Ex-Post Monitoring of Completed ODA Loan Project

The People’s Republic of China
Lanzhou Zhongchuan Airport Expansion Project
External Evaluators: Tomoko Matsushita and Masahiro Yoshizawa,
INGEROSEC Corporation
1. Project Description
Kazakhstan

Mongolia

Gansu Province

Beijing City

Project Site

The People's Republic of China
Nepal

BhutanIndia

Myanmar

Project Location Map

Terminal building of Lanzhou Zhongchuan Airport

1.1 Project Objective
The project’s objective was to newly construct a runway except for the existing runway anda passenger terminal building in the former runway area of Lanzhou Zhongchuan Airport
situated 70km northwest of the urban district of Lanzhou, Gansu Province in order to copewith the predicted increase in the demand for air transport, thereby contributing to activating
economic activities in the northwestern region. At the same time, the project aims to grade up
the aforesaid airport serve as an emergency or alternative airport, thereby contributing to theimprovement of aviation safety in the northwestern region.

1.2 Outline of the Loan Agreement
Approved Amount / Disbursed Amount

6,338 million yen / 6,299 million yen

Loan Agreement Signing Date /December, 1996 / June, 2002

Final Disbursement Date
Ex-post Evaluation

2004

Executing Agency

Gansu Airport Group Co., Ltd.

Main Contractor

Local company

Main Consultant－

1.3 Background of Ex-post Monitoring
Gansu Province, which located in Northeastern China near Xinjiang Uygur Autonomous
4-1

Region and Central Asia, plays an important role in terms of politics and economics.

Since

the surrounding areas including the Tarim Basin are abundant in oil reserves, transportationof materials in the province was expected to increase when the development of oil fields
started on a large scale. Lanzhou, the capital city of Gansu Province, was expected to function
as a base for the transportation of resources and people, and the demand for air transport waspredicted to increase, boosted by the development of energy and tourism resources.
Considering that the flight routes connecting Europe and Central Asia to Central China pass
mostly over mountain ranges including mountains over 8,000m as well as deserts, there was aneed to develop an airport in Lanzhou at the center of China that can serve as a site for
emergency landings in this region.

Based on this, this project was implemented with the aimof coping with the predicted increase in the demand for air transport by constructing a new
runway and passenger terminal building, thereby contributing to stimulation of economic
activity in the northwestern region. At the same time, the project aimed to enable the airport
to serve as an emergency or alternative airport, contributing to the improvement of aviation
safety in the northwestern region.
When the ex-post evaluation was conducted in FY2004, the fiscal balance of the executing
agency was in deficit and the management was required to make efforts to improve thefinancial situation.

Since the airport was an indispensable economic infrastructure for

growth of the regional economy, it was pointed out that a review should be conducted on theexecuting agency’s management efforts and that provincial and national governments should
consider offering financial support to the airport.
Therefore, this project was selected for ex-post monitoring and reviewed under eachcriterion with the findings from the field survey and other research activities with a final
conclusion being drawn.

2. Outline of the Monitoring Study
2.1 Duration of Monitoring Study
Duration of the Study: March 2011 - October 2011
Duration of the Field Study: Not conducted

2.2 Constraints during the Monitoring Study
During implementation of this monitoring process, the process of privatization of theexecuting agency, which had been indicated during the ex-post evaluation, was advanced.
Additional changes were made in the execution structure, and now Lanzhou Airport Co. Ltd. 1
would take charge of the operation and maintenance of Lanzhou Airport.

Since there wereLanzhou Airport Co., Ltd. is a company to manage the Lanzhou Zhongchuan Airport and one of groupcompanies of Gansu Airport Group Co., Ltd.
1

4-2

no personnel left at the company who had been in charge of the airport at the time of project
implementation, according to the Chinese side that the company would have difficulty inaccepting a field survey.

Therefore the monitoring process was done through desk analysis

by obtaining the minimum necessary information from Lanzhou Airport Co., Ltd. To fill thegaps in the information obtained from the company, civil aviation statistics generally
available in China and other information available through the Internet were obtained andused. In addition, in an analysis of the facilities, Japanese standards which comply with theInternational Civil Aviation Organization (ICAO) were drawn upon.

