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Price war predicted as air routes opened up

(Shanghai Daily)
Updated: 2006-11-22 08:57

China's civil aviation authority has for the first time allowed some private airlines to fly between Beijing, Shanghai and Guangzhou in the winter-spring flight schedule, increasing competition on the busy routes.

Spring Airlines, Juneyao Airlines, Shenzhen Airlines, China United Airlines Co and Hainan Airlines are expected to enter the profitable market dominated by the nation's three biggest state-controlled carriers, according to a schedule submitted to the carriers.

"The new schedule is to encourage competition and is as part of the aviation reform to secure stable and sustainable growth," China's Civil Aviation of General Administration (CAAC) said in a statement.

China is gradually opening up its airports, allowing more airlines to operate in busy airports.

On the Shanghai-Beijing route, only China Eastern Airlines and Air China Ltd offered direct service between the two cities before June this year.

Guangzhou-based China Southern Airlines opened flights on the same route in August while Haikou-based Hainan Airlines opened its Shanghai-Beijing-Brussels services in June.

Previously, only carriers based in the airports were allowed to offer the service.

The first private carrier to benefit from the open policy, Spring Airlines, China's first low-cost carrier, said yesterday it would open daily direct services from Shanghai to Guangzhou on Tuesday.

Spring said prices of its ticket would be about 36 percent lower than other airlines on average if it's not the peak season.

Industry officials said flights between Shanghai, Beijing and Chengdu were very busy and the new participants would help trigger a new price war.

"The ticket prices could be up to 50 percent off on such flights in the low season and they could be lower with more new players," said a saleswoman surnamed Liu from a Shanghai ticket agency.

CAAC has also relaxed controls on smaller airports, encouraging airlines based in six of the nation's busiest airports of Shanghai, Beijing, Guangzhou, Dalian, Kunming and Chengdu to open services to smaller airports, without having to get approval from CAAC.

The central China city of Wuhan was selected to run a trial that allows international and domestic airlines to operate international flights starting from the city.

The flights will also stop over in the cities of Shanghai, Beijing and Guangzhou, according to the schedule.