Century City, CA, February 22, 2006 ??” International Lease Finance Corporation (ILFC), a wholly-owned subsidiary of American International Group, Inc. (NYSE: AIG), announced the lease placement of two (2) used Boeing 737-800 aircraft to OKAY AIRWAYS.

OKAY AIRWAYS, based in Beijing, China, will lease two (2) Boeing 737-800 aircraft from ILFC. The aircraft, MSN 30679 and 30673, will be powered by CFM56-7B27B1 engines and are scheduled to deliver in March 2006. The lease terms are for eight and 10 years respectively.

ILFC is the international market leader in the leasing and remarketing of advanced technology commercial jet aircraft to airlines around the world. ILFC owns a portfolio valued at more than $ 40 billion, consisting of more than 800 jet aircraft.

AIG is the world???s leading international insurance and financial services organization, with operations in approximately 130 countries and jurisdictions. AIG member companies serve commercial, institutional and individual customers through the most extensive worldwide property-casualty and life insurance networks of any insurer. In the United States, AIG companies are the largest underwriters of commercial and industrial insurance, and AIG American General is a top-ranked life insurer. AIG???s global businesses also include financial services, retirement savings and asset management. AIG???s financial services businesses include aircraft leasing, financial products, trading and market making. AIG???s growing global consumer finance business is led in the United States by American General Finance. AIG also has one of the largest U.S. retirement savings businesses through AIG SunAmerica and AIG VALIC, and is a leader in asset management for the individual and institutional markets, with specialized investment management capabilities in equities, fixed income, alternative investments and real estate. AIG???s common stock is listed on the New York Stock Exchange, as well as the stock exchanges in London, Paris, Switzerland and Tokyo.

Well...it was 1 year 1 month 27 days afternoon....and I finally received my CAAC temporary pilot's commercial multi-IFR license on December 10, 2005. I was speechless...I thought I would never receive my licenses here in China. I still had the base training to complete before starting line training and then wait for my official pilot licenses to come in the mail!!

I would have to complete 30 take-offs and landings and a checkride, all within about 4 hours. I could hardly wait to burn rubber on the B737-900...literally.

Christmas had come early....I'll be able to go home as soon as base training is complete. Then I come back to China to start line training. Sweet!!

Update on the base training.....coming soon!

During this month, I successfully completed my CPL Multi-IFR checkride on the PA-44 Seminole. So 4.5 hours of review and 1.5 hours for the test. Talk about stress! Hadn't flown in nearly 1 year.

The standards here are pretty high, much like in the western worlds. Maybe it's because the examiners knew they were testing foreign pilots. They had to be extra strict. Anyways no GPS was used....all instrument flying only. Tracked out to the training area by using the VOR/DME. Then completed stalls (take-off and landing configurations) and steep turns. Afterwards tracked the radial to the VOR at the airport. At about 5 DME we broke that off and tracked direct to a nearby NDB for a published hold. Then continued on with various approaches such as NDB, VOR/DME and ILS/DME. Single engine procedures was performed on take-off and while on approach for ILS/DME and then landing single-engine. Completed ILS/DME, VOR/DME, and NDB approaches. Everything was pretty straight-forward.

Oral exam was the hardest part for me, since the chinese air law decided to mimick the FAAs air law system. So not too familiar with the laws but it wasn't much different then canadian air law other than the specifics. Lots of questions on CCAR Part 91....which is the operations rules and regulations for general aviation. So questions on air law, general aviation knowledge, instrument operations and procedures, instrument failures and instrument charts.

I also passed my basic english test as well as my radiotelephoney english test. So I had pretty much completed all the tests that they could ever test me on in China.

Now it's all up to the CAAC, I just hope that politics will favour us foreign pilots this time. Let's hope that we can finally get onto that 737 now.

Well...I ended up going home for most of July to visit my family and friends back in Vancouver and Toronto. I was under the impression that as soon as I return to China that I would be starting my base training and then the line indoc. But CAAC has many surprises up their sleeves. In August they came out with a policy that states that all foreign pilots must complete an basic English test as well as a Radiotelephoney English test. But the only place to write it is at China's only flight University in Sichuan.

The company was holding back in sending us since they thought that CAAC was going to come out with another ruling on a policy for foreign pilots. Also during this time, the military pilots were getting pushed through since CAAC had ruled to exactly what they needed to get done in order to get their licenses....so the company quickly sent them down to the flight University to finish the supplemental training. And during this time, us foreign pilots got lsot in the mix and were forgotten about.

So after a couple of months, all of a suddent it's October when the military pilots are back from training and the company finally remembered us, as CAAC came out with another ruling on us. Now we had to complete a conversion flight test to convert our foreign licenses to Chinese CAAC pilot licenses. We had to fly a Seminole for 6 hours and 1 hour in the FTD. At the same time, we can complete our English exams as well.

Next update is regarding the Seminole training and English exams. First flight taken in China!

The Beijing government and China's aviation regulator often appear to be at odds with one another over the shape and direction of the country's burgeoning airline industry. Fortunately, there is enough growth to go around.

By Geoffrey Thomas
Hong Kong, Shanghai, Taipei
Air Transport World, February 2006, p.24

For students of China's rapidly growing but often puzzling airline industry, at least two developments during 2005 needed no explanation. The landslide victory in early December of the pro-reunification Party in Taiwan's municipal elections sent a clear message that reunification will be a key issue in the country's 2008 presidential election, paving the way for unrestricted direct flights between Taiwan and China.

