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The routes of corruption

author:Peng Pu
link   Global Times August 05 2010:
 
 
 
Several top-level airline industry officials recently had their wings clipped due to allegations that airlines were required to fork over huge sums of cash to win favorable air routes and flight times.

A Civil Aviation Administration of China (CAAC) personnel website featured a list Friday of scores of officials who were moved to new jobs.
The move appeared to be related to the recent crackdown on aviation corruption, in which airlines were generally forced to pay huge bribes to officials to win the best routes.
If an airplane company wants to apply for a new air route, it must go to the CAAC's regional branch and the air traffic control authority. Once approved, the final decision will be made by the CAAC's head office.

"Under such condition those officials have huge power in allocating the best air routes and flight time slots. The best routes directly lead to billions in profit," a Beijing Capital Airport (BCA) worker surnamed Ren told the Global Times Monday.

CAAC officials have announced new rules to help fight corruption but the level of corruption stretched far into the sky.

In June, the Hunan Provincial Procuratorate held seven senior officials from China Southern Airlines (CSA) including CSA's former chief engineer Zhang Heping.

Zhang Zhizhong, former chairman of BCA, was held on May 21. In March, he left the job and said he was retiring.

Some speculated his arrest was connected to Huang Dengke, who, as the chief of CAAC North China Regional Administration, was arrested in 2009.

The different cases do seem to have a link.
Those arrests came after the National Audit Administration found an abnormally large amount of "air route coordination fees" in a 2008 audit. The administration didn't reveal the exact number but coordinating fees usually refer to bribes.

The payment records showed an intricate relationship between the parties in the civil aviation area, including CAAC, airplane companies and "middlemen" who help companies get favorable treatment when selecting air routes.

Club rules

An insider told China Business earlier that there are over 20 representatives in the official Flight Time Slot Coordination Committee (FTSCC) under the CAAC. The members include aviation, airport officials and big airlines representatives who do things like they're in a "club."

"And representatives from privately-owned airline companies find no access to the club, as big shots in the civil aviation field, such as state-owned companies, already divided up their power zones and that prohibits newcomers from entering the juicy area," he said.

"It is a monopoly situation. And it's not an underlying rule," he said.

Ren mentioned that different airline companies have to compete for prime flight times by giving money to the aviation officials. The expense is known as 'accommodation fees', or 'air route coordination fees'.

"Money rules - whoever pays the biggest money gets the prime and the best flight times," he said.

He added that sometimes there are middlemen who have close ties with those in power. They sometimes act as brokers between the decision makers and airline companies.

In the China Southern Airlines case, Huang Dengke, as director of CSSA North China, offered favorable time slots to Pang Hanzhang, a sophisticated middleman who introduced such services to the market about 10 years ago.
Zhang Qihuai, a lawyer at Lan Peng Law Firm, told the Global Times Wednesday that a limited number of desired air routes and time slots have created a hotbed of corruption, and the current civil aviation system is in need of reform.
"From distributing prime flight times to monitoring the whole aviation field, the power lies in the hands of just a few people. Some underhand acts were hard to be revealed, which greatly hindered effective supervision," Zhang said.

Transparency desired

CAAC North China said last week that all key decisions concerning airline traffic rights and flight times will be fully disclosed to the public. In addition, the decision-making process will be improved, the Beijing Times reported.
"The CAAC North China branch is the first and a 'test field' in fighting corruption, as the Beijing Capital Airport in our region is the busiest airport and encounters the most severe problems, where corruption cases are rampant," Sun Defu, spokesman of the regional administration, told People's Daily last week.
He added that the criteria would be refined and publicized.

Before 2009, the problem was even more severe.
The problem was so widespread that airlines adjusted their flight times without permission and occupied time slots they sometimes didn't use. The result was lots of delays.

"CAAC is enhancing its management, by carrying on real-time monitoring in busy airports. Since this year, 13 airplane companies including Air China, violated rules and been punished accordingly. We cancelled eight air routes belonging to three airline companies, as a warning for them," Sun was quoted as saying.
An official at CSA, who refused to be identified, told the Global Times Wednesday that the new CAAC North China rules are a significant step forward in terms of civil aviation reform.
"In past years, air routes and time slots were more or less granted at officials' will. Such practice, although on trial, will help transform the industry," he said.

Reform rules

He added that the civil aviation industry should not follow the US practice of auctioning off the air routes and times to the highest bidders.
"However, whether the new rule could be perfectly carried out remains a good question," he said.

Several airlines including Hainan Airlines, Eastern China Airlines and Air China couldn't to be reached for comment on the issue Wednesday.
Zhang Qihuai, the lawyer, believes the new rules won't solve everything.

"The problem is not how many people have the right to vote, but whether the people who have a say could make fair decisions," he said.
"Only when the decisions are made through free competition
(2010-11-25 15:13:00hits:1103)

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