3. Monitoring Results
3.1 Effectiveness

Number of aircraft takeoffs and landings(times)

40,00034,40735,0003.1.1 Quantitative Effects

28,35330,00023,601

25,000(1) Results from Operation and20,00018,63915,000Effect Indicators

10,000The effects of the project after

6,200

7,200

7,200

1995

1996

1997

9,000

9,500

10,200

11,200

1998

1999

2000

2001

12,1002002

13,4005,000
0ex-postevaluation

were

analyzed by the same indexes
used in the ex-post evaluationsuch as aircraft and passenger
traffic and cargo volume handled.
By comparing the data from2003 and 2009 on the number ofaircrafttakeoffs

andlandings

2003

2005

2007

2008

2009

Figure-1 Changes in the Number of Takeoffs and Landings(Source: 1995–2003 Ex-post Evaluation Report, 2009 Statistical Data on Civil
Aviation of China and Lanzhou Airport Co., Ltd.—Recent operational condition(provided by the Chinese side))
Number of passengers (10,000 people)

the

350.0
286.8

300.0
250.0

286.2

221.23

200.0
150.0

128.3

100.0
50.0

38.3

51.5

58.5

55.0

52.9

57.2

1995

1996

1997

1998

1999

67.9

2000

66.4

70.3

80.5

2001

2002

2003

0.0

(Figure-1),

thenumber1994

ofpassengers (Figure-2) and cargovolume handled (Figure-3), it wastimes, passenger traffic 3.55 times
and cargo volume handled 2.59
times. 2
It is thought that the rise in

Cargo volume handled (ton)with aircraft traffic growing 2.1

2007

2008

30,000found that the traffic volume in allthese categories grew rapidly,

2005

2009

Figure-2 Changes in the Number of Passengers(Source: 1995–2003 Ex-post Evaluation Report, 2009 Statistical Data on Civil
Aviation of China and Lanzhou Airport Co., Ltd.—Recent operational condition(provided by the Chinese side))27,021

25,00020,61921,74820,00015,00010,000

7,347

7,838

8,075

7,887

1995

1996

1997

1998

9,399

10,901

9,250

9,481

10,445

2001

2002

2003

5,592
5,000
0

1994

1999

2000

2007

2008

2009

Figure-3 Changes in Volume of Cargo Handled(Source: 1995–2003 Ex-post Evaluation Report, 2009 Statistical Data on Civil
Aviation of China and Lanzhou Airport Co., Ltd.—Recent Operational condition(provided by the Chinese side))2

According to ―Lanzhou Airport Co., Ltd.—Recent operational conditions‖ (material provided by the
Chinese side), at the end of October 2010 aircraft traffic at the airport totaled 28,549 takeoffs and landings,
passenger traffic totaled 3,103,500 people (a 30% increase over the same period in the previous year) andcargo traffic totaled 25,320.4t (an 18% increase), which represent the largest increase in use among the
airports in the provincial capitals in the northwestern region of China.

4-3these indexes is due to an increase in the number of flight routes.

According to a document

entitled ―Lanzhou Airport Co., Ltd.—Recent operational conditions‖ (provided by the
Chinese side), Lanzhou Airport Co., Ltd. launched new flight routes in 2006 connecting
Lanchou with cities such as Shenzhen, Changsha, Nanjing and Hangzhou, and in 2010, in
cooperation with 12 domestic and international airlines, the company also launched 59 newflight routes connecting Gansu Province with larger cities in China including Beijing,
Shanghai and Guilin as well as with 33 medium size cities.

The reasons for launching new

flight routes as mentioned above are seen in the fact that the aviation market in eastern China
has become saturated and the aviation market in the western part of China has grown.

(2) Results of Calculations of Internal Rates of Return (IRR)
Neither the Financial Internal Rate of Return (FIRR) nor Economic Internal Rate of Return(EIRR) was calculated, because there were no data available.

3.1.2 Qualitative Effects
When the ex-post evaluation was conducted, the effects of the project were evaluated interms of (1) the status of the airport facilities, (2) the safety of aircraft takeoff and landing and(3) the convenience of the passenger terminal building.

(1) Status of airport facilities
The airport has a runway with a length of 3,600m and a width of 45m.

According to―Statistical Data on Civil Aviation in China 2009,‖ the area of the passenger terminal building
remains at 27,500m2, meaning no changes have been made since it was completed.
indicates that no expansion has been made to the cargo terminal building.

This

It becamepossible to separate the flow lines of departing passengers and arriving passengers as much as
possible with the development of the passenger terminal building.

Therefore, it can beconsidered that the efficiency of movement of passengers has been promoted.

