The front page of CAAC News on July 16, by reporter Wang Lijie: On July 8, the Several Opinions of the State Council on Promoting Civil Aviation Development (hereinafter referred to as the Opinions) was released, identifying the general requirement, main task, and policies and measures for promoting civil aviation development. The guiding document for civil aviation development is the first one released from the perspective of national strategy

　　The Opinions sets up development targets for China’s civil aviation:By 2020, China Civil Aviation will acquire a larger service scope and much higher service quality, international competitiveness and influence, and capacity of sustainable development, and basically formed a modern civil aviation system that is safe, convenient, high-efficiency, and green:To increase air transport capacity to 170 billion ton/km; increase the annual growth rate to 12.2% and annual average flight frequency to 0.5 flights per person per year; to increase the service quality of air transport, and keep the safety level among the top in the world, and ensures that at least 80% of flights are punctual, to increase the total flying hours for general aviation to 2 million hours with an annual growth rate of 19%, and to increase economic and social benefits by making air services available to 89% of the nation’s population.

　　According to the Opinions, the general requirement for promoting civil aviation development is: To change methods used to achieve growth, encourage a mindset guided by a desire to achieve change and innovation, observe economic development law of civil aviation, emphasize advanced, safe and sustainable development, and improve the quality of products to ensure international competitiveness in order to meet economic and social development goals and to serve the needs of the general public. The basic principles: Prioritize people and their safety first.Establish and implement sustainable safe development concept so as to provide safe and high-quality air service for the society. Harmonize planning and coordinate development regionally as well as across sectors; coordinate the civil aviation sector with military aviation and relevant sectors in other modes of transportation. Have a proactive attitude that is relevant and forward-thinking. Strengthen infrastructure development, upgrade the quality level of equipment and guarantee service capability. Use free-market ideology in reforms and innovation: Eliminate systematic barriers, maximize productivity; Make structural adjustments to expand capacity and increase efficiency: Make efficient use of air space to increase flying capacity, promote technological progress and energy conservation, and reduce carbon emissions.

　　According to the Opinions, civil aviation is a strategic sector for our economic and social development. As a result of increased reforms and liberalization, our civil aviation sector has developed rapidly and continues to grow. Reforms leading to enhanced service capabilities and improved safety standards have contributed the most to our liberalization and the creation of socialist modernization. However, a lack of coordination and balanced management of air space still present challenges to the sustainable development of the civil aviation sector. The uneven distribution of air space resources, slow development of infrastructure, lack of skilled labor, low business competitiveness, and poor administrative system contribute greatly to the remaining challenges. To promote the sound development of civil aviation sector, “Opinions” put forward 10 major tasks: Strengthen airport planning and construction, scientifically plan and arrange domestic flight route network, make great efforts to develop general aviation, strive to increase international competitiveness, continuously improve the quality of air transport services, increase air transport safety levels,elaborately construct the construction of modern air traffic control systems, take measures to make aviation a green and low-carbon emission sector, proactively support domestic civil aircraft manufacturing, and proactively promote the economic development of aviation.

　　The Opinions also identifies policy measures in six sectors: Improve legislation and planning, make greater efforts in reforming air space management, improve administrative systems and mechanism, support scientific research and increase skilled labor, improve financial and tax support policies, and improve financial services.

　　Attached: Full text of Several Opinions of the State Council on Promoting Civil Aviation Development (Guofa [2012] No. 24)

　　To: All provinces, autonomous regions, municipal governments, ministries and institutions directly under the State Council:

　　Civil Aviation is a key sector for our economic and social development. As a result of increased reforms and liberalization, our civil aviation sector has developed rapidly and continues to grow. Reforms leading to enhanced service capabilities and improved safety standards have contributed the most to our liberalization and the creation of socialist modernization. However, a lack of coordination and balanced management of air space still present challenges to the development of the civil aviation sector. The uneven distribution of air space resources, slow development of infrastructure, lack of skilled labor, low business competitiveness, and poor administrative system contribute greatly to the remaining challenges. The following recommendations provide steps to ensure the development of the civil aviation sector:

　　I. General Requirements

　　1. Guiding thoughts: The Opinion is guided by Deng Xiaoping’s theory and the “3 representatives” ideology to implement scientific development concepts, change methods used to achieve growth, encourage a mindset guided by a desire to achieve change and innovation, emphasize advanced, safe and sustainable development, improve the quality of products to ensure international competitiveness in order to meet economic and social development goals and to serve the needs of the general public.

