The Civil Aviation Administration of China (CAAC) has cut an annual infrastructure levy on domestic airlines, in a move to help the carriers back into profit.
Until now, airlines have had to pay 8% of their domestic turnover into the CAAC's Domestic Infrastructure Construction Fund, which finances airport improvements. According to Shanghai-based China Eastern Airlines, the levy is now being cut to 5% of turnover from domestic routes. The levy on international turnover will remain at 2%, it says.
The cut is the latest step in China's drive to bring its troubled airline industry back into the black. The charge was introduced at a time when the airlines were comfortably profitable as a result of years of high growth. But now it has become a major burden on the carriers, most of which are suffering losses as a result of an escalating fare war and falling traffic.
It is understood that Chinese airlines paid about 1.8 billion yuan ($216.9 million) into the fund last year, when airline losses reached unprecedented levels.
In January, CAAC director Liu Jianfeng warned airline chiefs they would be fired if they did not reverse the industry's profit dive.
Source: Flight International
