China to support LCC growth

China to support LCC growth

CAAC plans new measures to help Chinese airline set up low-cost subsidiaries

CAAC plans new measures to help Chinese airline set up low-cost subsidiaries

China’s aviation authorities are planning a new range of measures designed to support the development of low-cost carriers in the country.

The Civil Aviation Administration of China’s (CAAC) deputy director, Xia Xinghua, said recently that the country plans to simplify the procedures for mainline Chinese carriers wanting to set up low-cost subsidiaries. Policies will also be designed to encourage private capital and other funding to boost the low-cost aviation sector.

Spring Airlines was the original Chinese low-cost carrier
Spring Airlines was the original Chinese low-cost carrier

Specific policies are expected to be announced by the CAAC by the end of this year, and these are expected to include measures relating to aircraft procurement, airport surcharges and new route launches.

These would add to the steps the country has already taken steps to encourage LCC development in recent months, including an agreement between the CAAC and National Development & Reform Commission (NDRC) to scrap the limitation on base fares, allowing airlines to structure their pricing based on market conditions.

Founded in 2004, Shanghai-based Spring Airlines was the first LCC to launch in China. But recent policy changes have seen many of the country’s mainline carriers announce plans to create their own budget airlines.

Hainan Airlines recently restructured its Chongqing-based subsidiary, West Air, to operate under a low-cost model, and Shanghai’s Juneyao Airlines is also planning to set up a new Guangzhou-based budget carrier, 9 RMB Airlines. China Eastern Airlines is also partnering Qantas to create Jetstar Hong Kong.

Xia added that the CAAC is considering constructing a budget terminal at Beijing’s new airport, which is expected to begin operating in 2018.

Mark Elliott
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Mark Elliott
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