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Airline Price War on the Loom in China
Anothr price-cutting war among China's major airlines to woo passengers is looming ahead, only days after the authorities said it would lift its two-year-old ban on ticket discounts, according to report by Chinadaily.
The new round of rivalry has something to do with the scorching weather. As most of China's well-off urbanities in Shanghai and Beijing sought haven to escape the heat, China's domestic airlines compete for passengers influxing towards China's southern Hainan Island, which is famous for its luscious beaches.
Cut-throat discount by China's four large airlines, China Southern Airlines, China Eastern Airlines, Xiamen Airlines and Hainan Airlines, makes air prices between Shanghai and Hainan to the present 500 yuan (US$60), from more than 800 yuan (US$96) one month ago.
Shanghai ``holiday-goers'' are the biggest beneficiaries of the price slashing contest, reported Shanghai-based Press Morning Post on Thursday.
The war begins with the China Eastern Airlines, which declared on July 20 to resume Shanghai-Hainan flights to the surprise of the other three competitors. They replied with more flights and sharply-lowered prices, the Post said.
An official from the China Eastern Airlines said the company has full confidence in winning the war, but he stopped short of saying what measures the company will take.
However, a source with the Civil Aviation Administration of China (CAAC), the air market watchdog, told chinadaily.com.cn reporter on July 27 that the white-hot rivalry among the four airlines by resorting to cutting tickets below travel cost in order to stand afloat, will do more harm than good to China's nascent air travel industry.
The allegation that some airlines collaborate with local travel agencies to shun their competitors is even more antagonistic, running against the country's ethical competition law, said the source.
CAAC and the State Development Planning Commission are researching the possibility of lifting a two-year-old ban on air ticket discount, as demanded by China's increasing air travelers.
In 1997, CAAC loosed its hold on ticket prices, but fierce competition among domestic airlines thereafter resulted in the two-year ban.
Price war is enveloping the whole country as the color television set, refrigerator, air conditioner, computer and car manufacturers are competing each other for a market share. The war will become throat-cutting when China joins the World Trade Organziation, which is widely expected at the end of this year.
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