CONTINUING CONNECTED TRANSACT

Air China Ld
21 March 2006

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents
of this announcement, makes no representation as to its accuracy or completeness
and expressly disclaims any liability whatsoever for any loss howsoever arising
from or in reliance upon the whole or any part of the contents of this
announcement.

AIR CHINA LIMITED

(a joint stock limited company incorporated in the People's Republic of China
with limited liability)

(Stock Code: 753)

CONTINUING CONNECTED TRANSACTIONS

Further to the announcement of the Company dated 18 November 2005 and with
reference to the CNAC Announcement dated 20 March 2006, the Company would like
to announce further details on the Airport Fees Transactions, which are
connected transactions entered into between Air Macau and associates of STDM.

Air Macau is a 51% indirectly-owned subsidiary of CNAC. CNAC is an approximately
68.4% directly-owned subsidiary of the Company, whose shares are listed on the
Stock Exchange. Therefore, the Airport Fees Transactions also constitute
continuing connected transactions for the Company under Chapter 14A of the
Listing Rules.

As the applicable percentage ratios for each of the Airport Fees Transactions
under the Listing Rules is less than 2.5%, each of the Airport Fees Transactions
is only subject to the reporting, announcement and annual review requirements
under Rules 14A.45 to 14A.47 and Rules 14A.37 to 14A.40 and is exempt from the
independent shareholders' approval requirement of Chapter 14A of the Listing
Rules.

Further to the announcement of the Company dated 18 November 2005 and with
reference to the CNAC Announcement, the Company would like to set out below
further details regarding the transactions between Air Macau and the associates
of STDM that constitute continuing connected transactions of the Company for the
purpose of the Listing Rules:

(A) AIRPORT FEES TRANSACTION

1.  Airport Charges

In Air Macau's normal and ordinary course of business, it incurs a number of
airport charges on a daily basis for the use of facilities and services at the
Macau International Airport. These airport charges, which are approved and
published by the Macau Government, include, inter alia, landing charge, loading
charge, parking charge, airport charge, loading bridge charge, and other
ancillary fees.

On 17 March 2006, Air Macau and ADA, being the authorized agent responsible for
the global management and provision of operational services to MIAC, including
the collection of Airport Charges, entered into a legally binding
acknowledgement pursuant to which it was acknowledged by Air Macau and ADA that:

(a) MIAC provides certain facilities and services to Air Macau at a price by
reference to the rates published by the Macau Government, namely, Portaria n.o
282/96/M of 11 November as revised by Portaria n.o 152/98/M, of 15 June, and,
Ordem Executiva n.o 36/2004, as amended, supplemented or otherwise modified from
time to time (the 'Macau Gazette'); and

(b) payment of all amounts of the Airport Charges are due from Air Macau to ADA
in accordance to the provisions set out in the Macau Gazette.

The Airport Charges relates to payment of fees to ADA/MIAC in Air Macau's
ordinary course of business in compliance with the laws and regulations of
Macau. Currently there is no regulatory mechanism which allows Air Macau to bind
the Macau Government or ADA or MIAC to fix a duration for such transactions via
commercial negotiation with the Macau Government or ADA or MIAC.

On or before a date expiring three years from the date of this announcement the
Company will, if required under the Listing Rules, re-determine the annual cap
for the Airport Charges for the forthcoming three financial years, publish an
announcement and/or seek independent shareholders' approval of the Company in
respect of the Airport Charges or otherwise comply with the then requirements
under the Listing Rules.

2.  Airport Fees

In respect of Air Macau's operation at the Macau International Airport, Air
Macau entered into the Airport License on 9 September 2004 and 1 the Proposed
Airport License with MIAC with a term of one year (which will be automatically
renewed for another year unless it is terminated by either party by way of 90
days prior written notice) and one year respectively. The current term of the
Airport License will expire on 7 September 2006 and the term of the Proposed
Airport License will expire on 28 February 2007.

Pursuant to the Airport License and the Proposed Airport License, MIAC licensed
certain floor space (including ticketing and check-in counters, operation/
traffic service offices, and lounges) at the Macau International Airport to Air
Macau. The current monthly license fee payable by Air Macau amounts to
approximately MOP 600,000 (equivalent to approximately HK$583,000) per month
(amounting to approximately MOP 7.2 million (equivalent to approximately HK$7
million) per annum).

