China Southern Airlines yesterday obtained the right to use a renovated terminal at the Capital International Airport in Beijing to provide ground services exclusively for its passengers.

The deal, clinched by China's largest air carrier with Beijing airport, ushers in a new phase in the country's civil aviation sector, according to sources with the industrial regulator.

Under a contract China Southern signed with the Beijing Aviation Ground Services Co of the airport yesterday, the two sides will invest 18 million yuan (US$2.2 million) to launch a 50-50 company, which will be put into operation in a year.

"The company will use the refurbished Terminal One of the airport to offer more convenience and comfort to passengers flying air routes operated by China Southern Airlines,'' said President Yan Zhiqing of the airline.

Last year, China Southern, together with its affiliates -- China Northern, Xinjiang, Xiamen and Sichuan airlines -- owned 122 aircraft, flying on 349 air routes, according to Yan.

The partnership with Capital International Airport is tied to the company's strategy of dramatically increasing the number of flights shuttling from Beijing to other cities, Yan said.

Last year, the number of passengers China Southern handled at Capital International Airport reached 5.6 million, one-fourth of the total passenger volume of the airport, according to airport statistics.

The country's thriving economy and the hosting of the 2008 Olympic Games in Beijing have bolstered China Southern's ambition to handle 8 million passengers through Capital International Airport by 2008, according to Yan.

Yang Yuanyuan, director of the General Administration of Civil Aviation of China, yesterday said his agency is formulating regulations to encourage more airlines to offer ground services.

Different from many developed countries where airline companies often own or operate airport terminals, airport ground services and air services are currently separated in China.

The civil aviation regulator has also considered establishing an airport terminal users committee to improve airport operation efficiency and better serve passengers, Yang said.

The Capital International Airport, operational since 1959, has been facing surging air traffic increases in recent years.

Terminal One was shut down for refurbishment in 1999, when the second passenger terminal was finished. It will resume operation next October to help relieve the pressure, said Li Peiying, president of the Beijing Capital International Airport Co.

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