Air regulator relaxes controls on Chinese domestic airfares
Chinese airlines welcomed a move by the aviation regulator to relax airfare caps on many domestic routes, which is expected to boost airline profits.
The Civil Aviation Administration of China announced carriers can set their own fares on more than 300 domestic routes that have at least five carriers competing.
This includes the landmark Beijing-Shanghai route.
The airlines will be permitted to raise prices by a maximum of 10% for each travel season.
Shares in the big airlines surged late last week on the news.
"Every 1% rise in the domestic ticket price system-wide boosts the Chinese airline sector’s earnings by 7% based on our estimates," said Corrine Png, chief executive of transport research firm Crucial Perspective in Singapore.
China Southern Airlines is expected to be the biggest beneficiary with the most extensive domestic network.
Its shares were momentarily up by 11% at one point.
It is the latest move by the regulator to gradually liberalise the aviation market after scrapping airfare caps in 2016 on domestic routes shorter than 800 km.
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Editor for TravelMole North America and Asia pacific regions. Ray is a highly experienced (15+ years) skilled journalist and editor predominantly in travel, hospitality and lifestyle working with a huge number of major market-leading brands. He has also cover in-depth news, interviews and features in general business, finance, tech and geopolitical issues for a select few major news outlets and publishers.
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