PROJECT INFORMATION DOCUMENT (PID)



PROJECT INFORMATION DOCUMENT (PID)CONCEPT STAGEReport No.: AB6612Project NameChina: Jiangxi Shangrao Sanqingshan Airport DevelopmentRegionEAST ASIA AND PACIFICSectorAviation (80%); Public administration- Transportation (20%)Project IDP123729Borrower(s)PEOPLE'S REPUBLIC OF CHINAImplementing AgencyShangrao MunicipalityShangrao, Jiangxi ProvinceChinaTel: (86-793)-8198 918Environment Category[X] A [ ] B [ ] C [ ] FI [ ] TBD (to be determined)Date PID PreparedJuly 28, 2011Estimated Date of Appraisal AuthorizationFebruary 15, 2012Estimated Date of Board ApprovalOctober 15, 2012Key development issues and rationale for Bank involvementA.Country ContextDuring the past few decades, China has enjoyed continued rapid economic growth with its booming transportation infrastructure. By 2010, the end of China’s “Eleventh Five-Year Plan”, China has developed a multimodal transportation system with 3.98 million km highway network, 91,000km railway network, 95 national ports, and 175 civil airports. The greatest parts of the national investment in transportation, however, remain in the road and railway sectors, the air transport sector only attracted about 4.6 percent of the total investment during the last five years.The country has recognized air transport’s vital role in promoting economic and social development, reducing regional disparities, and relieving natural disasters. Despite the relatively small amount of investment and the recent global recession of the industry, China has become the world’s second largest market in air transport. The country is now giving increasing attention and investment in building and renovating airports, especially feeder airports. In the National Civil Airport Development Plan, the Civil Aviation Administration of China (CAAC) has envisioned 244 civil airports by end of 2020.B.Sectoral and Institutional ContextAir transport is China’s fastest growing mode of transport. In 1949, China had only 10,000 passenger throughput traffic and 1.57 million ton-kilometers total traffic. Government policies and institutional reforms have facilitated the growth of air transport. After more than 30 years of reform and open-up since 1978, China’s civil aviation has enjoyed average annual growth of 17.4% in total turnover, 16.1% in passenger traffic, and 14.7% in cargo traffic. In 2010, China’s air passenger throughput had increased 16.1% to 564 million and cargo tonnage increased 19.4% to 11.3 million ton. By the end of 2010, China had 43 airline companies, with 35 state owned and 8 private owned. The total number of scheduled air routes has reached 1,880, with 1578 domestic and 302 international routes. The domestic routes have covered more than 172 cities; while international routes provide regular air service to 110 overseas cities in 54 countries. China is now the world’s second largest air transport market in traffic volume after the United States. During the Eleventh Five-Year (2005-2010), China’s civil aviation infrastructure received investment of RMB 250 billion (USD 38 billion), which is equivalent to the total investment combined during the previous 25 years. As of the end of 2010, China has 175 civil aviation airports with 33 newly built ones during the last five years. Using the airport service radius standard of accessibility within 100 kilometers or 1.5 hours of ground transport, the existing airport network now can serve 70% of counties, and their catchment area covers 76% of total population and 91% of the economy measured by total Gross Domestic Products (GDP). Decades of industry development emphasis on safety also makes China a globally acclaimed leader in air safety. Up till August 2010, China has kept a record of 6 years of safe flight without accident.The CAAC is the administrative institution of civil aviation affairs in China. CAAC’s responsibility includes planning for airports, setting domestic and international aviation tariffs, managing airport construction fees, setting and monitoring safety and security standards, administering air traffic control and conducting civil aviation airspace planning. Major administrative and regulatory reforms have been made by the CAAC for better functioning and development of civil aviation in recent years. In 2001, 10 major airlines were consolidated into 3 super carriers: Air China, China Eastern Airlines, and China Southern Airlines to optimize resource allocation. China plans to build 97 additional airports for a total of 244 civil airports by 2020. If successful, all the province capitals, major cities, and major tourism destinations, will be connected by a functional hub, trunk, and feeder airport network. The overall capacity of air transport and integration with other transport modes will be notably improved. By that time, more than 80% of counties will be within 100 kilometers or 1.5 hours by ground transport access to an airport, and the total air transport catchment area will account for 82% of total population and 96% of total GDP. Although China’s air transport sector development has made substantial progress, the geographical distribution of airports and resource configuration are still facing challenges. First, the number of airports and provision of service is still lagging behind demand in some areas. Second, the configuration of air transport resources and function between airports in some regions is not optimized. Third, there is a lack of integration of air transport with local urban planning and surface transport planning. Fourth, some large airports have reached their capacities; whilst some feeder airports are underutilized The number and geographical distribution of feeder airports is still not meeting. Issues such as lack of connection to regional aircraft, poor operational efficiency, and low utilization of feeder airports are restraining China from building a mature and efficient air transportation network. It is recognized in the 12th Five Year Plan of China Civil Aviation that to deepen the reform of airport operation, to optimize the service process and to integrate and configure capacities of airports are the key to resolve the above issues. Recognizing that the availability of air transport is a catalyst of regional economic growth, governments at times finance shortfalls from public funds or provide financial cross-support from larger airports while some are maintained