Slower economic growth, rising fuel costs and high-speed railways may be dark clouds preventing domestic airlines from repeating their outstanding performance in 2010 this year.
China's three biggest airlines soared last year as they tapped a rebound in the global economy and major events such as the Shanghai World Expo and the Guangzhou Asian Games which boosted travel and freight demand.
Air China's net profit took off 142.7 percent from a year earlier to 12.2 billion yuan (US$1.86 billion) last year while China Southern Airlines boosted its net earnings almost 18-fold to 5.8 billion yuan. China Eastern Airlines soared by an even more spectacular 656 percent to 5.38 billion yuan.
"The booming demand and flight capacity growth helped push up airlines' net income," said Li Lei, an analyst at China Securities Co.
However, the airlines expressed concerns about slower economic growth, inflation, the impact of high-speed railways, limited air space and rising fuel costs affecting their outlook this year.
"In 2011, the company will face challenges, such as the widespread development of high-speed railways that will dampen our domestic routes while competition posed by global airlines will hit our international markets," Shanghai-based China Eastern said.
A brokerage predicted that demand may slow from last year's boom.
"Growth in air demand in the country is expected to slow from last year's 20 percent to 15 percent this year," said Song Weiya, an analyst at Guotai Junan Securities Co.
China's air cargo volume fell 11.8 percent in February from a year earlier, versus a 10.1 percent growth in January, the Civil Aviation Administration of China said.
Passenger volume in the country grew 6.8 percent, slower than a 16.8 percent rise in January, CAAC said.
