Foreign Airlines reported to have “Favored Nation Status” subsidies over 600 million RMB
"Chinese Airlines are facing increasingly fierce competition in international routes yet many foreign airlines enjoy ‘Favored Nation Status’ in China".
Right now Chinese and international airlines are paying close attention to China’s outbound travel market. Until now 111 foreign airlines have been operating flights to 46 cities in China from 55 countries and regions, while there are only 19 Chinese airlines operating international routes. At the announcement of Spring Airline’s opening of a direct Shanghai-Sapporo route, spokesperson Wuan Zhang indicated that Chinese Airlines are facing increasingly fierce competition in international routes.
According to him, “compared to last year’s National Day holiday the load factor and average fare for domestic flights remained the same this year, but international flight bookings have increased and fares have risen 10%.This year China’s outbound travel will likely reach 100 million trips and in 5 years it will likely surpass 500 million trips ”. He says that from a development point of view, outbound travel is the best market for Spring Airlines and they plan to open more international routes to Japan and Korea. “While September is the off-season for domestic flights and we incur losses during this time, international flights continue to be profitable”.
In the area of passenger transport, foreign airlines hold an advantageous position with 54.1% of the Chinese market while domestic airlines hold 45.9%. “Many foreign airlines enjoy ‘Favored Nation Status’ in China, such as receiving subsidies from second and third tier city governments”, says Wuan Zhang.
There have been previous controversies regarding foreign airlines receiving subsidies from local governments. In 2012 18 provinces gave subsidizes exceeding 600 million RMB to 63 foreign airlines operating 107 international air routes. (Translated by David)