Shanghai-based Juneyao Airlines has applied to the Civil Aviation Administration of China (CAAC) to set up a low-cost airline in Guangzhou.
Local media reports quote Juneyao chairman Wang Junjin saying that the new carrier will start operations with domestic services out of Guangzhou, before launching routes to regional destinations. He added that the carrier will be named Jiuyuan Airlines which means "nine yuan" in Chinese.
It is unclear what aircraft type the new carrier plans to operate, or when it is likely to receive its air operator's certificate. Juneyao could not be contacted for further comments.
Juneyao operates a fleet of 33 A320s mostly within China, and also has regional services to cities in Taiwan, Korea and Thailand.
The Chinese regulator, which for years has prioritised the three state-owned carriers, has in recent months been working to encourage the development of low-cost carriers in the country's aviation industry.
The CAAC has apparently also abolished a rule requiring airlines to maintain a minimum domestic ticket price. Without this regulation, carriers can determine fares based on the supply and demand situation, and low-cost carriers can also offer the desired fare advantage over legacy carriers.
Spring Airlines is the only low-cost operator in China, despite the boom in such players across the Asia-Pacific over the years. The carrier started operations in July 2005 with one A320 and has grown to a fleet of 38 of the same type. It has, however, faced various challenges including being allocated unfavourable slots and having the government put the brakes on its fleet expansion plans.
Should the Chinese government continue to promote the development of low-cost carriers and make conditions more favourable for LCC operations, the country's state-owned operators could also launch budget arms, a course taken by other legacy carriers in the Asia-Pacific.
Data from FlightMaps Analytics shows that the three big carriers – China Southern Airlines, China Eastern Airlines and Air China – together with the carriers they have shareholdings in, account for 74.6% of the seat capacity on routes within China.