China links to World Bank air safety grants

Samoa has been granted almost $60 million to improve the safety and oversight of international air transport and associated infrastructure through out the country.

The World Bank grant comes in the wake of a similar project in Tonga, where the bank has also agreed to certify the MA-60 plane, Radio New Zealand Reports. According to the report, published two days ago, the dispute between Tonga and New Zealand over the plane is set to be solved by a new deal between the countries. A travel advisory is to remain in place.

Last year, when the MA-60 started flying domestically in Tonga, New Zealand's Foreign Affairs minister, Tupa’i Murray McCully put NZ$8 million of tourism aid on hold and issued a travel warning.

But now the World Bank has asked to review Tonga's entire transport industry, which will include accreditation of the plane. As in New Zealand, the MA-60 is not certified to fly in Australia, Europe and the United States. Late last month, the company that manufactures the planes, the Aviation Corp of China (A.V.I.C.), a subsidiary of Xi’an Aircraft Industry Co., was planning to apply to the Civil Aviation Administration of China (C.A.A.C.) to ground MA60 operations as soon as possible.

This application was for safety inspections following another incident involving the aircraft, Air Transport World reported. Late last year, Samoa signed a Memorandum of Understanding (M.O.U.) with the same company that supplied the Tongan plane.

This newspaper reported the Samoan government is looking at using the MA- 60, the same plane as in Tonga, despite the aircraft’s long history of crashes.

One of the crashes came less than a week after Samoa signed the M.O.U. with A.V.I.C.-International Aero-Development Corporation, a subsidiary of the Xi'an Aircraft Industrial Corporation. The crashes involving the MA-60 and variant models have claimed a total of 124 lives.

This agreement covers two types of aircraft manufactured by Xi’an – the 58-seater MA-60 and smaller 19-seater Y12 aircraft. Speaking to government newspaper, the Savali, at the time of the signing, Aviation acting chief executive, Nanai Junior Sa’aga said “Paramount to the government is the safety issue.”

He added, “The three aircrafts will be rigorously tested to meet aviation safety certification before any full commitment is made.”

Though the Y12 airplanes have, reportedly, been certified by the US Federal Aviation Authority and can fly to neighbouring American Samoa, the MA-60 model is yet to receive similar certification. In the report, Nanai pointed out that the M.O.U. is not binding.

“The M.O.U. is to register Samoa’s interests to get new airplanes and it is not a commitment,” he said. This latest U.S. $25 million ($58,526,900 tala) grant from the World Bank is a part of the Samoa Aviation Investment Project (S.A.I.P), a US$38.64million dollar project.

According to a press release issued by the Bank, this project is being financed by a U.S. $25 million grant from the International Development Association (I.D.A.) with cofinancing from other partners, including the Pacific Infrastructure Facility (P.R.I.F.), which is financed by the government of Australia.

“It is part of a series of projects implemented under the Pacific Aviation Investment Program (P.A.I.P.) that are designed to increase aviation safety and security across the Pacific,” the release reads.

“Focusing on developing key airport infrastructure for international travel such as runways, navigation aids and lighting; aviation sector reform, and improving airport management and operations.”

According to the release the S.A.I.P will invest in key international aviation infrastructure, upgrade navigational and communication equipment, and provide technical assistance and support capacity development for regulatory oversight, and operation and management of Samoa's airports and regional aerodromes.

“The improvements made under the project will benefit the hundreds of thousands people who travel to and from Samoa each year, including tourists, travellers visiting friends and relatives, and those who use air travel for business, education, or health reasons,” the release reads.

“Samoa’s remote, geographically dispersed islands and small population relies on safe and reliable air services to connect to each other, to connect the country to larger markets, and to facilitate important industries such as tourism.”

According to the World Bank’s Transport Specialist Chris De Serio aviation plays a vital economic and social role in Samoa, providing links to essential sectors, like health and education.

“Improved safety and reliability will also encourage growth in the tourism sector allow Samoa to increase exports of high value commodities that depend on fast delivery, both of which contribute to economic development in Samoa,” he said.

About 130,000 people travel to Samoa each year. The release says a major component of the project includes investments at the Faleolo International airport, including: Resurfacing of runways; upgrading of runway lighting to high intensity energy efficient LED lights; upgraded air traffic control equipment; secure communications; power supply and operations; installation of air navigation aids; upgraded fire safety equipment; installation of two water storage tanks; and security improvements such as the installation of closed circuit television.

“Other components include strengthening the policy and regulatory environment and supporting improved management capacity in the aviation sector,” the release reads.

Four years ago World Bank voting powers were revised to increase the voices of developing nations, markedly China, according to the report the World Bank Group Voice Reform: Enhancing Voice and Participation in Developing and Transition Countries in 2010 and Beyond.

This reform gave China the third loudest voice at the Bank with 4.42 per cent of the vote, coming in behind the US – with 15.85 per cent of the vote and Japan with 6.84 per cent of the vote. While China’s voting power increased, the US and Japan lost some of their voting power dropping from 16.36 per cent and 7.85 per cent respectively from the pre-voice reform phase.

At the time, Radio Television Hong Kong reported the World Bank recognised China's growing economic influence and agreed to elevate Beijing's voting power to behind only the US and Japan in the 186-nation lending organisation.

“Lifting China above a number of Western powers - including Germany, France and Britain - will give other nations with emerging economies more say in how the bank operates and lends money,” the special administrative region of China’s public broadcaster reported then.

Despite losing some of its voting percentage, the U.S. still retains the same veto power over changes in the Bank’s structure that it had before the reforms. The stakes are high. A.V.I.C. is an ultra-large stateowned enterprise that manufactures commercial and military aircraft. In 2012, it operated 10 business units and about 200 subsidiaries employing about 450,000 people, according to Defense News, a military information website.

That year, AVIC reported its turnover grew 14 percent to $47.7 billion and its profits rose 5 percent to $20.6 billion. Globally, civilian aircraft sales climbed 28% in 2013, according to the ADS, Aerospace Defense Security.

Overall, the aviation industry generates US$2.2 trillion in economic activity—about 3.5% of global GDP, supporting some 57 million jobs, according to I.A.T.A., the International Air Travel Association.

However airlines face low level profits. In 2012, the industry made an aggregate profit of $7.6 billion, on revenues of $638 billion, representing just 1.2 percent net profit margin. This is driving demand for cheaper planes, and for aircraft manufacturers to cut costs, according to I.A.T.A.