CAAC seeks competitive market

Source:Global Times Published: 2017/8/24 17:53:40

Reform draft by regulator suggests more players in long-haul routes


An Air China plane arrives at Los Angeles. Photo: IC



Popular international routes in and out of China could soon be inviting more players, making the industry more competitive, as the Chinese aviation regulator plans to make some reforms.

As part of the reforms, international routes will impose classifications, said the Civil Aviation Administration of China (CAAC) on Tuesday in a draft seeking public opinion.

The draft said international routes may be divided into two types.

Routes that hold fully or partly open traffic rights between China and other countries and regions could be classified as the first type. The rest will be classified into the second type.

The first-type classification will have no limitations on numbers of carriers, operational routes, flights and transport capacity.

But as for the second type, there are no limitations on the numbers of carriers when it comes to medium and short-haul routes, but more than one carrier is expected for long-haul routes.

Long-haul routes are usually considered as those longer than 4,500 kilometers.

Previously, the Chinese aviation industry stuck to the principle "each long-haul route is reserved for one airline only".

For instance, the route between Beijing and Los Angeles is exclusively designated to Air China; no other airline conducts this specific, direct route.

Insiders attributed this practice to the fact that the regulator had previously sought to encourage domestic airlines to participate in international competition.

However, with China's overall aviation industry strengthening over time, the former policy has restricted competition instead, preventing domestic airlines from expanding within the international market, to some extent.

Data from the International Air Transport Association showed that of all US long-range international routes, 316 of these routes were operated by one US carrier in 2016, taking up 87 percent, while the remaining 13 percent were contracted to multiple US carriers.

In comparison, the one-carrier-per-route proportion reached 95 percent in China's long-range international route sector last year, representing 159 routes. Only 8 routes were operated by multiple carriers.

Also, 40 percent of the top 10 most popular long-haul routes in China are conducted by multiple carriers, while 70 percent of the top 10 most popular routes in the US are conducted by multiple carriers. These figures show that the US applies a more competitive mechanism in the operation of long-haul routes than China does.

Although the CAAC's draft still needs to await more public opinions before any decisions would be made, opening the long-haul flights to more carriers is indeed a trend, an insider who attended the draft making session said.

The draft also announced that there would be a specific way to reserve a specific route for one of two carriers that bid for it.

Selecting the winning airline will be based on four indicators: consumer benefits, hub development, efficiency of resource use and the quality of the carrier's operation.

To accommodate the rapid development of domestic civil aviation in the international market and to keep up with demand, it is smart and timely for the authorities to adjust the management methods of international traffic rights, meanwhile, it will enable Chinese airlines' international vision to become a reality, experts noted.

This story is based on an article published by caixin.com

Posted in: INDUSTRIES,INSIGHT

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