Low-cost airlines face cloudy conditions
Print Edition
China’s low-cost airlines will not find it easy to make any breakthrough in their development this year, burdened with high fuel costs and lack of state support on fuel and airport fees, a senior analyst said yesterday.
Domestic budget airlines are also facing fierce competition from the major state-owned airlines such as Air China, China Eastern Airlines and China Southern Airlines, said Eric Lin, director at UBS Investment Research Asia Transport.
“The Chinese low-cost airlines can hardly achieve low cost without policy support on fuel purchase and airport fees,” Lin said.
The budget carriers, especially Spring Airlines and Juneyao Airlines, have expanded aggressively in 2013 by buying dozens of narrow-body aircraft and opening new international routes to Japan, South Korea and southeast Asia.
Though the Civil Aviation Administration of China issued new policies on ticket prices late last year to encourage the low budget carriers, there is no follow-up measure to implement the policy, Lin said.
The CAAC removed the lower limit on ticket prices to encourage more domestic airlines to set up budget carriers. Previously, the ticket prices could not be cheaper than 45 percent of the average price on the same route.
“Now, domestic carriers can decide their ticket prices freely and cut prices for the benefit of passengers,” said Xia Xinghua, deputy director of the CAAC.
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