　　2. Basic principles:

　　-      Prioritize people and their safety first: Establish and implement sustainable safe development concept so as to provide safe and high-quality air service for society.

　　-      Harmonize planning and coordinate development regionally as well as across sectors: Coordinate the civil aviation sector with military aviation, relevant sectors in other modes of transportation, and related industries; and coordinate the development of each region.

　　-      Have a proactive attitude that is relevant and forward-thinking: Strengthen infrastructure development, upgrade the quality level of equipment and guarantee service capability;

　　-      Use free-market ideology in reforms and innovation: Eliminate systematic barriers, open up markets and maximize productivity;

　　-      Make structural adjustments to expand capacity and increase efficiency: make efficient use of air space to increase flying capacity, promote technological progress and energy conservation, and reduce carbon emissions.

　　3. Development targets:

        By 2020, China Civil Aviation will acquire a larger service scope and much higher service quality, international competitiveness and influence, and capacity of sustainable development and basically formed a modern civil aviation system that is safe, convenient, high-efficiency, and green:

　　-      Increase the scale of air transport. Increase air transport capacity to 170bil ton/km; increase the annual growth rate to 12.2% and annual average flight frequency to 0.5 flights per person per year;

　　-      Increase the quality of air transport service, and ensure that the safety level is among the top in the world. Increase the safety rate controlled to less than 0.15 accidents per million hours and ensures that at least 80% of flights are punctual;

　　-      Realize scale development in general aviation. Increase the total flying hours for general aviation to 2 million hours with an annual growth rate of 19%;

　　-      Increase economic and social benefits by making air services available to 89% of the nation’s population.

　　II. Major tasks

　　4. Strengthen airport planning and construction: In order to meet the targets identified in the nation’s strategy for overall economic and social development, the construction of crucial infrastructure such as airports, especially transport airports requires improved planning and accelerated construction within our capacity. Airport planning should allow space for further development while simultaneously ensuring safety, remaining economically viable and conserving energy in a way that is environmentally friendly. In order to develop a comprehensive transportation system, airports should be able to connect with other modes of transportation more efficiently. Efforts should be made to build Beijing, Shanghai and Guangzhou airports into international hubs with improved facilities and global radiative functions. Kunming and Urumqi airports should serve as gateway airports while Shenyang, Hangzhou, Zhengzhou, Wuhan, Changsha, Chengdu, Chongqing and Xi’an airports should serve as regional hubs. Furthermore, large airports should serve as integrated transportation hubs. Newly-built feeder airports should incorporate mechanisms for defense and general aviation development while also increasing the capacity of existing airports pragmatically. Airport resources must be integrated complementarily among dense airports in the Pearl River delta, Yangtze River delta and Beijing-Tianjin-Hebei regions. More attention should also be focused on the planning and construction of airport auxiliary facilities including passenger services, air cargo collection and distribution, and fuel supplies. Integrated transportation hubs should be planned for major airports

　　5. Scientifically plan and arrange domestic flight route network: The establishment of domestic air transport networks that utilize international hub airports and domestic trunk lines as the pillar and regional and general aviation airports as supplements is imperative. Top priority should be given to building express airway networks among airports that handle over 10 million passengers. The connection between trunk lines and regional routes as well as between regional routes should be improved. The accessibility and utility of small and medium-sized airports should also be improved. The “basic air service scheme” should be implemented by using inexpensive aircrafts to meet the needs of inland areas including poor and underdeveloped regions as well as areas where minority people live. Route networks between China mainland and Hong Kong and Macao should be optimized while points and flights between the two sides of the Taiwan Strait should be increased. Cargo flights route networks and multimodal transportation need to be developed proactively and the use of IOT technology should also be maximize, and the cargo air transportation should be developed according to the requirements of modern logistics.

　　6. Make great efforts to develop general aviation: traditional general aviation business in agriculture and forestry should be consolidated. General aviation should serve as the vehicle for achieving economic growth by proactively developing general aviation services in areas of emergency assistance and medical emergency, maritime sovereignty safeguarding, and private and business corporate jets. The establishment and development of general aviation enterprises via probe business model demonstrations and innovative operation mechanisms to improvement the level of management should be promoted. In order to create better environment for the development of general aviation, developing comprehensive general aviation reform will require improved infrastructure construction, developing pertinent legislation regarding general aviation and standardizing systems, and improved air traffic control.

