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Last updated at: (Beijing Time) Thursday, February 07, 2002

News Analysis: Air Ticket Price Oriented by Market

For a long time, passengers traveling by air have been offered a variety of discounts which have aroused confusion even among experts in the airline industry.


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For a long time, passengers traveling by air have been offered a variety of discounts which have aroused confusion even among experts in the airline industry.

The price of a train ticket from Shenyang to Beijing is 200 yuan, while the lowest air fare costs only 160 yuan. The full price of an air ticket from Beijing to Guangzhou is 1470 yuan. Yet it can cost only 980 yuan which is cheaper than a train ticket.

Experts describe the price of air tickets as "up and down, like hitting a sudden air turbulence when flying, and really confusing".

"Reducing the price without consideration of the cost is not market-oriented, it's a reflection of the centrally planned economy," said Liu Jianfeng, director of the General Administration of Civil Aviation of China.

Experts point out that at present the airline companies in China are not market-oriented. After September 11, many international airline companies reduced flights, optimized air routes and laid off employees. At the same time many Chinese domestic companies wanted to expand while trying to offer competitive prices.

Experts note an airline company's main objective should be to make a profit. The price war shows many companies want to build up their companies instead of building up their profits. In the long term, these companies, with their crippling debts, will disappear from the market.

Economists say, a market economy brings competition, which is not the same as discounted prices. A mature company looks at areas other than discount pricing , such as reducing costs, improving services and enhancing efficiency.





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