A few weeks earlier, Siemens AG snared a contract for 60 600-passenger trains capable of speeds of 300 kph for introduction in 2008 connecting China's major cities. Vice Minister-Railways Hu Yadong also announced that express trains with speeds in excess of 200 kph are expected to start running in 2006, flagging significantly greater competition for airlines on short-haul routes.

Since 1997, the speeds of Chinese trains have been increased four times to meet demand. By 2020, China expects to build 10,000 km. of new railway track with 2,000 km. of high-speed track that will include the $12 billion, 1,300-km. Beijing-Shanghai Express. That line will provide an alternative to air travel between two of the nation's wealthiest and most industrialized cities.

While these two developments may be viewed as clear signals, most of the events in China in 2005 sent mixed messages, according to the Centre for Asia Pacific Aviation. In the December issue of its monthly China Essentials, CAPA highlighted the fact that the government-mandated freeze on approvals for new aircraft orders at the start of 2005 was followed by the biggest number of orders in a single year 590 by Chinese airlines.

At the same time, significant first-half losses at China Southern and China Eastern were turned around miraculously in the third quarter with the help of government policy intervention. Adding to the paradox, a raft of new airlines were approved and the Big Three of Air China, China Southern and China Eastern finalized the process of digesting the July 2000 government-initiated mergers that were designed to rationalize competition and end price wars.

Some of these occurrences reflect the differing policy objectives of CAAC, China's powerful airline industry regulator, and the Beijing government, which confronts international pressure to reduce its trade surplus with the West. For example, early last year CAAC DG Yang Yuanyuan stated, "Chinese airlines have already bought and arranged to be shipped next year a total of 147 planes and this basically suits the needs of the market's growth no additional purchases will be approved in 2005." This declaration was followed by orders and MOUs for five A380s, 60 787s and an even split of 300 A320s and 737s. More mystery was to be found in the financial results. After a robust 2004 in which China's airlines enjoyed their best profit performance in a decade, the government was forced to assist them in the third quarter of 2005 so they could post profits.

And the size of the turnaround has analysts scratching their heads. The country's largest carrier, China Southern, suffered a CNY964 million ($119.4 million) net loss in the six months to June 2005 compared to a net profit of CNY374 million for the same period in 2004, but in the 2005 third quarter it posted a CNY852 million profit. The story was similar at China Eastern, which suffered a first-half loss of CNY471.4 million compared to a profit of CNY346 million for the corresponding 2004 period and then posted a CNY673 million profit for the third quarter.

These numbers came despite record high fuel prices, greater competition and the costs associated with absorption of a number of smaller carriers into the Big Three. They also contrast with results at Shanghai Airlines, which experienced an 18% decline in third-quarter earnings, and Hainan Airlines, which saw profits fall 71%. According to CAPA, government assistance included de-pegging the currency, placing obstacles in front of new LCCs and absorbing fuel price hikes. But that has not stopped the major airlines' share prices from spiraling downward 20%-50% in the last 12 months.

Bursting At The Seams

China's airlines carried approximately 144 million passengers in 2005, up 20% over 2004; cargo carriage also rose 20% to 3.28 million tons. The strong growth last year built on a 22% rise in passengers in 2004, a year in which the country overtook Japan as the largest air travel market in Asia and second only to the US in terms of total scheduled departing seats, according to the ITTC consultancy division of Airclaims, which is headed by former IATA chief economist Peter Morris (ATW, 5/05, p. 36). It is a pace that Morris views with concern: "There are going to be mistakes, the system cannot grow at this rate without problems."

The government's political agenda in handling this growth may pose the greatest challenge both for private and government-owned airlines and for the foreign carriers eager for a slice of the ever-growing pie. "They are striving for a level playing field but every now and then they tilt it," muses one Hong Kong-based analyst who wishes to remain anonymous. "They are striving to get the yin and yang in balance." Morris says the government is "in favor of liberalization but is concerned with unstable growth," which could be growth that doesn't favor the Big Three.

In January last year, Liu Weimin, director of the Center of Air Law, told ATW that "globalization of the economy is an irreversible and inexorable trend" and that "China's correct choice could be only for win-win." That view was backed up at mid-year by Yang, the highly regarded former China Southern deputy chief pilot, who told media at the May ICAO symposium on airline liberalization in Shanghai that China's airlines will "get bigger and stronger with more competition." He added that the country "will explore new bilateral cooperation and will also learn from foreign airlines' technology and expertise."

More competition is on the way with 96 bilateral air service agreements, including one with the US that will see a tripling of flights by 2010. The latest is a virtual open skies agreement with Singapore inked in November. On the domestic front, the Big Three finally completed the forced digestion of a variety of government-owned smaller carriers last year even as CAAC approved 18 new privately owned airlines more than in the previous 10 years combined. But while encouraging private investment in the sector, the government continues to control aircraft ordering, fare-setting, service levels and route selection. According to CAPA Executive Chairman Peter Harbison, "This presents a major discouragement to investors and to those that have tried to implement a low-cost operating model, many aspects of the model being dropped or deferred until such time as regulatory controls are eased. Okay Airways stated in October it would have to adopt a more conventional airline business model as Chinese government restrictions have made its low-cost model impossible to implement." He adds that Okay President Liu Jieyin complained that after the airline was established, 40-50 airports called on it to open services but permission was refused by CAAC.

Chasing Equity

Foreign carriers chasing equity opportunities in Chinese airlines will be watching these events with unease. At stake is a share in a domestic passenger market that is forecast by Boeing to grow at a rate of 8.8% per year and an international market that will increase by 7.3% annually for the next 20 years, with a resultant requirement for another 2,600 aircraft one every three days worth $215 billion.

