journalist and pilot, describes the amazement of Chinese officials visiting America to discover that planes can fly over the capital, within miles of the White House. This would be unthinkable in Beijing.

In China, any new route must be approved by military officials. The air force has granted some temporary routes for commercial civilian use, but not enough, say experts. This has an environmental cost as well: a lack of flexibility to manoeuvre forces planes to burn much more fuel.

Money plays a role. Industry websites and Chinese newspapers report grumbles that military officials sell access to air space. The structure of government plays a still more decisive role. The armed forces do not answer to the government, of which CAAC is a part, but to the Communist Party and its central military commission. The only person in the system with power over both the army and the government is Xi Jinping, the nation’s president. If China is to do more to appease its hundreds of millions of airline passengers, the order must come from the top.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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