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Govt will ease controls on air ticket prices

China Daily, January 11, 2016 Adjust font size:

The Civil Aviation Administration of China has pledged to gradually loosen control over air carriers' ticket prices and administrative charges.

The administration recently published a set of guidelines that aim to deepen the reform of China's civil aviation industry. The guidelines vow to let the market, rather than the government, play a decisive role in the sector.

Enterprises in the industry will have more freedom to determine charges for their services or products, and consumers will enjoy more options when they use air transportation, the administration said.

According to the guidelines, the civil aviation and price monitoring authorities will review the situation this year for competition in the domestic air transportation market. Beginning next year, airlines will be allowed to determine the ticket prices for routes that the government defines as having competition among carriers.

Starting in 2020, they will be allowed to decide the prices for all routes.

Currently, carriers can only determine the lowest price for their domestic flights. The highest price for such flights and prices for international services are controlled by the government.

The administration also said that beginning in 2020, it will stop setting prices for the use of airport facilities, air traffic management services and aircraft inspections. Currently, airlines pay these fees according to prices set by the administration.

The move is the latest step taken by the CAAC as part of its efforts to "marketize" the civil aviation sector.

On Dec 28, Feng Zhenglin, vice-minister of transportation, was appointed Party chief of the administration.

In late December, the administration announced it would run trial programs to allocate spaces at Guangzhou Baiyun and Shanghai Pudong international airports.

The programs use either a lottery or an auction mechanism to replace a system based on administrative allocation that was prone to corruption.

On Dec 30, seven carriers won the rights to nine airport slots at Guangzhou Baiyun for three years in the nation's first airport slot auction.

Zou Jianjun, an aviation economics researcher at the Civil Aviation Management Institute of China, said price control and large carriers' dominance in the domestic flight market have become major obstacles to the development of China's air transportation industry.

He suggested that the CAAC should gradually reduce its control over ticket prices and various operational fees for domestic airlines, saying that fair competition among carriers and ground support suppliers will prompt them to improve management and services, which eventually will benefit consumers and the entire sector.