Consummating a successful equity alliance with one of the Big Three is proving to be elusive, as Cathay Pacific has found. It thought that taking a 10% stake in Air China would be the entry fee to securing a freer hand in operating flights to the mainland, but a single daily Hong Kong-Beijing service is hardly an adequate return. Cathay wants hourly services to some Chinese cities like it operates to Taipei. Here is the dilemma that is possibly a window into the true policy reality: Hong Kong has been part of China since 1997, Cathay has significant mainland ownership and an equity stake in Air China, yet it faces a titanic struggle to get a toe in the domestic air route door.

Clearly, says Indoswiss MD Jim Eckes, the Chinese fear the Cathay product. But instead of embracing its expertise and that of Emirates or Singapore Airlines, mainland carriers have shied away from meaningful equity/management tie-ups. This may explain why some of the world's largest air cargo operators have forged significant investments with China's lesser-known aviation names to secure a slice of the burgeoning freight market, Harbison suggests. Noting "potential partnerships" between China Airlines, EVA Air, Lufthansa Cargo, Korean Air and SIA Cargo on the one hand and Okay Airways, Hainan Airlines, Shanghai Airlines and Shenzhen Airlines on the other, he believes they are the result of the "seeming inability by foreign carriers to conclude investment agreements with the Big Three Chinese carriers and the need by the second-tier carriers to obtain fresh investment to fund expansion and foreign expertise to guide development."

The three, meanwhile, appear content for the moment to go with local equity involvement for their expanding cargo operations. For instance, the largest cargo airline, China Air Cargo, is a joint venture among Air China (51%), CITIC Pacific Ltd. (25%) and China Capital Airport Holding Co., parent of Beijing Capital International Airport Co. Ltd. (24%). US cargo operators FedEx and UPS also are going it alone but with significant support from airports such as Guangdong Airport Management Group. CAPA cautions the Big Three that second-tier cargo airlines could, with foreign assistance, "become increasing forces."

The same situation could evolve on the passenger side as an onslaught builds from foreign carriers. Air Canada, Garuda, Philippine Airlines, Finnair, Korean Air, Malaysia Airlines, Air New Zealand, EgyptAir, Dragonair, Delta, Mexicana, Qatar Airways and even Kenya Airlines all announced new or additional services to China in the last quarter of 2005. However, the view in Beijing appears to be that near-double-digit growth will smooth any turbulence for its favored sons.

This is the anticipated outcome of the introduction of direct flights between China and Taiwan expected within a few years. China watchers say that the "explosion of traffic" that would result from truly unrestricted scheduled direct services would more than offset the significant growth in popularity of the railway system as a result of introduction of high-speed trains. Late last year, 72 Lunar New Year charters were agreed that may operate nonstop but through Hong Kong or Macau airspace. The charters will be operated by six Chinese and six Taiwanese carriers between four Chinese and two Taiwanese cities.

The easing of tension between China and Taiwan will be welcomed by Chinese airlines, which are suffering because only 30% of the country's airspace is available to civil aviation, according to Eckes. They must endure indirect routings and lower altitudes, which cost the industry an estimated $1 million a day in extra fuel and lower productivity through longer flight times. Eckes believes the 2008 Beijing Olympics may be the catalyst for easing the restrictions. Some progress has been made. For example, changes to the IATA 1 route connecting North Asia with Europe immediately north of the Himalayas will save 17 min. on each flight.

Chess Game

China's major carriers also may find themselves the sacrificial pawns in the greater game of trade wars, with US and European governments exchanging greater access for their airlines for more access for Chinese imports, suggest some analysts. If this occurs, it will be just another burden for the trio, which already are saddled with mixed fleets of nearly identically capable Airbus and Boeing types to satisfy Beijing's political whims of trading favors.

The question many ask is how these airlines will fare against an unrestricted assault from Cathay Pacific, SIA and Emirates at the premium end of the market and an AirAsia-styled operation at the budget end. Eckes believes "not too well," and many analysts agree. While globally few carriers have the management skills or inflight product of Cathay or SIA, no country is ringed like China by some the world's finest airlines eager to tap its market. Many China watchers think that the Big Three need equity/management tie-ups with foreign airlines and "ponder with fascination" the powerhouse of a full Cathay/Air China alliance, an SIA/China Eastern group and an Emirates/China Southern combo.

What will be fascinating is how the three are going to extract economies of scale after absorbing a variety of airlines. While they now have greater scope, the extent of problems also has increased with inherited debt and yet more fleet types. For example, China Southern has a mixed fleet of 737s, A320s and MD-80s/-90s courtesy of mergers with China Northern and Xinjiang. Some analysts question why these inherited entities were not spun off into LCCs.

But creating LCCs may be a low priority considering the fact that China will overtake the US as the world's third-largest inbound tourism market this year after achieving 41.8 million arrivals in 2004, just 4.3 million behind the US. By 2020 it is expected that the Chinese will be the world's most prolific travelers with 115 million outbound passengers. Predicting how Beijing "will allow" that extraordinary growth to be shared is perhaps the greatest of all the puzzles for which China is so famous. Many analysts gazing into their crystal balls believe that if the government follows the recommendations of Yang, who was awarded IATA's Global Aviation Leadership Award in June, then yin and yang will be in balance.

The Players

Air China China's largest international airline, while outshining its rivals, suffered a 25% fall in profit to CNY591.3 million for the six months to June 30, 2005, on an increase in revenue of 14.6% to CNY16.9 billion. Load factor rose 10.7 points, driven in large part by heavy international demand. Chairman Jiaxiang Li told media that the airline was "able to maintain higher profits through successful cost control and budget management, as well as enhanced marketing efforts." Those cost controls have meant a hold on an anticipated order for the A380 as the carrier focuses on increasing utilization.