　　7. Strive to increase international competitiveness: in order to adapt to the new trend of China’s opening-up and international air transport development, comprehensive research should be conducted on open policies for international air transport while fostering mutual cooperation to achieve a win-win result. More support should be provided to develop domestic passenger and cargo airlines, improve management levels, tap into the international market, and increase competitive advantage in order to create international airlines that have the capacity to provide globalized services. The structure of international routes should be improved, especially medium and long distance routes. The density of flights to Europe and American regions should be increased, and more routes to South America and Africa should be added. The air transport relationships with neighboring countries should be consolidated by promoting aviation integration with ASEAN countries. International aviation cooperation should be improved, and participate in ICAO’s standard-setting.

　　8. Continuously improve the quality of air transport services: Flight punctuality should be increased according to the requirements of scientific dispatching and forcible guarantee. Delay warning and notification systems should be established for the general public and emergency mechanisms and standard services for large scale flight delays should be improved. Information technology should be disseminated, operational procedures should be optimized, equipment capabilities should be improved, and luggage transport quality should be ensured. The service quality standard system should be enhanced and implemented, boarding procedures should be simplified, differentiated service products and brands should be created to increase consumers’ satisfaction.

　　9. Increase air transport safety levels: Stick to the principle of “safety first, prevention as key comprehensive measure”. Maintaining safety should be a continuous priority which should be accomplished by improving standard safety rules and establishing long-term, efficient, and safe production mechanisms. The safety standards for productive operational entities and safety enforcement systems should be improved to increase accountability for meeting safety standards. Tracking systems for safety warnings and strict safety evaluations should be conducted to enforce accountability. The air marshal system should be improved as well as the communications and coordination between relevant administrative departments and local governments to ensure the safety of air space. Qualification levels for professional technicians including pilots, traffic controllers, repair people, dispatch signees, safety checkers, etc. should be improved. The development of information technology should be improved, proactively disseminate safety production information. New equipment for safer operational management should be developed and the emergency assistance system and rescue plan for emergencies should be improved.

　　10. Accelerate the construction of modern air traffic control systems: Route network structures should be improved and large capacity air expressways and parallel lines for busiest routes should be built. Route structures and air space at airport terminals for the busiest regions should be optimized. The quantity of entry and exit routes in the busiest airports should be increased and international routes flying over ocean areas should be opened. Air traffic control districts should be optimized and integrated and practical plans for higher-altitude air traffic control areas should be developed. Next generation air traffic control systems should be created and capacity-building for air traffic control communications, navigation, monitoring capacity as well as weather information services should be improved. The management of operational equipment should be improved as well as air traffic control systems and operational mechanisms for civil aviation.

　　11. Take measures to make aviation a green and low-carbon emission sector: Zigzag routes should be changed into straight line routes in order to make efficient use of the temporary routes. Ground operation and organization should be maximized to reduce unnecessary flying and waiting time. Airlines should be encouraged to import aircrafts of low emission and to dispose of the high pollution causing aircrafts. Fuel-saving renovations for aircrafts should be promoted as well as research and use of bio-fuel. Counter-measures should be established to deal with global climate changes that affect the aviation sector. Standards for green airport construction and new, environmentally-friendly materials should be created. An energy contract administration should be created. A noise monitoring system for large airports and safe treatment facilities for air pollution and waste should be created.

　　12. Proactively support domestic civil aircraft manufacturing: Cooperation and synergies between the civil aviation sector and aviation industry should be promoted. Capacity building in airworthiness evaluation and aircraft operational review should be improved to advance the organizational system for airworthiness evaluation. Jumbo-aircraft strategies should be utilized and domestic regional aircrafts and general aviation jets should be researched and utilized. Guidance should be provided on the distribution of aircrafts, engines and airborne equipment so as to foster a China-made airborne products manufacturing system conducive to China’s civil aviation development. After-sale service systems and operational technical support systems should also be improved. Bilateral airworthiness scales and international cooperation with the United States and Europe should be improved.

　　13. Proactively promote the economic development of aviation: Improvements in industrial restructuring and regional economic development through the scientific development of the civil aviation sector should be promoted. Local governments should be encouraged to research and develop air passenger and cargo transport, general aviation, airborne product manufacturing, aviation financing, aviation tourism, aviation logistics and high value-added product manufacturing with modifications incorporating local characteristics to create an improved industrial aviation chain. Pilot programs should be implemented to demonstrate the state of the aviation economy and form an agglomeration area for the air industry in the Pearl River Delta, Yangtze River Delta and Beijing/Tianjin/Hebei regions.