In the sameway in the cargo terminal building, separation of the flows of cargo and passengers has been
ensured, indicating that the efficiency of cargo handling has also been promoted.
Prior to the implementation of this project, only small aircrafts could take off and land at
this airport.

Thanks to the development of the 3,600m runway, it was found during the

ex-post evaluation that large aircrafts are able to take off and land. 3

In China, airports are

categorized by the airport classifications (Table-2) in accordance with the ICAO airport code
(Table-1).

According to the airport classification, aircraft types that can take off and land at

3

With respect to services involving the arrival and departure of large aircraft, it is known that a typicallarge aircraft, the B747 requires a runway of at least 2,500m to accommodate landing and take -off, andmore desirably, a runway of more than 3,000m should be provided for greater safety to serve aircraft
taking off at the maximum takeoff weight. Lanzhou Airport, which has a runway of 3,600m, can therefore
accommodate large aircraft landing and taking off.

4-4

Lanzhou Zhongchuan Airport
aregenerally

mediumaircrafts such as B767, B757,
A300 and MD82.
In

Japan,

inthe

Criteria

andDescription of Airport Civil―Establishment

Engineering

Table-1 ICAO Airport Standard Code

size

Facilities‖

Code element-1
Code
No.

Code element-2

Runway length withreference to aircraft

aircrafts categorized as code E

Wing span

Outer main wheel
track distance1Less than 800m

A

Less than 15m

Less than 4.5m

2800m –1,199m

B

15m- 23m

4.5m – 5.9m

31,200m –1,799m

C24m- 35m

6.0m – 8.9m

41,800m or overD

36m – 51m

9.0m - 13.9m

E52m – 64m

9.0m – 13.9m

F65m – 79m

14.0m – 15.9m(July2008), it states that ―if any

Code(Source: A System of Airport Development and Management in China,
Japan’s National Institute for Land and Infrastructure Management, 2005)(B747 and B777) are in service,
it is desirable that the runway
have a width of 60m for

Table-2 Airport Classification in China
Airport Standard
Code

Aircraft Type

Number of
Airports

Example of Airport (runway length x width) (m)improvement of the safety of

4F

A380

3

・ Beijin Capital International Airport (2,800 x 60, 3,200 x 50, 3,800 x 60)
・ Shanghai Pudong International Airport (3,400 x 58、4,000 x 60, 3,400 x 60, 3,800 x 60), etc.

the aircrafts in service.‖

For

4E

B747

30

・ Shenzhen Bao'an International Airport (3,400 x 45)
・ Chengdu Shuangliu International Airport (3,600 x 45, 3,600 x 60), etc.

example, international airports

4D

B767 / B757 /MD82 /A300

38・ Lanzhou Zhongchuan Airport (3,600 x 45)
・ Jiayuguan Airport (3,000 x 60), etc.

inNarita

4C

B737

77

・ Dunhuang Airport (2,800 x 45), etc.

Airport have runways with a

3C

Smaller than B737

17・ Qingyang Airport
・ Beijing Nanyuan Airport, etc.

width

1B

Y12

1

・ Changhai Dachangshandao Airport

Japan

of

including60m.

Lanzhou(Source: 2009 Statistical Data on Civil Aviation of China)

Zhongchuan Airport, however,has a runway with a width of 45m and it will be necessary to increase the width of the runway
in order to allow large aircraft to operate safely.
In summary, although the ex-post evaluation concluded that large aircrafts could serve theairport, such aircrafts do not seem to be taking off or landing at the airport at present forreasons of safety.

However, since the runway is long enough for large aircrafts, the airport

would be able to accommodate large aircrafts landing in an emergency.

As a result, it can besaid that the airport retains the capacity to act as an airport capable of accommodating large
aircrafts landing and as an alternative airport to substitute for neighboring airports in theevent of an emergency, as described in detail in ―3.2.1 Impact‖ below.

(2) Safety of aircraft takeoff and landing
How to improve safety was analyzed in this monitoring, because during the ex-post
evaluation, it was pointed out that the old facilities at the airport did not satisfy ICAO
standards concerning the distance between the runway and the taxiway and the width of the
taxiway.

Also in parts of the old runway the surface had peeled off or caved in, which could

cause aircraft taking off or landing to overrun the runway.
confirm how to improve safety.

