China's private airlines to take off in 2005
(Agencies)
Updated: 2005-01-24 09:00

China's fledgling private airline industry could take off in the first half of 2005, using busy holiday travel seasons to launch their services, state media said.

Planes of flag carrier Air China at Beijing airport. China's fledgling private airline industry could take off in the first half of this year, using busy holiday travel seasons to launch their services, state media said. [AFP]

The first group of private airlines could begin operations in the next few months, for example during the week-long May Day public holiday, the China Business Weekly reported, citing unnamed industry observers.

New rules by civil aviation authorities that took effect last week have set the bar low for entrants into the industry, allowing anyone with three planes to run an airline.

The rules, as reported earlier by the China News Service, also permit foreigners to have up to 25 percent ownership in the companies.

At least three private-sector airline operators have received approval from civil aviation authorities and plan to offer low-cost, no-frills services, the China Business Weekly said.

They include United Eagle Airlines in the southwestern city of Chengdu, Air Spring in the eastern city of Shanghai, and Okay Airways, based in the Beijing area, according to the paper.

The paper quoted Hu Wenbin, a United Eagle spokesman, as saying the company's first three planes, all leased, could be in place before the end of the month.

Also suggesting an early start for the company, it placed an order of 350,000 tonnes of aviation fuel with China Aviation Oil last month, according to the paper.

United Eagle is likely to focus on offering cheap flights for China's western frontier region, it said.

The main business for Shanghai-based Air Spring will be chartered flights and regional services within China, according to the report.

Okay Airways will operate out of Binhai International Airport about 200 kilometers (125 miles) from the Chinese capital, and will probably seek to carve out a niche for itself in the cargo business, the paper reported.

The paper cited unconfirmed reports that a fourth company, Huaxia Airlines headquartered in southwestern Chongqing municipality, had also obtained approval to operate.

No-frill carriers are spreading rapidly across Asia, with names such as Singapore's Tiger Airways, Malaysia's AirAsia and Thailand's Nok Air offering their services.

Concerns have emerged in China that the industry will be crowded with large numbers of more or less qualified would-be entrants, the China Business Weekly said.

The opening offered by the new rules could mean that eventually "every man and woman with deep pockets or financial backing from abroad" will want to set up an airline, it said.

The liberalization of a sector that a generation ago was still considered quasi-military is part of China's struggle to meet demand for airline services, which is growing faster than the economy as a whole.

According to preliminary statistics from the civil aviation authorities, passenger volume topped 100 million last year, a rise of 38 percent from 2003.

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