The amounts payable as Airport Fees are calculated by reference to rates
published by the Macau Government in the government gazette.

The Airport Charges and Airport Fees for each of the four years ended 31
December, 2002, 2003, 2004 and 2005 were HK$81,045,000, HK$51,927,000,
HK$69,337,000 and HK$86,343,000 (unaudited figure) respectively. Such
transaction amounts were within the relevant cap amount granted to CNAC for the
relevant financial year.

Both the Airport Charges and the Airport Fees are invoiced and collected by ADA,
a 51% owned subsidiary of CNACAL which in turn is wholly-owned subsidiary of
CNACG, on behalf of MIAC, the developer and owner of Macau International
Airport. Since CNAC and CNACAL are both subsidiaries of CNAH, ADA is a connected
person of CNAC. Furthermore, STDM, which has a 14% shareholding interest in Air
Macau, has an approximately 33% shareholding in MIAC and hence, MIAC is also a
connected person of CNAC. As a result, the payment of the Airport Charges and
the Airport Fees will constitute connected transactions for CNAC under the
Listing Rules. As CNAC is a non-wholly owned subsidiary of the Company, the
payment of the Airport Charges and the Airport Fees will also constitute
connected transactions for the Company under Chapter 14A of the Listing Rules.
Since ADA does not receive any benefit or additional fee from the Group in
respect to the collection of the Airport Charges and Airport Fees on behalf of
MIAC, ADA, CNACAL, CNACG, CNAH and their respective associates are not deemed to
have a material interest in the Airport Fees Transaction.

The Board has considered and proposed that the cap for the annual volume of the
Airport Charges and the Airport Fees for each of the three years ending 31
December, 2006, 2007 and 2008 shall be HK$130 million, HK$160 million and HK$200
million, respectively. Reference is also made to the corresponding cap proposed
by the board of CNAC in the CNAC Announcement. As the aggregate annual Airport
Charges and Airport Fees payable by Air Macau represents less than 2.5% of the
applicable percentage ratios of the Company, the payment of the Airport Charges
and the Airport Fees is, according to Rule 14.34(1), only subject to the
reporting, announcement and annual review requirements set out in Listing Rules
14A45 to 14.47 and Rules 14A.37 to 14A.40 and are exempt from the independent
shareholders' approval requirement of Chapter 14A of the Listing Rules.

The cap proposed for the Airport Fees Transaction is determined with reference
to (a) the rates published by the Macau Government in the government gazette;
(b) the previous transactions and figures which are published in CNAC's annual
reports in 2002 to 2005; and (c) the growth in passenger uplift as projected by
the management of Air Macau. Neither ADA nor MIAC has the ability to vary such
rates without the prior approval of the Macau Government.

(B) REASONS FOR ENTERING INTO THE CONTINUING CONNECTED TRANSACTIONS

The Airport Fees Transaction relates to payment of fees to ADA/MAIC in Macau is
in CNAC and its subsidiaries' ordinary course of business in compliance with the
laws and regulations of Macau. As Air Macau is an airliner based in Macau and
Macau International Airport is the only airport in Macau, it is in the ordinary
course of business of Air Macau the use the facilities and services and license
certain floor space at the Macau International Airport. Air Macau entered into
the Airport Fees Transaction for the purpose of operating its business.

The Board, including the independent non-executive directors of the Company,
consider that the Airport Fees Transactions and the Airport Fees Transaction
Annual Cap are fair and reasonable and in the interests of the Company and its
shareholders taken as a whole, and have been negotiated on an arm's length basis
in the usual and ordinary course of business on normal commercial terms and on
terms no more favourable than would have been with independent third parties.

(C) BUSINESS OF THE GROUP

The Group is principally engaged in the provision of air passenger, air cargo
and airline-related services.

(D) INFORMATION ON CONNECTED PERSONS

MIAC is the owner of the Macau International Airport.

CNAC is an investing holding company with investments principally engaged in the
provision of air transportation services through Dragonair and Air Macau,
airline catering services, airport ground handling services and logistics
services.

CNACG is an investment holding company with investments principally engaged in
travel services, air cargo terminals and other aviation related businesses.