4-5

Therefore, it was decided toFirst, according to ―Statistical Data

Table-3 Example of ACN of ICAO DM3 (asphalt pavement)

on Civil Aviation in China 2009,‖ thesurface of the runway at the airport is
said

to

have

PCN

Roadbed Design CBR (%)
Aircraft type
13 or over8 – 12

4–7

Less than 4

B747-400

58

64

80

102

A300-600

49

56

68

84

B767-300

43

47

56

76

(Pavement

Classification Number) 4 ―75.‖

ICAO

also has its own standards for runway
pavement (Aerodrome Design Manual(Source: Material of Japan’s National Institute for Land andInfrastructure Management No. 604)

Part 3 Pavements), which apply ACNs

(Aircraft Classification Numbers) as shown in Table-3. With respect to the aircraft types(A300-600 and B767-300) to be accommodated at the airport, a comparison between ACNs
and PCNs5 confirmed that some parts of the airport runway pavement exceed the ACN.
This is because measurements differ in countries depending on how the PCN is calculated oron the thickness of the pavement.
With regard to facilities to prevent
overrun such as an overrun area, landing

Table-4 Standards for Overrun Area and Others in JapanItem

strip and runway end safety area, they
were

confirmed

by

using

Japanese

Overrun area

In principle, the length of the overrun area should be 60m or overand the width should be the same as that of the runway.

Landing strip

The length of the landing strip should be that of the runway plus
60m on each side except for landing strips approved as having
special reasons not to have such length.
The width of the landing strip should comply with the standard forthe strip grade except for landing strips approved as having special
reasons not to have such width. If precision approach is made (forinstrument landing) on a runway with a length of over 1,280m, thedistance between the centerline in the lengthwise direction and thelonger side of the landing strip should be over 150m.

Runway end
safety area

In principle, the length of the runway end safety area should be
between 40m (general rule) and 120m (standard) for non-instrument
landing on a runway with a length of less than 1,200m and between
90m (general rule) and 240m (standard) for instrument landing on a
runway with a length of over 1,200m.
In principle, the width of the runway end safety area should be thesame as that of the landing strip.

standards, ―Establishment Criteria and
Description of Airport Civil Engineering
Facilities (July 2008) 6 ‖, because China
has not established particular standards
for installing such facilities.

It can be

said that the airport is of a structure tosatisfy the standards and it is prepared forincidents such as overrun, as shown in
Figure-4.

Standard

Moreover, the aviation security-related
radio facilities were introduced by thisproject such as an Instrument Landing
System (ILS) and Non-Directional Radio
Beacon (NDB).

(Source: Establishment Criteria of Airport Civil Engineering
Facilities and the Descriptions‖ (July2008)

According to the ―Statistical Data on Civil Aviation of China 2009,‖ a VHF

Omnidirectional Range (VOR) Beacon, Distance Measuring Equipment (DME) and4

PCN values for airports around the world indicate to what extent the airport pavement can endure theaircraft load. The values are indicated for each type of aircraft taking into account the impact of the aircrafton the pavement.
5
When reviewing pavement strength, ACN and PCN established for each aircraft type should be compared.
In case of ACN≦PCN, the pavement can be deemed to be strong enough for the aircraft type.
6
As Japanese standards comply with ICAO standards, it can be deemed that an airport largely complies
with ICAO standards to the extent that it complies with Japanese standards.

4-6

Secondary Surveillance Radar (SSR) were also installed.

By introducing them, takeoff andlanding from both north and south became possible at the airport and reduced the risk causedby the weather and ensured safe takeoff and landing.
Based on the above, it is considered that the situation at the airport does not pose a threat tothe safety of aircraft takeoff or landing or of aircraft services.
Runway end safety area: 240m
Runway end safety area :660m

Overrun area : 60m

Overrun area : 60m

150m
180m

Landing strip : 330m

ILS
VOR/DME

ILS

Figure-4 Status of Airport Facilities (created based on data from Google Earth)(3) Convenience of the Passenger Terminal Building
There seem to be no significant changes in the facilities themselves.

Since the flow linesof departing and arriving passengers are separated as much as possible to further promote
efficiency and safety of movement, it is deemed that the convenience and safety of airport
users are ensured.

In summary, in terms of the airport’s effectiveness, the number of aircraft takeoffs andlandings as well as the number of passengers and cargo volume handled are increasing andthat the airport facilities ensure the safety of aircraft takeoff and landing.

3.2 Impact
3.2.1 Intended Impacts
During the ex-post evaluation, the followings were mentioned: (1) aviation safety was
ensured in the northwestern region of China and (2) the economy of the northwestern region
has been stimulated.

