Business / Industries

Full-price govt airline tickets grounded

By Xu Wei (China Daily) Updated: 2014-04-24 06:59

The three major airlines in China - Air China, China Eastern Airlines and China Southern Airlines - all reported major declines in net profits in their annual reports for 2013.

Air China, the flag carrier of China, saw a 32.41 percent year-on-year reduction in its net profit in 2013. It is the third consecutive year that the carrier has reported reduced profits. The decline was attributed to China's slowed economic growth, the global economic recession and a weak cargo market.

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China Eastern Airlines reported a 25.12 percent reduction in net profits in 2013, while China Southern Airlines saw a reduction of 27.89 percent, according to their annual reports.

The volume of air travel made by government personnel on official business could exceed 3 billion yuan ($481 million) each year, Beijing News reported, citing figures from the Civil Aviation Administration of China.

Zhang Wu'an, spokesman for the budget airline Spring Airlines, said the new regulation is good news for them.

"Our ticket price is a cutting-edge advantage for us to average passengers. We can certainly help the government to save more travel costs," he said.

Li Xiaojin, a professor at Civil Aviation University of China in Tianjin, said business travel by air, including government travel, is still estimated to take up more than half of all air travel. "That is why the effect cannot be overlooked," he said.

Li said the major airlines have already faced a major slump in profits in the first quarter of this year due to the appreciation of the yuan.

"That is because the installments of aircraft are paid in dollars or euros and the airlines collect most ticket fares in yuan," he said.

However, Li, the analyst, said that in the long term the market will have the final say on the price of air tickets and the airlines people choose.

"Despite the items on transfer in the new regulation, it is impossible for all the domestic airlines to cover all the major cities in the world," he said.

"For some high level government officials, it is hard to imagine they would stand the trouble of making two or three transfers during a business trip," he said.

Zhao Lei contributed to the story.