Air China planned to invest more than 3.5 billion yuan (US$431 million) in its Beijing hub over the next two years as it looked to key markets for future growth, the company's president said.

Ma Xulun said Monday the airline also wanted to develop Shanghai into a cargo center and an international passenger gateway, while expanding its regional hub in Chengdu in the southwestern Sichuan Province.

He said China's aviation industry was likely to maintain rapid growth over the next three to five years and Air China was well positioned to take advantage.

"We expect 12 percent to 15 percent annual growth in China's aviation industry over the next three to five years. Beyond 2010 the market will slow but still show growth," he told financial news wire XFN in an interview.

Air China has a fleet of 160 aircraft, 97 of which are based at Beijing International Airport.

"Our top target is the Beijing hub, where we are trying to realize the synergy of our international and domestic flight network," Ma said.

"The plan is to get the Beijing hub in shape within three years ... it will reach full maturity in five years' time," he added.

A new international terminal is currently under construction in preparation for the 2008 Beijing Olympics and there are also plans to build a third runway.

Air China's investment at Beijing airport would include the development of cargo operations, engineering and maintenance programs, together with catering and IT services, Ma said.

It cargo operations, through its 51 percent stake in Air China Cargo, accounted for 9.9 percent of the group's total revenue of 16.94 billion yuan in the first half of this year.

The national flag carrier recently invested 300 million yuan in a site in Shanghai as part of its plans to enhance cargo operations there and develop it as an international passenger gateway, Ma said.

The regional hub of Chengdu is also a key location and the company is looking to increase its market share there to 50 percent from its current 40 percent in two to three years.

Air China currently operates international flights to North America and Europe from Chengdu through Beijing but may soon open direct flights.

The development of the airport hubs will broaden Air China's international business, which accounts for 49 percent of the international operations of all of China's air carriers combined.

(Shenzhen Daily October 11, 2005)