(1) Ensurement of Aviation Safety in the Northwestern Region
As mentioned above, the runway at Lanzhou Zhongchuan Airport is long enough toaccommodate large aircrafts taking off and landing.

When looking at neighboring airports

in the region, Lanzhou Zhongchuan Airport is found to be relatively large in terms of runway

4-7

standard and airport code, too.

As shown in Figure-5, relatively large airports located close

to Lanzhou Zhongchuan Airport include Urumchi Airport (4E), Xian Airport (4E) and
Chengdu Airport (4E) and other surrounding airports are 4D or smaller.
Based on the above, it is considered that the airport can function as an emergency airport toaccommodate landings by large aircrafts and as an alternative airport to substitute forsurrounding airports in an emergency.

Table-5 Size of Airports in the Neighborhood of Lanzhou
Zhongchuan Airport
Airport Name

Province/
Autonomous
RegionAirportStandard Code

Lanzhou
Zhongchuan
AirportRunway: Length x width (m)4D3,600 x 45

4D

3,000 x 60

Dunhuang Airport

4C

2,800 x 45

Qingyang Airport

3C

Unknown

Tianshui Airport

3C

Unknown

Jiayuguan Airport
Gansu Province

Xian Airport

Shanxi Province

4E

3,000 x 45

Chengdu Airport

Sichuan Province

4E

3,600 x 45, 3,600 x 60

Urumchi Airport

Xinjiang Uygur
Autonomous

4E

3,600 x 45

Xining Airport

Qinghai Province

4D

3,000m x 45

Figure-5 Airport Located around Gansu Province(Source: 2009 Statistical Data on Civil Aviation of China)(2) Stimulation of the economy in the Northwestern Region
1) Economic trends in the northwestern region

Lanzhou, the capital city of Gansu Province,
located adjacent to the airport, are shown in
Figure-6 and changes in GDP in Figure-7.

It can

700.1
700.0

Number of domestic travelers(Total; 10,000 people)

Changes in the number of domestic travelers in

800.0

600.0

522.0

500.0
400.0

435.0
348.2

300.0
200.0
100.0

be seen that the number of domestic travelers has

0.0

increased 2.0 times from 2006 to 2009, while GDP(regional gross domestic product) has also grown
As mentioned

earlier, it is known that the number of passengers
and aircraft takeoffs and landings and cargo volume
handled are growing, while both the number oftravelers and GDP in the region are also increasing
following this trend.
One of the reasons for such trends toward
economic growth is the growth of tourism andpromotion of the use of airports.

4-8

2007

2008

1,000.00

GDP (Regional Gross Domestic Product(0.1 billion yuan)

1.5 times during the same period.

2006

2009

Figure-6 Changes in Domestic Travelers in Lanzhou
City(Source: Searchina (Internet website))
925.98846.28900.00800.00700.00732.76638.47600.00500.00400.00300.00200.00100.00
0.00
2006

2007

2008

2009

Figure-7 Changes in GDP of Lanzhou City (Source:
Searchina (Internet website)2) Trends in tourism
In Gansu Province, there is a wealth of tourism resources, including Dunhuang (Mogao
Caves) which was designated as a World Heritage Site, and tourism plays an important role in
the region’s economy.

It is thought, therefore, that changes in the number of travelers areclosely connected with the state of the regional economy and that there is a close relationshipbetween changes in the number of travelers and changes in airport-related indexes such as thenumber of passengers using the airports.
Based on this, it is highly possible that the development of the airport, which is the traffic
hub for the region, has impacted on regional tourism and contributed to stimulation of theregional economy.

3) Promotion of the use of airports
According to the document entitled ―Lanzhou Airport Co., Ltd.—Recent operational
conditions‖ (provided by the Chinese side), as the flight routes have expanded, the airport
market in Gansu Province has been stimulated and hence convenience for business andpleasure trips has been enhanced.

In addition, in order to attract a greater number oftravelers and passengers, in January 2010, operation of a limousine bus service 7 waslaunched by Baiyin Longxin Automobile Transport Co., Ltd. connecting the central area of
Baiyin City and Lanzhou Zhongchuan Airport, thereby improving accessibility to the airport.
In 2007, through cooperation with the ―Gansu Year Campaign‖ held by Hainan Airlines
Group, the airport also contributed to the development of the aviation market in the region.
From these circumstances, it is understood that the use of the airport has been promoted byplacing importance on collaboration with outside entities while actively taking advantage of arange of incentive schemes and supporting airlines’ PR programs to contribute to a significant
increase in air traffic.

