China moves forward in pledge to promote LCCs growth

Singapore
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The Civil Aviation Administration of China (CAAC) is moving forward in its pledge to promote the development of low-cost carriers in the country.

In a statement on its website, the CAAC says LCCs have a less than 5% share of the market in China, far behind the world average of 26%. It adds that Spring Airlines is currently the only Chinese LCC with a successful business model.

The regulator is thus pledging to relax policies to encourage the development of more LCCs in the country. These measures include lowering the barriers to entry for the establishment of new budget carriers, and also lower restrictions to allow for more flexible operation of these carriers. It will also make aircraft purchasing easier to support the growth of "safe airlines".

The CAAC says it will also push for airport operators to set up dedicated budget terminals, and for these operators to meet the needs of LCCs. It could also cut charges at airports in third and fourth tier cities.

This latest statement follows the regulator’s comments last year signalling its intention to promote the development of Chinese LCCs in response to the growing number of such foreign LCCs flying into the country. This is a major policy shift for the highly regulated market which for years has protected and prioritised its three state-owned carriers.

Shanghai-based Spring Airlines is the dominant low-cost player in the country. Juneyao Airlines has however applied to set up an LCC in Guangzhou, while China Eastern Airlines and Hainan Airlines are working to convert their respective subsidiaries China United Airlines and West Air into low-cost operations.