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China's Air Fleet Expands Massively

As the number of air passengers in China expands rapidly, the country is going on a shopping spree to buy new planes. But there is one problem, China does not have enough pilots to fly the new planes.

Last year, 138 million people traveled by plane in China, more than twice as many as five years earlier. Chinese aviation authorities predict the number of air passengers will double again over the next five years, soaring to 280 million by 2010.

To keep up with the growth, China's airlines - which now have a combined fleet of fewer than 900 planes - are going on a major shopping spree. China's civil aviation administration says the country will add more than 100 new planes to its fleet annually over the next five years.

But there is one problem: China does not have enough pilots. Peter Harbison, executive director of the Center for Asia Pacific Aviation in Sydney, estimates the country needs at least 3,500 additional pilots just to accommodate the existing orders of about 350 planes.

As China cannot train enough people fast enough, its only option is to recruit more foreign pilots, which some private airlines have started to do. But Harbison says an overseas recruitment drive is not going to be easy. He notes that China faces the same problem that India, which also desperately needs pilots, confronts.

"Each of those two countries has salary rates which are considerably less than the rest of the world and that of course means they can't just tap into the global markets for pilots without substantially changing their cost profile, because pilots are a very expensive part of the whole labor profile," said Harbison.

To compete with airlines in places that pay high salaries, such as Europe and the United States, Chinese airlines will have to offer hefty packages to foreign pilots. And to keep Chinese staff happy, airlines would then have to raise local pay.

Higher labor costs are a problem as most Chinese airlines are not yet profitable - despite the strong passenger growth figures. Harbison says one of the reasons is that the major three airlines - Air China, Air Southern and China Eastern - have recently merged with other, smaller airlines.

"Now these airlines are often not very efficient, they have duplicated fleets, duplicated management, as a consequence they have to absorb a lot of hopefully one-off costs in the process of consolidating and merging those airlines, so it's going to take them a couple of more years still to get the necessary efficiencies," he said.

China's aviation authority has pledged to improve safety in the face of the massive growth. Harbison says China's aviation industry has a strong safety culture, and that airlines are under a lot of pressure not to compromise on safety to save costs.