7

Following the start of the limousine bus operation, on October 18, the Hainan Airlines Lanzhou Airport
Baiyin City Air Terminal was opened in the West Station of Baiyin Longxin Automobile Tra nsport Co., Ltd.
to operate the first city air terminal in Gansu Province.

4-9

3.2.2 Other Impacts(1) Natural environment, relocation of residents and land acquisition
Since documents and materials
related to environmental standards
and the status of waste disposal in
China were not available, thesituation surrounding air pollution
and waste disposal is not known.
As

far

Figure-8,as

understoodalthough

5km
Lanzhou Zhongchuan Airport

fromresidential

districts are scattered around the
airport,

there

are

mainlyagricultural fields to the east and in: Residential district

the mountainous areas to the west.
Therefore, it is thought that there
are not many areas or entities that

Figure-8 Condition of the Surrounding Area
(created based on data from Google Earth)

are affected by aircraft noise. In addition, relocation is considered completed since there are few
residential districts or agricultural land in the vicinity.

(2) Others (disaster-relief assistance)
According to ―Lanzhou Airport Co., Ltd.—Recent operational conditions‖ (provided by the
Chinese side), when disasters occurred in a row such as the earthquakes in Sichuan and Yushu
and mudslide in Zhouqu, Lanzhou Airport Co., Ltd. immediately offered assistance for relief
goods and workforce as emergency measures.

Lanzhou Airport fulfilled its role for

emergency relief transport assistance: a total of 69 relief planes were accepted, supporting thetransportation of 454 relief workers, 186 injured people, 167 attendants to the injured and108t of relief goods.
In this way, it is known that the airport can function in the emergency assistance system not only as
an alternative airport but also as a priority ―disaster relief‖ center for disaster relief transportation.

Based on the above, the airport not only functions as an alternative airport to ensure aviation safety
in the northwestern region but also contributes to the stimulation of the regional economy, for example,
in the tourist industry.

3.3 Sustainability
3.3.1 Structural Aspects of Operation and Maintenance
Since there were no detailed materials available on the operation and maintenance of the

4-10

airport facilities, the detailed status of operation and maintenance could not be grasped.
However, judging from the fact that the name ―Lanzhou Airport Co., Ltd.‖ is found in the―financial data‖ (provided by the Chinese side) and from ―Lanzhou Airport Co., Ltd.—Recent
operational conditions‖ (also provided by the Chinese side), efforts to make each airport a
subsidiary company have been made in accordance with the policy established during the
ex-post evaluation.

The organizational structure is considered to have been establishedalready, by making ―Gansu Airport Group Co., Ltd.‖ the parent company and by establishingand controlling subsidiary companies under the group, including Lanzhou Airport Co., Ltd.,
Dunhuang Airport Co., Ltd., Qingyang Airport Co., Ltd. and Jiayuguan Airport Co., Ltd.
According to ―Lanzhou Airport Co., Ltd.—Recent operational conditions‖ (provided by the
Chinese side), Gansu Airport Group Co., Ltd. has made efforts to promote corporate
governance by allocating personnel appropriately, streamlining the personnel system andpromoting management efficiency after coordinating and reorganizing the management
framework and organization.

As a result, the scope of the group’s services was expanded,

the management level of related operations was improved, and streamlining of organization
was promoted.

In addition, Gansu Airport Group is further promoting corporate governancethrough business collaboration with Hainan Airlines Group, 8 improving the management ofbusiness operations, administration, financial matters, projects management and service
standards.

3.3.2 Technical Aspects of Operation and MaintenanceAlthough detailed data on technical aspect of operation and maintenance were not available,according to ―Lanzhou Airport Co., Ltd.—Recent operational conditions‖ (provided by the
Chinese side), it is known that Lanzhou Airport Co., Ltd. has been promoting various
programs such as ―Safe Operation Month,‖ ―Safe Operation Risk Roller Campaign‖ and―Special development of control area certificate documents‖ in order to further develop asound safety management system. In 2007, Lanzhou Airport passed the safety review andnational aviation security examination of the Civil Aviation Administration of China (CAAC),
further enhancing the level of safety management.

