Hainan Airliines Not Paying Bills
From the SCMP:
Unpaid airport fees pile up as airlines post losses
Charlotte So
Mainland carriers, facing a deteriorating operating environment, are shifting part of their financial burden to airports by delaying payments for services such as landing fees, according to an industry association.
Seventeen major airports had accumulated accounts receivable from mainland carriers of 4.2 billion yuan (HK$4.8 billion), said an official from the China Civil Airports Association yesterday. At the end of October, most bills were more than three months overdue.
In March, overdue payments at the 17 airports amounted to only 700 million yuan.
Hainan Airlines and East Star Airlines were the top two airlines with the highest amount of unpaid bills, the official said.
Many airlines, taking advantage of unresolved airport fee negotiations, had declined to pay for airport services such as take-off and landing fees, ground handling charges and parking fees since March, said Wang Jian, secretary of the association, who was quoted by mainland media yesterday.
Government-driven reform of airport fees, which increased a variety of charges and went into effect in March, was not welcomed by the airlines. Reportedly, the 17 major airports had renewed only 30 per cent of their contracts with airlines. Smaller airlines tend to be more willing to sign new contracts, while large carriers have been reluctant to do so.
Airlines have faced a variety of difficulties including higher fuel costs and lower traffic due to the snowstorms in February, the Sichuan earthquake in May, tightened security for the Olympics in August and the global financial turmoil.
Beijing was to review domestic jet fuel prices, which now are at a 50 per cent premium to international jet fuel prices, said Liu Shaocheng, head of research for the Civil Aviation Administration of China, at a conference in Beijing.
Fuel costs, which had been reduced by 8 per cent in October, account for more than 40 per cent of the operating costs of mainland airlines.
In the first 10 months, airlines posted 4.2 billion yuan in losses, said Mr Liu.
Air China posted a 1.9 billion yuan loss in the third quarter, while China Eastern Airlines incurred 2.3 billion yuan in losses and China Southern Airlines had a deficit of nearly 900 million yuan.
The situation is set to get worse if traffic demand does not rebound because the big three airlines are scheduled to receive 20 to 40 new aircraft each next year, a 10 per cent expansion in their fleets.
Financial headwinds
Carriers delay payments for airport services such as landing charges
Overdue payments at 17 mainland airports have risen to, in yuan: 4.2b yen.
Interesting to see that Hainan Airlines is one of the two top non-payers. Seems to be mainland Chinese accepted business practice, when times are tough, don't pay your bills.