Air China is 70% controlled by China National Aviation Holding Co. Ltd., which in turn owns major stakes in Dragonair and Air Macau. It has a fleet of 160 aircraft operating to 72 domestic and 36 international destinations and is on record that it will take delivery of 30 aircraft a year for the next three years. It has consolidated with China Southwest and Zhejiang Airlines and also holds a 25% stake in Shandong Airlines.

China Southern Airlines The country's largest carrier suffered a CNY964 million net loss in the six months to last June compared to a net profit of CNY374 million for the same period in 2004. Revenue leapt 61% to CNY17.8 billion due mainly to the merger with Xinjiang and China Northern. Its media release perhaps summed up the plight of the Chinese industry, saying it faced "new challenges" in a market "full of opportunities." One of the challenges was a slump in yield of 5.2% due to "intense domestic competition." But looking to the future, China Southern committed to five A380s and 10 787s. It has stakes in Shantou Airlines (60%), Guizhou Airlines (60%), Xiamen Airlines (60%), China Postal Airlines (49%) and Sichuan Airlines (39%).

China Eastern Airlines Like its southern neighbor, China Eastern suffered a first-half loss of CNY471.4 million compared to a profit of CNY346 million for the corresponding 2004 period. Fuel was the major culprit, rising 41%, and now accounts for 32% of total operating costs. The carrier has taken over Air Great Wall, China Northwest and Yunnan Airlines and plans to add 40 aircraft over the next two years. It also holds a 40% stake in China Eastern Airlines Wuhan.

Hainan Airlines The rapidly expanding carrier reported a 21% lift in revenue to CNY4.6 billion for the first half of 2005 but net profits fell 88% to CNY10.3 million. Hainan has a very different history from other Chinese carriers, being foreign controlled through financier George Soros's American Aviation LCD. Established in 1989, it began flying in 1993 from its base on Hainan Island and now operates a fleet of 61 aircraft to 52 domestic and three international destinations from its two hubs. In 2005 it added eight 787s and four 737s to its outstanding order book of 24 aircraft and expects to have a fleet of 200 jets by 2010. Last year it took delivery of the first of eight A319s on order. It also moved to set up LCC Lucky Air using 737s from its wholly owned subsidiary Shanxi Airlines and to manage Chongqing Airlines.

Shanghai Airlines This carrier announced plans in December to increase its fleet size from 42 to 100 by 2010. It has an all-Boeing fleet of 737s, 757s and 767s except for five CRJ200LRs. It has ordered eight 787s, three 737-800s and two 767-300ERs and is expected to take some of the huge order for 150 737s placed by the government in November. The airline, which started operations in 1985, serves a host of domestic destinations plus six regional international points. It has a 10% stake in Sichuan Airlines and controls China United Airlines. For the first half of 2005 it made a tiny profit of CNY4.7 million, down 82%, while revenue was up 13.8% to CNY1.18 billion.

Sichuan Airlines Formed in 1988, Sichuan is planning to buy three A330s to launch international services within three years. They will complement its essentially all-Airbus fleet of A319s/A320s/A321s that serve more than 20 domestic destinations from a base at Chengdu. Its shareholders include China Southern (39%), Shandong Airlines (10%) and Shanghai Airlines (10%).

Shandong Airlines Like its sister carriers, Shandong signaled huge growth potential by flagging a doubling of its fleet to 60 by 2010. Based at Jil Nan in Shan Song Province, it was formed in 1994 by 11 state enterprises that hold 64.3% of the stock with the balance in public hands. It serves more than 40 domestic destinations with its fleet of 11 737s and 10 CRJ200s and CRJ700s and also operates to Singapore. Revenue was up 13% in 2004 to CNY1.18 billion but profit slumped 82% to CNY4.2 million. Last June it committed to 15 737NGs.

Shenzhen Airlines The carrier now is controlled by new private investors who have a 65% stake. Air China holds 25%. Shenzhen operates to 46 domestic destinations and Kuala Lumpur with 25 737s and has another five on order. Last year it committed to 25 A320s and A319s.

Xiamen Airlines China's first regional airline was established in 1992 with China Southern holding a 62% stake. It operates an all-Boeing fleet of 29 737s and 757s and last year ordered its first twin-aisle jets with a commitment to three 787s as well as another 15 737s. It flies to 40 domestic and seven Asia destinations.

Taking Flight

Okay Airways China's first LCC is backed by Korean Airlines from which it leases two 737-900s for operations from its base at Tianjin just south of Beijing.

Spring Airlines Launched in July 2005 and based at Shanghai Hongqiao, the airline is owned by Shanghai Spring International Travel Service. It operates three A320s to four domestic destinations.

United Eagle Airlines From a base at Chengdu, domestic operations were launched July 26 with four A320s/A319s.

China United Airlines The carrier started up Oct. 25 with three 737s flying from a Beijing base to four domestic destinations. It is owned by Shanghai Airlines and China Aviation Supplies Import and Export Group.

On the Runway

Golden Dragon Owned by East Asia Airlines and Macau businessman Lam Kuo, the airline expects to launch flights early this year with two Embraer 170s from Macau to eight Chinese destinations plus Hanoi and Vientiane.

East Star Airlines Backed by four tourism and property groups, the carrier will launch operations in May to some 10 domestic destinations. Based at Wuhan, it will have 10 A320s by 2011.

Lucky Air Based at Dali, Lucky is leasing three 737s from Shanxi Airlines for domestic routes. It is a joint venture of HNA Group, Shanxi and Shilin Tourism and hopes to begin flying in the first quarter.

