Only one day after Air China introduced 350 yuan (US$42.4) Shenzhen-Beijing air tickets and incited a price war with China Southern Airlines (CSA), the airlines agreed to return tickets to normal price levels Thursday.

According to Zhan Guang, a spokesperson of the CSA Shenzhen subsidiary, his company lowered its Shenzhen-Beijing airfare to 350 yuan Wednesday immediately after Air China launched the tickets of the same price. “We were forced to do so,” he said.

Zhan said some of Air China’s top managers asked for talks with their CSA counterparts Thursday. The result was that the two parties reached an agreement to push the ticket price back up to its former level.

According to Zhan, CSA’s top management had asked Air China to keep the airfare market stable. But the offer was neglected. “Once the price war opened, they found it too hard to bear. So they came to talk to us,” he said.

Air China was listed simultaneously in London and Hong Kong on Wednesday. “A price war means suicide for Air China. Low airfares give the company a bad image on the stock market,” Zhan said.

Air China started selling 350-yuan Shenzhen-Beijing air tickets Wednesday afternoon. The move surprised many people, because it was cheaper than a train ticket between the two cities. Only one hour later, CSA followed suit.

The full airfare between Shenzhen and Beijing is 1,750 yuan. And the price of a train ticket with sleeping compartment between the two cities range from 422 yuan to 720 yuan.

The Shenzhen-Beijing route is a lucrative market and has seen fierce competition between different airlines. Not long ago, Hainan Airlines introduced tickets with a 70-percent discount. But it was the first time that 350 yuan, or tickets with an 80 percent discount had appeared.

(Shenzhen Daily December 17, 2004)