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Airlines cleared for pricing take-off

MOST domestic airlines began a new fare system today but the system will offer passengers less discounts than were previously available.

China Travelsky Holding Company, which runs the ticketing system used by most of China's airlines, launched its new ticket pricing formula today. Under the new system, discounts will be reduced 1.25 times.

For example, previous discounts of 20 percent will become 16-percent discounts and 30-percent discounts will become 24-percent discounts. The new system will tell passengers the actual price rather than the discount.

A marketing official for China Eastern Airlines said the new system is a step closer to international ticket-pricing methods and airlines can still adjust prices in line with demand.

Analysts said airlines still need to consider passenger traffic, capacity, environment and costs when setting prices, so they will still offer lower-priced tickets when demand drops.

Travel agencies said although the travel packages for the May Day holiday will rise by at least 10 percent over last year for the same period, the market hasn't had much time to respond to the price adjustment.

"We think the public can accept the price," said Luo Guanshi, an official with Shanghai CYTS Tours. "And once the market goes down, airline fares may drop again."

Luo said because Spring Airlines will not adjust its prices, it will hold down the prices for other companies. Spring Airlines is not covered by the new pricing system.

Domestic carriers cut ticket prices in the first quarter of this year to boost waning demand dampened by the global financial crisis.

The sagging aviation market led to huge losses for the country's three air giants which reported a total loss of 28 billion yuan last year.


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