Chongquing Airlines This carrier has been set up by local government-owned Chongquip Land Properties Group and will be managed, subject to CAAC approval, by Hainan Airlines.

At the Terminal

Kunming Airlines, Western Airlines, Northeastern Asia Airlines and Eastern Fastline Airline Co. Ltd. all plan to launch domestic passenger and cargo services toward the end of 2006 or in early 2007.

Runaway aviation growth in Asia has brought its own problems: can airlines find enough staff to fly the increasing numbers of aircraft?

Phenomenal growth in Asia sparked by the global recovery in aviation and the launch of significant numbers of new carriers, particularly in markets undergoing deregulation, has brought its own problem ??“ a shortage of pilots. The crisis in two of the region???s largest and fastest-growing markets, China and India, is so severe that leading industry players and governments are being forced to act.

Boeing has forecast that Chinese domestic traffic will grow 8.8% a year on average over the next two decades and the US aircraft manufacturer says total traffic ??“ air travel for all markets to, from and within China ??“ will grow at 7.3% annually.

India???s government, meanwhile, says the country???s air transport sector has averaged 7% growth a year over the past three years, and from 2000-10 the annual growth rate is expected to average 16%.

China???s state-owned carriers have been working to increase fleet size to aid the launch of domestic and international services. Growth in airline traffic has also been fuelled by a spate of private start-ups including Okay Airways in Tianjin, Spring Airlines in Shanghai and United Eagle in Chengdu. In terms of aircraft, Boeing forecasts that from 2004-24 China???s commercial fleet, excluding Taiwan, will rise by about 2,500 aircraft, from 891 to 3,239.

The Civil Aviation Administration of China (CAAC) recognises that the rapid growth in the commercial aircraft fleet is leading to a shortage of pilots. In December 2004 the CAAC???s flight standards department disclosed that the country needed to recruit 12,000 pilots from then to 2010, but pointed out that China???s two certified pilot training schools could train only 850-900 pilots a year, with the CAAC Flying College in Sichuan accounting for 600-700 and the China Southern West Australian Flying College near Perth in Australia training 150-200.

Consequently, the CAAC has allowed privately owned pilot-training schools to open. ???We have to find many channels and sources to provide pilots, not just government schools,??? says an official in the CAAC flight standards department in Beijing.

Beijing PanAm International Aviation Academy is the first privately owned commercial pilot training school in China and a few weeks ago became the first flight school to receive China Civil Aviation Regulation (CCAR) 141 approval. Since January 2005 all new flight schools in China have been required to have CCAR 141 certification, which was introduced to meet international requirements, particularly International Civil Aviation Organisation standards. The Beijing official adds that ???before [CCAR 141] there were not very complete regulations for flight schools???.

New schools

Beijing PanAm International Aviation Academy has begun ab initio training, with Hainan Airlines sending trainee pilots there. The academy will soon to be joined by new schools that have applied for CCAR 141, including Flying Dragon School???s Harbin International Flight Training Centre in Harbin. The Qingdao Jiutian Spartan Flight Academy in Shandong also planned to apply in late January for certification. The latter is a joint venture between US-based Spartan School of Aeronautics and local partners, including Shandong Airlines.

Meanwhile, the main source of pilots remains the two government-backed commercial pilot training schools, which have until July this year to comply with CCAR 141. The Beijing official says the CAAC Flying College and China Southern Flying School are on track to meet the deadline. In addition, each is working to increase the number of pilots they train. The school in Sichuan, for example, has raised its intake to 1,200 this year. But the CAAC official believes it will take years before the higher input bears fruit.

John Bent, director of Hong Kong-based aviation consultancy Aviation Solutions Asia and former Asia managing director of General Electric Commercial Aviation Training, says it takes roughly three years for a trainee to graduate. Some will drop out during or after the course, so there is no perfect correlation between the number of trainee pilots and number of pilots graduating, he says. Bent adds that the dearth of general aviation in China has also contributed to the pilot shortage.

While China???s pilot training schools and general aviation sector struggle to meet airline demand for more commercial pilots, the CAAC last year standardised and updated regulations in an effort to help airlines wishing to employ foreign crew.

Standardising regulations means the CAAC???s offices across the country have exactly the same set of regulations, which now spell out more clearly what is required, says the CAAC official in Beijing. About 70 foreign pilots have valid licences to work in China, but only one carrier employs a significant number ??“ about 30 fly with Shenzhen Airlines.

Aviation recruitment specialists believe this number could swell when China begins this year to receive the first of huge numbers of aircraft it has on order. The pilots most in demand are likely to be captains with international experience because many of the local captains have never flown an aircraft beyond the Chinese border and newly trained pilots will need time to gain experience.

However, China may need to absorb the lesson learned by new Indian carriers a nd increase the relatively low salaries on offer before overseas pilots book their tickets to the east. When Indian start-ups advertised for pilots last year there was initially no response, forcing them to raise salaries to make them more comparable with international levels. Like China, India is grappling with pilot shortages caused by state-owned airlines expanding and a plethora of privately owned carriers launching.

State-owned Air India last month signed a firm order for 68 Boeing 737s, 777s and 787s after Boeing and GE agreed set up four full-flight simulators in India, establish maintenance, repair and overhaul (MRO) facilities worth up to $100 million and provide training worth up to $10 million. Boeing has agreed to invest in training as part of package of concessions made to the Indian government.

Air India director of public relations Jitender Bhargava says the airline is considering establishing an aviation academy near Mumbai in a joint venture partnership with Boeing. The academy will train pilots as well as maintenance personnel and cabin crew. Bhargava says it is unclear if the aviation academy will offer ab initio training, but it will offer simulator training. Air India offers no ab initio training and instead relies on the Indira Ghandi Rashtriya Uran Academy in Rae Bareli.

