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Prices to Hike 10% for Air Travelers

Airlines operating outbound flights from Shanghai plan to raise air ticket prices by around 10 percent on almost all flights starting April 20, according to industry insiders.

The price hike is a response to a new air-pricing regulation that will take effect on April 20 and allow air carriers nationwide to sell tickets at prices of up to 25 percent more than their face value.

For instance, the full-fare single-trip ticket between Shanghai and Beijing priced at 1,030 yuan (US$124) will rise to 1,130 yuan, according to a price list provided by Shanghai Guangfa Air Ticket Service Co Ltd, one of the major air ticket agents in Shanghai.

The new pricing rule allows carriers to raise ticket prices by up to 25 percent and cut by a maximum of 45 percent.

"Under the new regulation, these price changes are up to air carriers. They need not apply to us for these price rise as long as they obey the limit of 25 percent," said Li Jin'gao, an official working with the East China branch of Civil Aviation Administration of China, the industry watchdog.

Industry analysts say the price rise will be good news for carriers on the stock market and may help push up their earnings in the second quarter.

"Airlines can report better earnings for the whole year if they keep the price hike as a regular practice during peak seasons like the Labor Day holidays, National Day holidays as well as the Chinese Lunar New Year," said Zhu Anping, an analyst with Shenyin & Wanguo Research and Consulting Co Ltd.

However, passengers are quite unwilling to see such price adjustments which mean higher travel expenses in the upcoming Labor Day holidays.

"I plan to visit Lijiang in the southern Yunnan Province. Now it seems that I may have to spend about 300 to 400 yuan more on the plane tickets," said Jin Ting, a 24-year-old middle school teacher in Shanghai.

"For travelers like me, more expensive plane tickets means that I have to save more on other expenses like catering or hotel fees to help keep the total travel cost within my budget," she complained.

But industry insiders believe that higher air ticket prices won't keep passengers away as the upcoming Labor Day holidays period is a peak season for tourism.

"Airlines can still find enough passengers to fill their planes as those who have decided to have trips outside won't care about spending one or two hundred yuan more," said Zhao Hong, general manager with Shanghai Guangfa.

(eastday.com April 15, 2004)

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