Winter-spring flight schedule hits the skies
The Civil Aviation Administration of China (CAAC) officially adopted the winter-spring flight schedule for China’s civil aviation industry on Oct 25. The new schedule has triggered carriers to add more flight routes while greatly slashing ticket prices to compete for passengers, the Economic Information Daily reported yesterday.
An anonymous industry insider said since winter is the off season for the aviation industry the price cuts are inevitable, but the slump in ticket prices will not affect the recovery of China’s aviation industry, according to the newspaper. Competition has intensified among carriers and the expansion of high-speed railways has grabbed more business from the aviation market, the insider added.
Price war
Private carriers began to offer specially-priced tickets for the upcoming winter season, which triggered a price war between the civil aviation industry and high-speed railways sector.
The Shanghai-based private carrier Spring Airlines began offering about 300,000 tickets at 99 yuan ($14.50) covering approximately 30 different routes connecting Shanghai and other cities like Shenyang, Lanzhou and Nanning. In most cases, the cost of a flight ticket will be no more than that of a high-speed railway ticket, even including the airport construction fees.
Many other carriers also offer cheap tickets, and popular booking websites like ctrip.com and et-china.com are reportedly offering flight tickets with 70 to 80 percent off.
But the specially-priced tickets have many restrictions. For instance, they cannot be changed or returned and the departure and arrival times are not very desirable??always in the early morning or at night??which may inconvenience passengers.
An unnamed staff member with yoee.com said not all the tickets have seen a big price decrease as the price is decided according to the booking rate. Normally, in northern cities where the weather is extremely cold in winter, not many people will travel, so the ticket prices will be adjusted. Southern cities and provinces like Kunming city and Hainan province prove to be popular tourist destinations in winter, so the ticket prices will not have many changes.
Severe competition
Industry insiders think the main reasons which caused the price-cuts are the intensified competition within the aviation industry in the slow winter season and the pressure brought by the expansion of high speed railways, the report said.
Every year, the months between the National Day holiday and the Spring Festival are the off- season period for the aviation market. In the past, flight companies relied on the sales of first-class and business-class tickets during the winter season. But this year, airlines are not optimistic about the overall tickets sales so they are being forced to offer more promotions.
Even first-class tickets are being offered with discounts this year, which is rare in the past, an airline ticket agent said.
The expansion of high speed railways also poses a threat to the aviation industry. Many airline companies have been offering air express routes since Oct 25, the day the CAAC issued the winter-spring flight schedule. Air China, for example, has opened six new domestic air express routes??Beijing-Chengdu, Beijing-Chongqing, Beijing-Shanghai, Beijing-Hangzhou, Beijing-Guangzhou and Beijing-Shenzhen.
Bright future
Though internal and external competition has squeezed aviation industry profits, the competition is considered healthy to the development of China’s aviation sector, the report said.
The appreciation of yuan has also brought benefits to domestic aviation companies, the report added.
According to the report, profits from aviation is, in the short term, affected by oil prices and in the long term, affected by the number of passengers; the ticket price is not a main factor. The price-cut will help increase the number of passengers and the prices will still be higher than the cost of operation.
As China’s economy recovers, aviation demand will increase, so the future of the aviation industry is still looking positive, the report showed.
Professor Zou Janjun with the Civil Aviation Management Institute of China predicted that China’s aviation industry will soon walk out of the economic downturn and begin a new round of fast growth.
Tags: Aviation, CAAC, flights, logistics