Draft Version of Reform on Domestic Air Tickets Unveiled

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Last updated at: (Beijing Time) Thursday, April 17, 2003

Draft Version of Reform on Domestic Air Tickets Unveiled

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A new regulation on China's aviation ticket price is set for public release in June, giving domestic airlines more freedom to sell cut-price seats.

The State Development and Reform Commission Wednesday unveiled the long-awaited draft version of the reform on air tickets ahead of a public hearing on April 24.

The draft will be formally released as new industry regulation if the majority of representatives to the public hearing do not challenge the content.

Documents with the commission suggested the new policy would permit a 25 per cent higher or 40 per cent lower fluctuation based on the official ticket price. Such fluctuations have officially been banned by China's aviation administrator since 1998.

The price for each person per kilometre remains at 0.75 yuan (US$0.09) -- the same as under the old regulation adopted in 1997.

On special air routes where only one airline operates, the discount level can be even lower but the maximum price must not be breached.

Domestic airlines enjoyed great freedom in fixing ticket discounts before 1997, when the 'cut-throat' discounting plunged the whole industry into heavy losses.

The General Administration of Civil Aviation of China (CAAC) -- the industry watchdog -- imposed strict bans on discounted ticket sales in 1998, and it has not loosened a discount level of more than 20 percent.

The commission described the CAAC ban on discounts as a policy which could not meet the demands of the fast-developing market economy in China.

It said authorizing more freedom in permitting ticket discounts by airlines would push healthy competition among domestic air carriers. Better efficiency and lower operational costs would consequently result in the long term.

CAAC officials reached by China Daily refused to comment on the draft regulation, though some said it was good news for domestic airlines.

"We helped the commission draft the plan, and we hope it can help domestic airlines find their way in market competition,'' said an official, who declined to be named.

He said the draft regulation would amend the misguided policy of the CAAC of the past few years.

Domestic airlines were reluctant to comment on the regulation. Most said they would carefully study the content of the regulation when it is formally published.

Customers contacted by China Daily also showed indifference towards the new policy -- some even thought it was in place last year.

"I came to Xiamen late last year on a 40 per cent discount ticket, so what's the new policy about?'' said Li Zhengkun, an employee of a high-tech company in Beijing.

He said all his colleagues were able to get discounted air tickets easily this year even though the discount ban is still in effect. (China Daily News)

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