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Airfares cut
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Yang Yunfei
IT'S not only airline passengers who approve of the recent decision by the Civil Aviation Administration of China (CAAC) to free up airfares on seven routes. Ticket agents also like the move, calling it a sign that the CAAC's attitude has mellowed on the issue of allowing the market to play a decisive role.
“CAAC's announcement to allow airlines to offer ‘open discounts' to travellers will benefit China's aviation sector as a whole rather than do any harm to it," said Zhan Yanming, general manager of Laisida Aviation, one of Shenzhen's leading air ticketing agents, yesterday.
“This move signals that CAAC is beefing up its efforts to carry out more market-oriented reforms."
CAAC, the aviation sector's watchdog, caused quite a stir last week by allowing air fare discounting of up to 60 per cent on seven tourist routes.
The reform, as Zhan pointed out, paves the way for a broader easing of price curbs in the industry. But he dismissed the possibility that a complete liberalization of air fares will come soon, saying that such a market deregulation will come “step-by-step".
State media, citing sources from CAAC, reported that “an important change" was expected to take place by the end of March but failed to elaborate.
China's aviation sector has long been plagued with poor service, overcapacity, blind expansion, redundant staffing and low efficiency.
Many airlines operate at high costs, which, in turn, results in high air fares. As a result, travellers are unfairly victimized, Zhan said.
In proportion with averaged per capita income, China's air fares are relatively high in the world, according to Zhan.
Airlines usually had to slash fares in a bid to lure more travellers. A vicious price war contributed to a combined loss of 2.44 billion yuan (US$292.8 million) for the industry in 1998, prompting CAAC to impose a ban on fare discounts the following year.
Since then, CAAC has faced mounting accusations that its curb on discounts was pushing the industry back towards a planned economy.
“Air fares should be left to float in accordance with demand, instead of being fixed by CAAC," said Zhan.
He said that CAAC should set ceilings for air fares and allow airlines to charge their passengers according to the quality of their services and the market.
Chinese airlines are expected to face a boom-or-doom battle against their foreign counterparts some time after the country's imminent WTO entry, widely expected to come this year.
Zhang said that domestic carriers should improve management and services and trim operational costs to boost their competitiveness as they prepare themselves for the expected cut-throat competition from foreign airlines.
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