Private investment would help prevent capital outflows and add momentum to China's domestic aviation market, experts said, after industry regulators announced that private funds will be allowed into the civil aviation construction.
The Civil Aviation Administration of China (CAAC) released a notice on its official website on Sunday, saying that private capital will be allowed into the construction and operation of civilian airports and affiliated facilities in various ways, including franchising, transfer of management rights and stock holding.
Private investments can be made in airport terminals, logistics and warehousing, ground services and other operations of entirely civilian airports without the approval from agencies, according to the CAAC announcement.
The regulators would also reduce the number of State-owned airports.
"The civil aviation market offers a great potential for domestic private investment, which has witnessed a decline and huge capital outflow," Li Xiaojin, a professor with the Economics and Management College of the Civil Aviation University of China, told the Global Times.
Li said the CAAC announcement offers a future direction for private investors at a time when China is encouraging domestic investment in the economy.
Compared with nations like the US and Brazil, China's aviation infrastructure is under developed, said Li.
While the US has about 13,500 airports and Brazil more than 4,000, China only has more than 500 airports as of 2013, according to data on the CIA's website.
Most airports in China are based in eastern areas, Li said. "The civilian airports in East China will be small in scale and have distinctive purposes, like the Sanhe Airport in Hebei Province, 60 kilometers away from Beijing, the first airport specializing in corporate and business travel."
Wang Jiangmin, a senior civil aviation economist, told the Global Times on Monday that the CAAC notice will help bridge the regional gaps in the Chinese aviation market.
"East China already boasts an extensive aviation market while there is a large scope for development in the western and central parts of the country," said Wang.