Air India has an agreement with the academy, under which it will provide additional funding and in turn be given first priority and, possibly, all the school???s graduates. The school is also about to increase its graduate numbers to 50 a year from 30.

Meanwhile, India???s other state-owned carrier Indian Airlines expects to sign a formal purchase agreement in February for 43 Airbus A320-family aircraft for delivery from October 2006 to March 2010.

These two legacy carriers already have some in-house training facilities, including flight simulators, but only Jet Airways of the country???s private carriers so far owns a training device. One of Jet???s rivals, Air Deccan, plans to build a training centre, either at the Jakkur Aerodrome outside Bangalore, or on government-owned land near the new Bangalore airport and aims to open it next year to coincide with the arrival of its first A320 and ATR simulators. Air Deccan also hopes to offer ab initio training because, says Capt P K Gupta, adviser to the carrier???s chief operating officer, ???the other flying schools are not up to the mark???. Air Deccan recruits only qualified pilots, who are then sent to simulator centres overseas such as Alteon Training at London Gatwick for type training.

Kingfisher initiative

Rival low-cost carrier Kingfisher Airlines is also establishing its own training centre, dubbed Kingfisher University, which will train pilots, maintenance engineers and flight attendants. Kingfisher chief operating officer Nigel Harwood says the university is intended to be up and running by mid-2007 at the latest. Harwood says Kingfisher is considering a 2.43Ha (6 acre) site at Thane, outside Mumbai, but is also looking at locations at airfields such as the new Bangalore airport.

Kingfisher will kick off with simulator training and plans to get one ATR and two A320 flight simulators, one next year and one a year or so later, says Harwood. The carrier also plans to offer ab initio training as early as next year and is speaking to two potential partners, he says. The carrier also plans a maintenance centre and is seeking to house the MRO business, simulator and ab initio training centre at one site.

In the meantime, Kingfisher has signed an agreement to use the CAE-Emirates training centre in Dubai to train its A320 pilots. The carrier also sends pilots to Airbus in Toulouse for simulator training and plans to send its would-be ATR 72 pilots to the ATR training centre in Bangkok.

Some Indian airlines have sought help from aircraft manufacturers to overcome the problem of pilot shortages. Bruce Peddle, Embraer Asia Pacific managing director, says the Brazilian manufacturer has been providing pilots to its two major commercial airline customers in India: AirOne and Paramount Airways. ???Each programme is tailored to meet the specific operator???s requirements and typically range from one to three pilots up to a 90-day period.??? he says. ???However, in some cases the quantity and duration of pilot support can be extended to meet specific regulatory requirements or special circumstances.???

Peddle says this support ???is a fundamental part of our product offering??? and ???the pilot shortage in Asia Pacific will increase the demand for this???. He adds that Embraer is ???evaluating a potential location for the [Asia Pacific???s] first Embraer 170/190 simulator [and] we anticipate it will be in operation during the second half of 2007.???

The Indian government has taken its own steps to deal with pilot shortages by introducing a rule requiring commercial pilots to give at least six months??? notice. The ministry of civil aviation made the move in September and warned that pilots failing to comply could lose their licences. The government has also moved to increase the pool of pilots available by twice increasing the retirement age, first to 61 from 60 and then to 65, although pilots aged between 60 and 65 must fly with a co-pilot under 60. In addition, the government has tried to increase pilot numbers by reducing the total flying time required for the issue of a commercial pilot???s licence to 200h from 250h.

Ageing population

While the pilot shortage is arguably most severe in China and India, it is a problem elsewhere. In Japan, shortages are a concern because of an ageing population. Japan Airlines (JAL) expects ???a slight decrease??? in pilot numbers due to retirements and some JAL executives say this decline may impede growth. The government has responded by raising the retirement age of pilots to 65. JAL says it plans to hire ???more non-Japanese cockpit crew??? and will ???make more use of retired Japanese pilots up to the age of 65 who are still in excellent health???.

The carrier says it trains about 60-70 new pilots each year, but has no plans to increase the trainee intake. JAL???s ground school and flight simulator training is at Tokyo Haneda and it sends pilots to the USA for their commercial licences.

Japan???s other major carrier All Nippon Airways (ANA) says it expects about 400 ANA pilots ???to retire over the five years from 2007???. ANA each year sends about 50 students to the International Flight Training Academy in the USA for ab initio courses. In future it will also source pilots from Tokyo University, which plans to have ab initio training as part of a four-year degree in aeronautics.

The university???s first intake is planned for April and it has been in talks with the University of North Dakota in the USA for the provision of the flight-training component of the course.

LEITHEN FRANCIS / SINGAPORE

Jonathan Watts in Beijing
Wednesday February 15, 2006
The Guardian

China's aviation industry will buy 100 new jetliners and recruit 1,000 pilots every year for the next five years, regulators announced yesterday in a plan to more than double air traffic. The target will make China second only to the US in terms of flights and is likely to alarm environmentalists and air safety campaigners even as it delights Boeing and Airbus executives. It is estimated that air traffic is already responsible for 10% of global warming because jet emissions linger.

Senior officials from the General Administration of Civil Aviation of China (GACAC) admitted the expansion plan would put a strain on operators. "We have felt that we are walking on thin ice in safety management," said Gao Hongfeng, GACAC deputy director in announcing the new plans. "There are over 5,000 flights every day and more than 11,000 takeoffs and landings in airports, therefore the pressure on safety is very high."

