China, Asia's biggest air-travel market, will stop approving plane orders and the establishment of new carriers to avoid overcapacity during an economic slowdown.

Airlines will be able to buy planes that have already been approved, Liu Shaocheng, head of policy and research division of the Civil Aviation Administration of China, said at a conference in Guangzhou yesterday. Some orders will also be signed next month, he added, without saying when the ban would come into effect.

Slowing capacity growth may help the nation's airlines cope with the global recession, which is expected to damp China's air travel for as many as three years, according to the regulator. The government may also lower fuel prices and cut taxes after granting a 3-billion-yuan (US$439 million) bailout to the parent of China Southern Airlines Co, the nation's biggest carrier.

The regulator has applied to cut domestic jet fuel prices to close a 2,000-yuan gap over global costs, Liu said. The proposal is awaiting the nod from the National Development and Reform Commission. China controls fuel prices for domestic routes only.

The government is working on cutting taxes for airlines and on lowering tariffs imposed on imported plane parts, Liu said. Taxes account for 8.3 percent of Chinese airlines' operating costs, compared with an average 2 percent worldwide, he added.

Fewer orders in China may damp sales for Boeing Co and Airbus SAS, which are counting on emerging markets to offset waning demand in the United States and Europe, Bloomberg News said. Airbus, the world's largest commercial plane maker, expects to conclude deals with China for 150 to 200 planes before the Chinese New Year in January, Chief Commercial Officer John Leahy said on November 4.

China's economy, the biggest contributor to global growth, will rise at the slowest pace in almost two decades next year, the World Bank forecast earlier this week.

(Shanghai Daily November 28, 2008)