The Xi'an Xianyang International Airport terminal expansion project began in 2001. The airport is located in the outskirts of Xi'an City, Shaanxi and was opened in 1991. The rapid growth in air traffic in north western China has led it to require further investment. Xian Xianyang airport will see its airport terminal building expanded with new investment buying boarding bridges, air conditioning equipment, and other passenger terminal building equipment.

EXPANDING AIR TRAFFIC AT XIAN XIANYANG AIRPORT

The rationale of the project is to service the extremely rapid growth in air traffic (both passengers and cargoes) within north western China. This follows the rapid economic growth seen after the early 1980s economic liberalization reforms. During the 1980s, air passenger numbers grew at a rate of 18% a year while the figure for cargoes was 15%. The 1990s saw an even higher rate of growth, which continued despite the economic problems of East Asia after 1997.

Xi'an Xianyang International Airport itself has seen its passenger numbers mount with alacrity. In 1998, it saw more than 2.8 million people use the airport. This was well ahead of the predictions for 2000 of 2.4 million passengers.

ECONOMIC IMPORTANCE OF XIAN XIANYANG AIRPORT

In addition to the need for the airport to expand simply to accommodate its passenger numbers, it also holds a wider economic importance. The existence of a large airport is widely viewed as being essential to the general growth of north western China's economy (and therefore the Chinese economy as a whole). North West China has traditionally had a lower growth rate than the coastal regions.

The Xi'an Xianyang International Airport is also important because it is a potential airport hub for western China. At present much Chinese air travel is from city to city with few "feeder" airports. The expanded airport will be better able to deal with regional flights. Major steps to a spoke and hub system are an objective of the five-year's plan. The project is designed to improve the equipment and functions of the Airport by expanding the existing terminal building for passengers (about 50,000 square meters) and upgrading apron/utility facilities.

XIAN XIANYANG AIRPORT FINANCING

The project has benefited from a loan from the Japan Bank for International Co-operation. The loan was used to procure boarding bridges, air conditioning equipment, and other passenger terminal building equipment that was needed in the expansion of the airport.

XIAN XIANYANG AIRPORT LEAD CONTRACTORS

Bids were invited from firms to supply various items of equipment during the course of 2001. For instance, in April 2001, the authorities asked for bids for baggage handling systems at the airport. The airport is now under construction, but it is unknown when the expansion is expected to reach completion.

Probably because of the countrys Japanese finance, there is a hierarchy of countries of origin for the bidders. The hierarchy runs as follows: Japanese firms may bid to become the prime contractors; Japanese and Chinese firms may bid to become the sub-contractors; and firms from all countries and areas may bid to become the contractors engaged in contracts subsidiary to sub-contracts.

In the cases of equipment, there is a set percentage for the origin of parts involved in, for example, the baggage handling systems. Thus, the contract can stipulate that 0% of the parts should come from outside Japan. The bidding process is therefore being carried out with some emphasis on Japanese companies or their local Chinese partners benefiting from the business.