It also obtained safety titles such as―Organization that Successfully Passed the Safety Evaluation‖ from the CAAC Northwest
Regional Administration, while being designated as a ―national model of a reliable airtransport sales agency‖ for the second year in a row.
In summary, it is presumed that a certain level of education, training and maintenance is in

8

The official name is Hainan Airlines Co., Ltd. based at Haikou Meilan International Airport located in
Haikou City, Hainan Province. On November 29, 2007, China Xinhua Airlines, Chang An Airlines, Shanxi
Airlines and Grand China Express Air merged with the company to establish Grand China Air. Following themerger, the group positioned itself as the 4th largest airline company in China after China Southern Airlines,
Air China and China Eastern Airlines.

4-11

place at the company.

3.3.3 Financial Aspects of Operation and MaintenanceAs shown in Figure-9, when

20,0002005 and later, sales havegrown while the deficit in net
profits has decreased.

company’s financial status was
extremely poor from 2005 tocannot0-5,000-10,000-15,000
2000

2001

2002

2003

2005

2006

2007

2008

2009

Sales

13,01813,454

3,976

4,683

5,851

7,110

9,565

10,858

13,636

Current net
profit812-7,409-18,105-17,458-10,174-6,496-1,467-4,540-2,465Figure-9 Changes in Sales and Net Profit(Ex-post Evaluation Report and material provided by the Chinese side)be200,000

deemed a healthy situation.
2008,

althoughthecompany’s assets exceeded
liabilities at a rate of over
100%,

in

2009,

again

liabilities exceeded assets,
theairport’s

liquidity ratio to 87.5%.
In

terms

of

businessmanagement, although the

Lanzhou Airport Co., Ltd.
200.0%

140,000
120,000

150.0%

100,000
80,000100.0%

60,00040,00050.0%

20,0000lowering

250.0%

Gansu Airport Group Co., Ltd.

160,000
Amount (10,000 yuan)In

180,000

2003

2005

2006

2007

2008

19,763 23,206 22,741 19,267

1,921

2,867

5,714

11,448 23,108

Current liabilities

9,819 160,190 19,886 19,120

54,435 45,577 49,498 10,180 26,395

Liquidity ratio

201.3%

3.5%

Current assets

2000

2001

14.5%

2002

114.4% 100.8%

6.3%

11.5%

112.5%

2009

87.5%

Figure-10 Changes in Liquidity Ratio(Ex-post Evaluation Report and data provided by the Chinese side)

number of takeoffs and landings has increased and it is expected that the principal source ofincome, such as landing fees and airport charges collected from airlines, will increase, theairport is tending to spend more because operating, financial and administrative costs havenot declined.
When looking at the budget related to maintenance, according to ―Financial data: List ofmajor operating costs of Lanzhou Airport‖ for 2007 (provided by the Chinese side)‖, themajor operating costs in 2007 amounted to 83,786,002 yuan, of which 3,381,091 yuan were
accounted for as ―maintenance costs‖ (4.0% of the operational costs). The ratio is not veryhigh.99To compare the maintenance budget with that of Narita Airport by referring to Narita Airport’s ―FY2010
Financial Report,‖ about 13% of total operational costs (107,839 million yen) is accounted for as ―repair andmaintenance costs‖ (13,833 million yen) at Narita Airport. Because the scale of the two airports issignificantly different, the comparison should not be made lightly, but it shows that the figure of 4% at
Lanzhou Zhongchuan Airport cannot be deemed high.

4-12

0.0%

Liquidity ratio (%)

which

5,000

-20,000

As shown in Figure-10, the2007,

10,000
Amount (10,000 yuan)

Lanzhou Airport Co., Ltd. inLanzhou Airport Co., Ltd.

Gansu Airport Group Co., Ltd.

15,000looking at the financial status of

3.3.4 Current Status of Operation and Maintenance
When the ex-post evaluation was conducted, it was reported that daily maintenance was
performed in accordance with the procedure manuals developed based on rules.

In thismonitoring study, however, the status of maintenance could not be confirmed because theprocedure manuals could not be obtained.
Since the runway is maintained in a good condition such as not to hinder takeoff or landingof aircrafts and the aviation security-related facilities are operated in an appropriate manner, it
can be presumed that the number of takeoffs and landings at the airport is on the rise as
mentioned above.
Based on these conditions, it is considered that daily maintenance is performed inaccordance with the procedure manuals.

In summary, with respect to sustainability of the project, when looking at the airport’s financial andmanagement conditions, it is still recording losses although sales are rising. In terms of operation andmaintenance, it is presumed that maintenance is performed, because the airport is in an appropriate
condition as not to hinder aircraft traffic.

