During the review period, the Group's total traffic revenue was RMB6,778 million, an increase of RMB674 million or 11.0% from the same period last year. Meanwhile, the Group's total traffic volume increased by 18.6% to 1,104 million RTKs. The aggregate utilization rate of the Group's Boeing and Airbus aircraft was 8.52 hours for the review period, an increase of 0.47 hour or 5.8% from the last period.

Passenger revenue during the period was RMB6,182 million, up 9.8% from the same period last year, representing 91.2% of the Group's total traffic revenue. Moreover, passenger traffic volume increased 14.8% to 10,056 million RPKs.

Domestic passenger revenue was RMB4,819 million, up 7.5% from the same period last year. Domestic passenger revenue accounted for 78.0% of overall passenger revenue. Domestic passenger capacity, in terms of ASKs, increased 9.1% from the same period last year, while domestic passenger traffic increased 15.0% from 6,744 million RPKs to 7,753 million RPKs during the same period.

As a result, the passenger load factor increased 3.0 percentage points to 58.8%. However, the average yield for the Group's domestic passenger traffic was lowered due to increasing competition in the domestic market. Consequently, the Group's passenger yield per RPK for the review period reduced by 6.1% from the same period last year.

On Hong Kong regional routes, the Group recorded passenger revenue of RMB584 million, up 5.4% from the first half of 1999. Hong Kong regional passenger revenue accounted for 9.4% of total passenger revenue. Passenger traffic volume for these routes decreased by 5.0% to 528 million RPKs, as compared with 556 million RPKs during the first half of 1999.

The decrease in passenger traffic volume was mainly due to intensified competition from other airlines and road transportation alternatives and a reduction in regional charter flights operated by the Group. While the Group's passenger capacity increased 1.1%, the passenger load factor was down 3.8 percentage points as compared with the same period last year. However, yield per RPK experienced an increase of 11.0% as a result of upward fare adjustments during the period.

Passenger revenue for the Group's international routes amounted to RMB779 million, representing an increase of 30.9% from the same period last year. International passenger revenue accounted for 12.6% of total passenger revenue. Passenger traffic volume for these routes grew 21.4% to 1,775 million RPKs from 1,462 million RPKs in the same period last year, while the capacity, in terms of ASKs, increased 19.0%. As a result, the passenger load factor rose 1.1 percentage points. Performance of the Group's "Guangzhou - Los Angeles" route continued to improve during the review period.

Passenger load factor for this route in the first half of 2000 was 66.5%, up 2.9 percentage points from the same period last year. During the review period, the continued recovery of the Southeast Asian economies helped to stimulate demand for air transportation in the region, resulting in a rise in the Group's passenger revenue from routes serving such region. Passenger yield per RPK gained 7.3% as compared with the same period last year.

Cargo and mail revenue was RMB596 million, representing an increase of 26.5% from the same period last year, and accounted for 8.8% of total traffic revenue. Cargo and mail traffic volume, meanwhile, increased 27.5% to 357 million RTKs from 280 million RTKs of the same period last year, mainly driven by the growth in the existing passenger/cargo combined operation and the new International freight route "Shenzhen - Chicago". This route commenced operation in April 2000 using a Boeing 747-400 freighter.

As the growth of cargo and mail traffic volume was higher than that of capacity, the load factor for cargo and mail increased 0.5 percentage points to 42.0% for the review period. However, due to intensified competition in the International and Hong Kong regional market, the overall yield per cargo and mail tonne kilometre decreased 0.6% as compared with the same period last year.

Total operating expenses increased 13.2% to RMB6,263 million as compared with the same period last year, primarily due to the expansion in flight operations and the effect of increased fuel prices.

Flight operation expenses increased 19.1% to RMB2,625 million as compared with the first half of 1999. Of these expenses, fuel cost was RMB1,323 million, up 29.5% from the same period last year. The increase was mainly due to the increase in fuel prices and the increase in flight capacity. A substantial portion of the Group's fuel consumption is sourced domestically. The average domestic and International fuel prices borne by the Group increased by about 14% and 66%, respectively as compared with the same period last year.

For the review period, the additional fuel costs resulting from the increases in fuel prices amounted to approximately RMB199 million. Operating lease rentals increased 9.7% to RMB704 million as compared with the same period last year, due largely to the addition of the Boeing 747-400 freighter in the review period. Air catering expenses increased 9.8% to RMB220 million as compared with the same period last year, as a result of the higher number of passengers carried during the review period. 

Labor costs of flight personnel increased 12.2% to RMB257 million, reflecting largely the expansion in flight operation.

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