Domestic competition is set to intensify in China next year, with the country's aviation regulator unveiling a plan to open the commercial centre of Shanghai to all domestic airlines.
The announcement of the planned changes came as a surprise to local airlines and industry observers, as they represent a partial easing of restrictions put in place around two years ago that were intended to reduce cut-throat competition.
Civil Aviation Administration of China (CAAC) minister Yang Yuanyuan told an industry conference in Shanghai that from the spring of 2005, the city's Pudong and Hongqiao airports would be opened to all domestic airlines, enabling them to operate from the city to any other Chinese destination. Importantly this will include the capital Beijing and the southern city of Guangzhou, where a new airport is due to open this year.
Yang says the planned opening of the eastern city of Shanghai is meant as a test policy intended to "push the city forward as fast as possible towards being an air hub". If successful, Beijing and Guangzhou are also likely to be opened to all domestic airlines, although for now the move in Shanghai will put the most pressure on locally based China Eastern Airlines and smaller Shanghai Airlines.
Just over two years ago the CAAC announced a major overhaul of the country's domestic air route network that was aimed at boosting services between secondary cities and eliminating what it called "disorderly" competition. Those changes barred airlines not based at the main hubs of Beijing, Guangzhou and Shanghai from operating between those cities.
In addition, the CAAC said at the time, flights to the three cities from points that are not provincial capitals or key tourism destinations would be "restricted and cancelled". The CAAC, which has been promoting development of a US-style "hub and spoke" route network for several years, said the changes were designed to "establish a clear and rational aviation network across the country".
But many domestic airlines complained about the policy, saying that since the government is progressively liberalising its international air services regime and allowing more foreign airlines to fly to the country, domestic liberalisation measures should also be put in place.
The CAAC has, for example, declared the southern island province of Hainan an "open-skies" zone, giving all foreign airlines unlimited rights to operate passenger or cargo flights to and through the province's airports at Haikou and Sanya. Several foreign airlines have also been given rights to operate cargo services beyond major Chinese cities to destinations in other countries.
In addition to its moves on passenger flights, the government has indicated that an open-skies policy for international cargo services may be put in place for Shanghai.
NICHOLAS IONIDES SINGAPORE
Source: Airline Business
