No frills flying

Ninety-nine yuan flights to Shanghai, a 75 percent discount to Guangzhou, flights from Zhengzhou Xinzheng International Airport (Zhengzhou Airport) are attracting a lot of attention due to the cheap fares.

"We plan to make Zhengzhou Airport an aviation hub based on cheap flights," Wang Ai'rong, deputy general manager of Zhengzhou Airport says. Zhengzhou is a prefecture-level city, and the capital of Henan province. The airport is currently negotiating with Chinese Spring Airlines, Shenzhen Airlines, Airasia Airline from Malaysia, Tiger and Jetstar Asia Airways from Singapore and Air Macao.

In July 2008, Kun Peng Airlines, a subsidiary company of Shenzhen Airlines, moved its headquarters to Zhengzhou. During the next 10 years, Kun Peng says it will put 10 planes every year in Zhengzhou Airport and open flights to neighboring cities such as Hefei, Xi'an and Changsha. The ticket prices will be kept below 500 yuan.

"If the policy permits, we will also offer one-yuan tickets in Zhengzhou," said Wang Zhenghua, the board chairman of Spring Airlines, China's first private airline remembered for its one-yuan plane tickets in 2005, at a news conference in Zhengzhou. Spring Airlines plans to open 40 cheap flights within five years based from Zhengzhou Airport.

"I promise the ticket price of those new flights will be 35 percent lower than the average market price," Wang says.

Spring Airlines set foot in Zhengzhou at the beginning of 2007. Its round-trip tickets between Zhengzhou and Shanghai are generally with 70 percent discount. Some of the tickets sell at 99 yuan.

East Star Airlines from Wuhan will open flights from Zhengzhou to Guangzhou, announced by Zhengzhou Airport in this August. East Star Airlines thus becomes the third private airlines entering Zhengzhou Airport.

It was in March this year that Zhengzhou Airport established a low-budget airport terminal, the first one of its kind in China. The 3,800-sq-m building is next to parking area to conveniently board exit passengers from planes because boarding ramps and ferry buses are not provided. There are no restaurants, stores or cafes in the terminal, but the security verification system, luggage system and other essential facilities are well equipped.

"Low cost does not mean shabby. The terminal is not luxurious," the spokesperson of Spring Airlines, Zhang Lei says.

"Each landing at Zhengzhou Airport can save 8,000 to 9,000 yuan and lower our costs by 6 to 7 percent," Wang, of Spring Airlines, says.

The reason for Zhengzhou Airport's no frills approach is obvious. "Henan province has a resident population of more than 100 million, the largest one in China. But most of them haven't traveled by plane. The potential of the civil aviation market in Henan is great," says Xu Dahai, marketing director of Zhengzhou Airport. "Besides, the seven neighboring provinces have a population of 500 million. Meanwhile, the Beijing-Guangzhou Railway and Lianyungang-Lanzhou Railway meet in Zhengzhou. Therefore, the passenger supply is plenty."

"Development of civil aviation in Henan lags behind roads and railways. To make Zhengzhou Airport a low-cost aviation base will meet the demand of different levels," deputy general manager Wang adds.

There were 151 civil airports in China by the end of 2007 but "most of the airports are in the red and only some of them can make profits," Secretary General of China Civil Airport Association Wang Jian says.

One important reason is that small and medium-sized airports lack the passengers who are centralized around larger urban airports.

According to China Civil Air Transport Industry Report (2007-2008) by Civil Aviation Administration of China (CAAC), the 47 major airports transported 95.4 percent of all the air passengers in 2007 and four of those, airports in Beijing, Shanghai and Guangzhou, transported 35.1 percent.

The high price of plane tickets is a big reason for the passenger shortage at small- and medium-sized airports. For example, the full price of a single ticket for Air China from Guangzhou to Beijing (about 1967 km) is 1,680 yuan, accounting for 10 percent of China's per capita GDP in 2007. While according to the ticketing system of United Airlines, a single ticket from Washington to Los Angeles (about 3660 km) costs $231.5, accounting for 0.5 percent of US per capita GDP in 2007, which was $46,280.

Chinese passengers who pay their own way make up 50.71 percent of those flying in 2007. A survey conducted by Civil Aviation Resource Net of China shows 92 percent of those and 68 percent of the passengers whose businesses paid for their flights chose the more inexpensive flights.

Price-conscious passengers are increasing, too. According to statistics from Office of Consumer Affairs of CAAC, 25.6 percent of passengers currently price into account, while the figure in 2004 was 10.8 percent.

The price of a plane ticket in China includes the airfare as well as a fuel surcharge (FSC) and an airport construction fee (ACF). FSC is charged by the airlines to offset the price increase of aviation fuel and an ACF is charged by the airports.

Since the civil aviation industry was opened to private capital in 2005, private airlines have been trying hard to reduce their costs and offer cheaper tickets.

Take Spring Airlines for example. The few-frills airline does not provide free dishes during the flight. Every passenger is allowed to carry 15 kg luggage, five kg less than under normal regulations. There is no first class seating on Spring Airlines - it's all economy - it sells tickets through travel agencies and hotels, saving the cost of ticket agencies.

"We can save 20 percent of the normal cost during each flight compared with other airlines," Spring Airlines spokesperson Li Weiming says.

But the rising cost of aviation fuel is a big obstacle. The National Development and Reform Commission announced in June 2008 that it would increase the price of aviation fuel by 1,500 yuan every ton and it passenger fuel surcharges were raised by 20 to 50 yuan beginning in July.

There is also good news for passengers and airlines, although not for the airports.

In February the CAAC reduced the landing fees for Chinese domestic airlines by 20 percent, something that low-cost airports like Zhengzhou Airport facing as another challenge to survive.

(China Daily 10/27/2008 page10)