China is already the fastest growing aviation market in the world. According to the government, air traffic has doubled in the past five years. Since 2000, passenger numbers have risen by 105% to 138 million a year and the combined fleet of the country's air companies rose to 863 planes from 527.

Dozens of cities boast new airports, such as the $2bn Guangzhou mega-terminal that opened last year as the first part of a two-stage plan to double capacity to 27m passengers by 2009. Shanghai has even bigger plans. A second runway opened last year at its futuristic Pudong airport. The facility, which can handle 35 million passengers a year, is in the midst of an expansion plan to quadruple the number of terminals and handle 80 million.

The biggest is the Beijing Capital International Airport Terminal 3, designed by British architect Norman Foster. The huge building site, home to 10,000 workers, is the first thing that most visitors to the capital see when they touch down. Due for completion in time for the 2008 Olympics, its operators say it will cover 420,000 square metres, overtaking Hong Kong and Heathrow as the biggest airport building in the world.

To the concern of safety officials, filling airports with passengers is a lot easier than filling cockpits with qualified pilots. At 0.42 accidents per 1m flight miles, China's safety record is better than the average, but officials warn that the lack of pilots could pose new risks. China has 11,000 registered pilots. With the growth in traffic it is estimated that it will need 1,000 more every year, but the Civil Aviation Flight University of China, the main training school, trains only 600. Airline companies are increasingly looking overseas. Yesterday, Air China announced plans to recruit its first foreign pilots.

Addicted to flying

Since 2000, aviation passenger numbers in China have more than doubled to 138 million

In the same period, the fleet of aircraft owned by major carriers has increased by 336 to 863

Every day, there are more than 11,000 take-offs and landings in China

Beijing is building the world's biggest airport terminal, which is due to be completed in time for the 2008 Olympics

By Cao Desheng (China Daily)
Updated: 2006-02-14 06:13

Foreign pilots are to be brought in by the nation's flagship carrier to meet the demand of its expanding air fleets.

Air China said it was planning an overseas recruitment drive because it was suffering a severe shortage of pilots.

"Air China has planned to introduce 20 to 30 airplanes within this year, but the exact number will depend on the supply of aircrew members, particularly the pilots," said Li Huxiao, a senior staff from the Beijing-based airline company.

"Currently, we are short of at least 40 captains, so we will try to recruit foreign pilots," Li said.

He gave no details about the exact number of foreign pilots his company planned to recruit.

Air China's problems reflect the fact China's booming commercial aviation industry is taking off faster than the country can train pilots.

According to statistics from the General Administration of Civil Aviation of China (CAAC), the industry regulator, about 11,000 pilots are employed to fly more than 770 aircraft operated by the major Chinese commercial airlines a figure industry experts say is inadequate to cope with rocketing demand for passenger services.

The Civil Aviation Flight University of China, the nation's major training school for commercial airline pilots based in Sichuan and Henan provinces, graduates a maximum of 600 pilots a year.

Based on the delivery of new aircraft, industry experts estimate that China has needed between 1,200 and 1,600 new pilots every year since 2000.

To the major State-owned airlines such as Air China, China Southern Airlines and China Eastern Airlines, another increasing challenge is the expansion of private carriers in the country, as pilot headhunting frequently occurred to the companies from last year.

Ten captains from the Jiangsu Branch of China Eastern Airlines asked to resign in December, something that had never happened before the growth of private airlines.

In the context of the rapid growth of civil aviation industry, the shortage of pilots, particularly captains, is a serious problem, said Hao Yuping, deputy senior director of Air China.

(China Daily 02/14/2006)

Well....looks like another type rating and still have not flown a real plane. I guess now the company can bring in whatever 737 they want....classic or NG....I'll be valid to fly any of them.

The ground portion was 2 weeks long. 1 week of self-study CBT stuff and then a ground instructor came to review the material with us for a test at the end. This test was yet again in Chinese. It was still very difficult and took me longer than the other pilots in the class because I read Chinese a lot slower than everyone else. I ended up with an 85%...again good enough to keep moving forward.

Simulator training was quick....only 3 lessons and a check. Obviously this course was designed for those who have flown the 737-300 for some time before upgrading to the NG. But I guess we were allowed to take the same course. Lucky for us.

Nothing too interesting on the chinese culture this time, I didn't have to drink any 40% alcohol the day before with any examiner to make him happy. Things were much calmer this time around. I can be one with my jet fuel when I get on line and have a few with the captains.

My check was more interesting this time than last time on the 300. The 300 was pretty straight forward, stuff that we had been practising during the lessons and stuff we've seen before. But this time, for example, I guess the instructor thought we had achieved the basic standard and told the examiner to step up the difficulty and decided to give us electrical failures of all sorts. Seeing these warning lights (amber and red) go off one after another is not kool. My partner and I just watched the overhead panel light up like a christmas tree and then sat there, analyzed and read pretty much all the checklists except for the correct one. Yup...it was hell....but at least the instructor and examiner got a good chuckle out of it.

Anyways, it was hell during the ride but a good chuckle afterwards. The 800 is definitely a sweet plane to fly. Now CAAC just needs to approve the use of the HUD display and then we can get trained using that too!

Well, still awaiting for the real planes to arrive and start base training and line indoc.

Next update...first takeoff in China on a 737!

P.S. I just found out it costs $5000 cad per hour to do base training. I have to complete 30 take-offs and landings in 4 hours to meet CAAC requirements. Not to mention the number of tires that needs to be changed due to my amazing landings! That's one way to spend 20K really quickly!!

