Chinese regulatory authorities have given tentative approval for the establishment of new privately owned carriers, in another sign the government intends to open up the booming domestic market to more competition.
The Civil Aviation Administration of China (CAAC) said in June that it had given the go-ahead to two new airlines, which will be based at the commercial centre of Shanghai and the port city of Tianjin, near Beijing.
China's airline industry remains under the control of the central government or provincial or local authorities. But early this year the CAAC gave the first in-principle approval for a privately owned airline to be formed. That would-be carrier, Eagle United Airlines, plans to have its base at Chengdu, the capital of the south-western province of Sichuan. Its backer is E & Net Communications, an IT company based at the southern city of Guangzhou.
One of the two additional prospective carriers is known as Spring and Autumn Airlines, while the other is called Aokai Airlines. Both reportedly aim to be operational in around two years. Shanghai-based Spring and Autumn Airlines is to be established by Shanghai Spring International Travel Service and Shanghai Spring Charter Flight Travel Service.
If it launches as planned it will be the first Chinese airline to be owned by a travel service provider. The carrier aims mainly to provide domestic passenger services. It says it will target the price-conscious holiday market with package deals.
Aokai Airlines is to be set up by Xinjiang Zhongjing Qili Investment, Aokai Investment Development and Beijing Qili Logistics, says the CAAC. Aokai reportedly plans to focus primarily on domestic cargo operations.
Although many more approvals are needed before the new carriers become operational, the fact that in-principle approvals have been granted is seen as a major step forward for the country, which is progressively moving away from its traditional protectionism.
Until recently the CAAC was calling for mergers in the local air transport market and oversaw the consolidation of 10 state-controlled airlines into three dominant groups, headed by Air China, China Eastern and China Southern Airlines.
The exercise was aimed at reducing cut-throat competition which was blamed for widespread losses. Air China merged with China National Aviation and China Southwest Airlines; China Southern's parent acquired China Northern Airlines and China Xinjiang Airlines; while China Eastern's parent acquired China Northwest Airlines and Yunnan Airlines. China Eastern had already acquired Great Wall Airlines.
Observers say that the CAAC now appears to be indicating that it sees more stability in the domestic market and that it should step back from regulating competition and instead regulate primarily for safety.
NICHOLAS IONIDES SINGAPORE
Source: Airline Business
