The Civil Aviation Administration of China (CAAC) said recently it will further subsidize special long-haul international flights and expand the variety and scope of tax reductions and exemptions on international routes to encourage domestic airline companies to fly overseas, China Securities Journal reported Tuesday.
Industry insiders said domestic airline companies will intensify their efforts in expanding international flights. Carriers that concentrate on long-haul transport will benefit most from the new policy, the paper said.
Domestic air carriers are already expanding their international business. Air China is in talks to buy wide-bodied jets from Boeing and Airbus to revamp its fleet, including exchanging its used jets for new ones. China Southern Airlines will also open several new international flights in the second half of this year, the report said.
Some analysts attributed the expansion to increasing demand for international flights as the world economy recovers. It is also part of Chinese civil aviation industry's restructuring, they said, adding that the carriers also want to get prepared for competition when skies are fully open, according to the paper.
Li Xiaojin, a professor with the Civil Aviation University of China, said a deeper reason behind air carriers' international expansion is that their short-haul business has been dealt heavy blows by high-speed railways.
Sinolink Securities also said that as China's high speed rail is developing fast, airline companies should focus on medium and long-haul flights.