After my CBT training, I was in training mode for 25 days straight with the exception of about 1-2 days rest in the month of April. First 10 days was training on the flight training device(FTD) at Air China's Pilot Training facility in Beijing China. This place is pretty big....6 full-motion Level D simulators. Anyways....I wasn't lucky enough to get on one yet....I had to train on a FTD first (non-motion). All I can say is "Procedures, procedures, and procedures!" Non-stop procedure training until you memorize the right call and movement at the right time. Plus...it's all in chinese! Yeah that was lovely. My partner was from Hong Kong, but at least his mandarin was better than mine. Regardless we practiced at anytime that we didn't have to fly the sims. We hung out in our hotel rooms and just sat in front of our cockpit poster and practiced with one another on calls.

We were lucky that there was no check for that session. Afterwards we flew to Kunming, China to resume our training on a B737-300 full-motion Level D simulator. Very cool place, 6 full-motion Level D simulators. They have sims for B737-300, B737-NG, B757/767, B747-200, MD-90, and a MD-82. This company is called Alteon, A Boeing Company. Apparently it's all over the world. So here there was another 13 courses plus a checkride. Each course lasted for 4 hours with each pilot getting a chance at "pilot-flying" from the right seat.

My instructor was a genuine sim instructor....which means he knows everything! He's retired now and really sharp at 61 years of age. He's like a little chinese Yoda. But once the door closes in that sim, it's all about the flying. When we sucked at flying....which was most of the time....he'd yell and yell and he loves to whip that pointer of his around. Whenever we make a mistake on normal procedures or emergencies he whips that pointer at us....not funny at the time but very funny now that we're done. At one point he lost his pointer because he forgot it in the sim. My partner and I were so happy, but then he showed up to the next session with a newer and stronger pointer, courtesy of Alteon. Anyways, he was a great instructor who prepped us beyond what we had to know.

Our checkride examiner was some head chief pilot from the Northern District Office of the Civil Aviation Administration of China (CAAC). Yeah that's all. He only holds 4 current valid type ratings on the 747-200, -400, 767 and a Cessna Citation. Pretty kool guy...but made my partner and I nervous as hell. Since we were so nervous, the day before the checkride, he made us drink with him at lunchtime! and we were drinking this 40% chinese hard liquor. It was fire when it entered your body! Then once we had a few (mind you, he did make us drink the whole glass at one time) ....he said now you should feel more loosened up....go rest and come back the next day with a clear mind. Chinese culture...I'm still learning about it...it's great!

Checkride day. My left leg was shaking so bad after the ride from all the single engine flying. No rudder trim was allowed for any part. And to add to it my right leg was shaking because I was so nervous. The checkride items were general in nature. Normal procedures for everything, climb to 30000 feet, complete a rapid depressurization and emergency descent to 10000 feet. In China, ATC uses meters as opposed to feet for all altitudes. So it is mandatory for all chinese pilots to memorize this table that converts meters to feet. Lucky me!

Then we did 3 types of stalls, 45 degree steep turns and a normal ILS approach. Then it was a VOR/DME approach, single engine failure before V1 and after V1 and a passenger evacuation. There's more to it but I stated some of the basics. All in all a real nice plane to fly. So at the end of the ride, the examiner debriefed us and told us that we passed. YEAH!!

At the time, the 300s hadn't come in yet. As soon as they do I'm on for base training....4 hours of touch and go's and 30 circuits! Here's the catch...there was talk that 300's might not come, maybe 800's instead. Therefore, it would be back to the sim for differences training for the NG 800. Plus there was a lot of paperwork that had to be completed for CAAC license application.

It turns out that it was never that easy....

Next up....B737-800 Differences Training.

The ground school was taught by an instructor from Air China's Flight Training Department. This guy was very knowledgable. The course started at the last week of February and ended near the end of March.

We had 2 weeks of Computer-based Training (CBT) self-study work, then he came in for 2 weeks to review the material with us. The problem was that the exam in the end was in chinese!! Yeah, I wasn't thrilled about that. So I had to do a lot of extra chinese language studying. He prepped us fairly well on what we may be tested. And he also took us through the main points of each system on the plane.

There was 100 questions, to be written within 3 hours and must attain an 80% to pass. I had some troubles with understanding the chinese language, but the instructor was kind enough to translate it for me if I had any troubles. I ended up with an 88%....good enough to pass!

During this time, Okay Airways received their Operating Certificate and finally started flying with China's first ever Boeing 737-900. March 11th was the maiden flight. It was an exciting time for everyone and it was great that I was there to experience all of it.

Next up....sim training for 1 month on the 737-300 in April.

Well it was Chinese New Year at this time so not much happening anywhere in China. Business wasn't back to normal until about mid-February. So that was when I wrote my IR exam. Only 80 questions, 2 hours to write it and must achieve an 80% to pass. I ended up with another 96%. I was very happy with that mark. The IR exam is a bit easier than the FAA one, but there were definitely similar questions. The CAAC IR exam left out the section regarding flight computer calculations as well as flight mapping stuff.

So here us foreigners were told that we only needed to complete the CPL and IR exams since that was all that we would be getting, in terms of licenses. The a week later, a CAAC official changed his mind again and decided to have us write it. So our company being rushed, decided to have us write it within a week's time. Talk about bad timing...no studying yet. Anyways...it turned out ok. The ATPL theory exam is much more difficult. It incorporates questions from the FAA, JAA, CASA and some that are local, questions that have been translated into english. So it is very difficult to find any material on this because CAAC constantly changes the material. No wonder not many local pilots don't pass, since they have to deal with the exam material as well as in another language that they are not familiar with. 100 questions, 2.5 hours to write it and a 70% required to pass. A lot of questions that I had never seen before but I came out safe with a 90%.

Now that all of our theory exams were over and done with....we started with 737-300 ground school.