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Air Routes Opened up: Price War Predicted
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China's civil aviation authority has for the first time allowed some private airlines to fly between Beijing, Shanghai and Guangzhou in the winter-spring flight schedule, leading to an increase in competition on the busy routes.


Spring Airlines, Juneyao Airlines, Shenzhen Airlines, China United Airlines Co and Hainan Airlines are expected to enter the profitable market dominated by the nation's three biggest state-controlled carriers, according to a schedule submitted to the carriers.


"The new schedule is to encourage competition and is as part of the aviation reform to secure stable and sustainable growth," China's Civil Aviation of General Administration (CAAC) said in a statement.


China is gradually opening up its airports and allowing more companies to operate from the country's busy airports.


On the Shanghai-Beijing route, only China Eastern Airlines and Air China Ltd offered direct service between the two cities before June this year.


Guangzhou-based China Southern Airlines opened flights on the same route in August while Haikou-based Hainan Airlines opened its Shanghai-Beijing-Brussels services in June. Previously only carriers based in the airports were allowed to offer the service.


The first private carrier to benefit from the open policy, Spring Airlines, China's first low-cost carrier, said yesterday it would open daily direct services from Shanghai to Guangzhou on Tuesday. Spring said their ticket prices would be around 36 percent lower on average than other airlines out of peak season.


Industry officials said flights between Shanghai, Beijing and Chengdu were very busy and the new participants would likely trigger a new price war. "The ticket prices could be 50 percent lower on such flights in the low season and they could be lower with more new players," said a saleswoman surnamed Liu from a Shanghai ticket agency.


CAAC has also relaxed controls on smaller airports, encouraging carriers based in six of the nation's busiest airports of Shanghai, Beijing, Guangzhou, Dalian, Kunming and Chengdu to open services to smaller airports without having to secure CAAC approval.


The central China city of Wuhan was selected to run a trial that allows international and domestic airlines to operate world flights beginning from the city. According to the schedule, these flights will also stop over in the cities of Shanghai, Beijing and Guangzhou.


(Shanghai Daily November 22, 2006)


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