by industry (e.g. manufactures) or the local private sector (e.g. chamber of commerce). This places even greater pressure to ensure that investments are appropriately sized and mechanisms for optimizing revenue generation are realized.In addition, environmental issues, such as solid wastes, water pollution as well as carbon emission, are identified as strategic issues. As a user of fossil fuels and a contributor to green house gas emissions, air transport is under pressure to provide more energy efficient transport and to reduce its carbon footprint.The recent development of China’s high speed rail network is imposing a significant impact on the air transport industry. According to China’s Ministry of Railway, there will be16,000 km of high speed railway network by 2020, of a total of 120,000 km of railway planned, based upon a grid eight higher speed railways (300 kmph plus) connecting the country: 4 major lines running north-south and 4 traversing east-west. The high speed trains will travel at the speed of more than 200 km/hr and the railway stations are often more easy to access than airports. As such, in areas served by high speed rail, the air transport industry is losing some of its market share for travel distances within 500-1000 km. However, air transport has its own advantage of faster speed, lower investment, and greater flexibility in adjusting flight plans. The industry is trying to make the best use of these advantages to secure its customers with more than 1,000 km of travel distance and retain customers traveling 500-1000 km.The World Bank, together with the Ministry of Finance and the National Development and Reform Commission, identified in a June 2009 workshop on innovation, air transport as an area where the World Bank could bring value. Subsequently air transport workshops sponsored by the World Bank were held with government officials and industry specialists in September 2009 and June 2010 to discuss the challenges facing air transport in China and how the Bank could assist in mitigating these challenges. Three principal areas of cooperation were identified: transport modal integration, environmental friendly airport design and operation, and economic and financial sustainability. Shortly thereafter the first Bank financed air transport project in China; the Shangrao Sanqingshan Airport was selected.Aside from the primary project development objective of improving transport accessibility, potentially, the Bank’s involvement will bring value and innovation to China’s air transport sector in four areas. These innovations will be further explored during project preparation.i) Transport integrationii) Environment friendlyiii) Economically sustainableiv) Financially sustainableThe proposed Sanqingshan airport is of significant importance to the economic development of Shangrao city and Gandong region. It will facilitate the growth of the region’s tourism resources and complement the comprehensive transport system.It is intended that the project will enhance forecasting methodology of passenger flows, setting up a proper business model, improving the identification of targeted passenger groups, designing proper air routes, incorporating environmental sustainability to achieve national carbon emission targets as well as energy saving. If successful, it is anticipated that this project could become a demonstration project for the development of future feeder airport projects in China.C.Relationship to CASThe Bank’s Country Partnership Strategy (2006-2010) contains five “pillars” (priorities) for the Bank’s support of China’s development. This project contributes to two of these priorities:Pillar 1. Integrate China into the world economy, by deepening its participation in multilateral economic institutions, reducing internal and external barriers to trade and investment, and contributing to its overseas development efforts: This project will reduce the barrier to trade and investment in Shangrao by providing more efficient and safe transport means.Pillar 5. Improving public and market institutions, by improving firm competitiveness, reforming public sector units, and rationalizing intergovernmental fiscal relations: This project seeks to involve private participation for airport operation and maintenance after completion of construction. The Government of China has requested the new World Bank Country Partnership Strategy (CPS) with China for 2011 -2015, which will be available in 2011, be coterminous with, and aligned to its 12th Five Year Plan, covering 2011 -2015. The objectives of the Airport Project are expected to be consistent with the new CPS.Proposed objective(s)The development objective of the airport project aims to improve the transport accessibility of Shangrao and East Jiangxi Province by providing an airport, Shangrao Sanqingshan Airport, and its intermodal amenities. Preliminary descriptionThe proposed airport is located at Houmentang Village of Zunqiao Town, about 8 km south from the center of Shangrao City. The proposed project will support the construction of a new feeder airport in Shangrao. Conceptually it is envisioned that the airport will include a runway, a terminal building, a landing system and airfield lighting system, and an apron area.Implementation is proposed to commence in 2013 and will take 3 to 4 years to complete. The estimated total cost of the project will be RMB 461 million ($69 million) (not including the cost of the access road).While the scope of the proposed project has not yet been finalized, it is proposed that the project will have two components:Component 1: ponent 2: Airport access road (financed by other sources).Safeguard policies that might applySafeguard Policies TriggeredYesNoTBDEnvironmental Assessment (OP/BP 4.01)XNatural Habitats (OP/BP 4.04)XForests (OP/BP 4.36)XPest Management (OP 4.09)XPhysical Cultural Resources (OP/BP 4.11)X Indigenous Peoples (OP/BP 4.10)XInvoluntary Resettlement (OP/BP 4.12)XSafety of Dams (OP/BP 4.37)X Projects on International Waterways (OP/BP 7.50)XProjects in Disputed Areas (OP/BP 7.60)XTentative financingSource:($m.)Borrower19International Bank for Reconstruction and Development50Total69Contact pointContact: John Carter ScalesTitle: Lead Transport SpecialistTel: 5788+7731Fax: 86-10-5861-7800Email: jscales@Location: Beijing, China (IBRD) ................
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