Two new competitors have entered the fast-growing Chinese market with the launch of services by two privately owned airlines that are promising to deliver significantly lower fares.

The new airlines, Spring Airlines and United Eagle Airlines, are the second and third new carriers to start flying domestically in China this year, after the Chinese government eased rules to allow for the establishment of privately owned operators.

Earlier this year Okay Airlines launched services from Tianjin, near Beijing, becoming the first of the new players to challenge incumbent airlines. All of the new carriers say they model themselves on low-cost airlines in other parts of the world and are beginning with narrowbody aircraft.

The new carriers promise lower fares than those available from the majors, but there are many who say the Chinese market is not yet ready for true low-cost players, given rules on minimum service levels required from airlines as well as government restrictions on pricing.

Spring Airlines has already encountered problems as it was forced to increase its headline-grabbing 199 yuan ($24) fares within days of its launch. State-run media said the airline bowed to pressure from other carriers and the Civil Aviation Administration of China, which claimed that Spring was bending rules that limited discounts.

Spring Airlines is owned by Spring International Travel Service and based in Shanghai. United Eagle is based in Chengdu and is reportedly majority owned by a Guangzhou-based information technology firm. Both operate leased Airbus A320s, while Okay operates Boeing 737-900s.

Source: Airline Business