　　III. Policy measures

　　14. Improve legislation and planning: Air space-related legislation should be improved and the PRC Civil Aviation Law should be revised. Legislation regarding aviation safety, air transport, airworthiness evaluation, general aviation etc. should be improved to create comprehensive civil aviation laws and a standardized system. A national air space plan should be created for the general aviation industry. The “national civil airport location plan” should also be improved. All local governments should have their own plan for civil aviation development in concert with their plans for local economic and social development, land use management and urban/rural construction.

　　15. Make greater efforts in reforming air space management: Air space resources should be efficiently used. Unified planning of military and civil air space is necessary to create an air space management environment that serves the harmonious development of air transport, general aviation and military aviation. The coordination between civil and military aviation should be improved and should incorporate a mechanism for the flexible use of air space. Air space should be scientifically categorized and a classification management system should be implemented. Supplementary work that promotes low-altitude air space administration reform should be improved. Basic theories, rules and regulations, and operational management and service provision systems for low-altitude air space administration should be created and should incorporate Chinese attributes. The organizational structure and operational methods should be in alignment with the low altitude administrative reforms.

　　16. Improve administrative systems and mechanisms: Civil aviation administrative mechanisms that facilitate the achievement of civil aviation development and improve construction of various regional administrative institutions at all levels should be created. The professional administration of civil aviation departments over airlines should be approved along with the evaluation systems for large airlines and air transport enterprises. Guidance should be provided for the administration of civil aviation departments to pay more attention to the social benefits of air transport. The “Regulations on the Administration of Civil Airports” should be implemented and the roles of local government and its relevant functions in developing airports should be clarified. Air transport pricing reform using market-oriented resource distribution should be gradually implemented and price creation mechanisms should be modified accordingly. The fee policy regarding civil airports and air traffic control should be improved. The opening up of markets of jet fuel, airborne materials, air traffic information and other air services should be accelerated. Guidance for foreign and private capital to invest in the civil aviation sector should be provided and investments should be encouraged.

　　17. Support scientific research and increase skilled labor: Innovations in civil aviation should be incorporated in the nation’s science and technology plan and research labs should be established at the national level. Researching and disseminating core air traffic control technology, airworthiness evaluations and new flying techniques etc. should be increased. The use of the Beidou Satellite system in the civil aviation sector should be promoted. The development of the core information platform for the air transport system should be accelerated. The testing capability for civil aviation equipment should be improved to ensure the equipment meets safety requirements. Key skilled professionals should receive increased training including pilots, MRO, traffic controller etc. Non-aviation colleges and universities should be encouraged to train professional personnel for the civil aviation sector. Preferential welfare treatment should be implemented and adequate salary policies for civil aviation professional technicians should be used to support professionals in the civil aviation sector.

　　18. Improve financial and tax support policies: increase Capital investments in the construction and development of the civil aviation sector should be increased. The central budget will continue to support the construction and operations of airports in the middle and western regions. The management and use of civil aviation development funds should be maximized and the expense structure should be improved. The administrative requisition system for emergency assistance and special key projects should also be improved. Additional jet fuel taxes should take into consideration fuel prices. Land used in airport and comprehensive hubs construction should receive tax exemptions according to the relevant policy measures. Qualified airport zones should be encouraged to apply the establishment of bonded areas according to standard procedures and relevant tax policies. Preferential import tax policies for certain types of aircraft, engines and airborne equipment should still continue.

　　19. Improve financial services: Possible measures to establish civil aviation equity investment (funds) enterprises with diversified stakeholders should be identified. Policy measures promoting the development of the domestic air leasing sector should be drafted. Financial institutions should be encouraged to provide preferential credit support regarding aircraft leasing, airports and auxiliary facilities construction. Financial institutions should also be encouraged to support IPOs, as bonds and mid-term bill issuances for aviation enterprises. Various financing institutions should be encouraged to provide insurance for civil aviation infrastructure facility construction projects. The commercialization of third party war liability insurance for aircrafts of domestic airlines should also be consistently promoted.

　　All local governments and departments should be fully informed of the significance of promoting civil aviation development. They should change their thought processes and mindset in alignment with these objectives. They should work hard on identifying practical measures to implement all tasks in the Opinion. They should actively coordinate amongst one another to resolve key issues in the development of the civil aviation sector and also foster an environment conducive to the scientific development of the civil aviation sector.

　　The State Council

　　July 8, 2012