CNAH is principally engaged in the business of investment holding in
airline-related businesses, provision of financial services, hotel operations,
construction, media and advertising.

DEFINITIONS

'ADA'   Administration of Airports Limited, a 51% owned subsidiary of CNAC
(Macau) Aviation Limited (a wholly-owned subsidiary of CNACG)

'Air Macau' Air Macau Company Limited, a company incorporated in Macau with
limited liability and a 51% indirectly-owned subsidiary of the Company

'Airport Charges'   the airport charges determined by the Macau Government for
use of certain facilities and services at the Macau International Airport which
includes, inter alia, landing charge, loading charge, parking charge, passenger
charge, passenger tax, airport charge, loading bridge charge and other ancillary
fee

'Airport License'   the airport license entered into between Air Macau and MIAC
on 8 September 2004 in respect to the license of certain floor space by Air
Macau at the Macau International Airport

'Airport Fees'  the airport fees paid by Air Macau to MIAC pursuant to the
Airport Licenses

'Airport Fees Transaction'  the continuing connected transactions between Air
Macau and MIAC in relation to the Airport Charges and Airport Fees as described
in the section headed '(A) Airport Fees Transaction' in this announcement

'Airport Fees Transaction   the proposed new annual cap of

Annual Cap'   transaction amount for the Airport Fees Transactions for the
period from 1 January 2005 to 31 December 2008 as described in the section
headed '(A) Airport Fees Transaction' in this announcement.

'associate(s)'  has the meaning ascribed thereto in the Listing Rules

'Board' the board of directors of the Company

'CNACAL'    CNAC (Macau) Aviation Limited, a wholly-owned subsidiary of CNACG

'CNAC'  China National Aviation Company Limited, a company incorporated under
the laws of Hong Kong with limited liability, whose shares are listed on the
Stock Exchange and which is an approximately 68.4% directly-owned subsidiary of
the Company

'CNAC Announcement' the announcement of CNAC dated 20 March 2006 relating to,
inter alia, the Airport Fees Transaction entered into between Air Macau and
relevant associates of STDM

'CNACG' China National Aviation Corporation (Group) Limited, company
incorporated in Hong Kong with limited liability and is wholly owned by CNAH and
a substantial shareholder of the Company

'CNAH'  China National Aviation Holding Company, a state-owned enterprise 
incorporated under the laws of the PRC and the ultimate controlling shareholder 
of the Company

'Company'   Air China Limited, a joint stock limited company incorporated under
the laws of the PRC with limited liability, whose H shares are listed on the
Stock Exchange and the London Stock Exchange, plc

'Dragonair' Hong Kong Dragon Airlines Limited, an airline operator incorporated
in Hong Kong with limited liability and a 43.29% owned associated company of the
Company

'Group' the Company and its subsidiaries

'Hong Kong' the Hong Kong Special Administrative Region of the PRC

'HK$'   Hong Kong dollars, the lawful currency of Hong Kong

'Listing Rules' The Rules Governing the Listing of Securities on the Stock
Exchange

'Macau' The Macau Special Administrative Region of the PRC

'Macau Government'  The Government of Macau

'MIAC'  Macau International Airport Company

'MOP'   Macau Patacas, the lawful currency of Macau

'PRC'   The People's Republic of China

'Proposed Airport License'  the finalized airport license to be entered into
between Air Macau and MIAC in respect to the license of certain floor space by
Air Macau at the Macau International Airport

'STDM'  Sociedade de Turismo e Diversoes de Macau, a company incorporated in
Macau

'Stock Exchange'    The Stock Exchange of Hong Kong Limited

In this announcement, except as otherwise indicated, MOP has been translated
into HK$ at the rate of HK$1.00 = MOP1.03 for reference purpose only.

By Order of the Board
Air China Limited
Zheng Baoan    Li Man Kit
Joint Company Secretaries

Beijing, 20 March 2006

As at the date of this announcement, the directors of the Company are Messrs Li
Jiaxiang, Kong Dong, Wang Shixiang, Yao Weiting,

Ma Xulun, Cai Jianjiang, Fan Cheng, Hu Hung Lick, Henry*,

Wu Zhipan* and Zhang Ke*.

*  Independent non-executive director of the Company




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