3.4 Others
During the ex-post evaluation, it was pointed outthat Lanzhou Airport Co., Ltd. (Lanzhou Zhongchuan
Airport)recordedlosses.

Therefore,

it

was

suggested that the executing agency should makeefforts to improve its financial status, while financial
assistance should be provided by the provincial andnational

governments.

The

policiesof

Other income
9,682,851
yuan
Income from (10.1%)
site 6,957,318
yuan(7.3%)

Income fromlanding fees
12,820,404
yuan(13.4%)

Major operating income
in 2007
95,650,993 yuansuchgovernments were not known in detail since detailed
data were not available to know financial assistancebytheprovincial

andnational

governments.

However, judging from the airport’s financial status,in which liabilities and negative balance have notbeen eliminated, it can be presumed that no assistance

Income fromgroundservices
66,190,419
yuan(69.2%)

Figure-11 Operating Income of Lanzhou
Airport Co., Ltd.
(Data provided by the Chinese side)has been provided by the governments.
Details of the major operating income of Lanzhou Airport Co., Ltd. in 2007 are shown in
Figure-11. About 70% of the operating income comes from ground service operations, which
includes income from airport charges collected from airlines and apron service operations.
Other non-aviation related income includes franchise business, which corresponds to just
0.5% (441,530 yuan) of total operating income.

4-13

Since there is only a small income from

non-aviation related business, it can be presumed that efforts to diversify airport businesshave not progressed significantly.

4. Conclusion, Lessons Learned and Recommendations
4.1 Conclusion

Thanks to the expansion of the airport, the number of aircraft takeoffs / landings andpassengers, and volume of cargo handled have increased.

Coupled with this positive

trend, the regional economical indexes (the number of travelers and GDP) are also on therise, and as a result the project is considered to contribute to the growth of the regional
economy.


The airport has a role as an alternative airport for surrounding airports and as an
emergency landing airport.

In terms of safety, it is deemed that the airport is in an

important position.

With regard to the executing agency, Lanzhou Airport Co., Ltd., a member of Gansu
Airport Group Co., Ltd., the company has not been able to eliminate its deficit althoughsales have increased since 2005.

4.2 Recommendations


China has implemented necessary measures to develop and maintain airports and perform
aviation operation and maintenance in accordance with ICAO standards.

While theairport was placed under the control of a private airport company, it continues to be
developed, managed and maintained in accordance with ICAO standards. In addition, it
plays an important role as it is positioned to function as an alternative airport forsurrounding airports as well as an emergency landing airport, which means it should bealways maintained in a good condition.

Therefore necessary measures should becontinuously taken to perform regular maintenance of the major facilities, such as the
runways, and to secure the budget and organizational structure to perform themaintenance successfully.
When looking at the financial status, the airport has not eliminated its deficits since 2005,
although sales have increased. As the number of aircraft takeoffs and landings increases,
income from landing fees and from ground service operations such as passengers ’ airport
charges is expected to increase. However, it is expected that the airport will make further
efforts to increase non-aviation related income as diversification of airport operations has
not progressed.

4.3 Lessons Learned
None.

4-14

Comparison of the Original and Actual Scope of the Project
Ite m
1.Project Outputs
1) Basic facilities
RunwayParallel taxiway
Apron2) Passenger terminal building3) Cargo terminal building4) Control tower5) Hangar
6) Aviation security facilities

7) Other facilities
2.Project P eriod
3.Project Cost
Amount paid in Foreign currency
Amount paid in Local currency

Total
Japanese ODA loan portion
Exchange rate

Original

Actual

3,600m x 45m
3,600m x 23m
Loading 71,400m 2
Night stay: 54,800m 2
25,000m 22,000m 2
4,000m 2
4,000m 2
Instrument Landing System(ILS): 1 unit
Non-Directional Radio Beacon(NDB) 4 units
Water and sewage system, fuelsupply system, etc.
December 1996 – February 2000
(38 months)

As planned
As planned
As planned
As planned
27,495m 2
3,328m 2
As planned
As planned
As planned

December 1996 – August 2001
（ 56 months）

6,338 million yen
7,379 million yen(in local currency: 615 million
yuan)
13,717 million yen
6,338 million yen
1 yuan = 12 yen

6,299 million yen
14,033 million yen(in local currency: 926 million
yuan)
20,332 million yen
6,299 million yen
1 yuan = 15.155 yen

4-15

As planned