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China's aviation sector to fly higher in 2018

By Yang Yang | | Updated: 2018-01-22 14:48
An A320-214 airplane of China Eastern Airlines takes off for Shanghai from Fuzhou city, East China Fujian province, May 28, 2015. [Photo/VCG]

China's aviation industry is expected to welcome a boom year in 2018, following a series of favorable industrial policies, Shanghai Securities News reported on Monday.

New rules allowing state and private firms to independently or jointly invest in China's aviation industry took effect on Jan 19 to drive the industry's healthy development, the Civil Aviation Administration of China (CAAC) announced.

This policy, which eases investment access to aviation industry, indicates room for State-owned equity changes in the country's three largest airlines, including Air China, China Eastern Airlines and China Southern Airlines, in the future.

The negative list mode adopted by the new policy also provides many new investment opportunities in various fields of China's civil aviation industry.

Meanwhile, the government also issued on Jan 5 a market-oriented price setting notice to make civil aviation industry more globally competitive.

Additional 306 air routes' tickets prices will be adjusted by market, according to the new regulation released by CAAC.

Currently, total number of air routes, applying market-oriented price setting system, exceeds 1,000, covering Beijing, Shanghai, Guangzhou and Shenzhen. The country aims to establish a complete market-oriented price setting mechanism and a scientific, standard and transparent price monitoring system in civil aviation industry by 2020.

In addition to stake holding and price setting, new policy, permitting portable electronic devices (PEDs) on board, was announced by CAAC on Tuesday.

Timetables to allow the use of mobile devices in the air have been announced by seven airlines - Hainan Airlines, China Eastern Airlines, China Southern Airlines, Xiamen Air, Shandong Airlines, Spring Airlines and Lucky Air.

The country's civil aviation industry witnessed an average growth of 11.2 percent in flight hours and the annual flying time has soared to 10.5 million hours, up from 6.19 million hours over the past five years, according to CAAC.

In terms of external environment, a new round of fuel surcharge is expected as the crude oil price per barrel is close to the benchmark to charge fuel surcharge. The average US dollars debt level of China's three major air companies experienced 10 percent year-on-year decrease in 2017, which was influenced by the exchange rate fluctuations.

In terms of air companies, Chongqing-based China Express Airlines Co Ltd received approval from the China Securities Regulatory Commission for a potential initial public offering Wednesday, becoming the 7th air company in A-share market, following Juneyao Airlines, which got IPO approval in May 2015.

China, the world's second-largest civil aviation industry in terms of air transport scale for 12 consecutive years after the United States, is determined to develop civil aviation industry and has set a goal of 11.4 percent year-on-year increase of the passengers' transport volume to 612 million person-times in 2018, according to Shanghai Securities News.

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