China tightens grip on airline approval rules

The heady days of China’s ‘no-holds barred’ aviation industry growth have, at least for the moment, been reduced from take-off to taxiing speed. Chinese authorities have signalled their desire to partially reign-in the growth that, despite the ongoing global downturn, still flickers within the country.

As the global economic crisis has plunged the aviation industry into turmoil, China’s aviation watchdog, the Civil Aviation Administration of China (CAAC), has stopped accepting applications for new airlines until 2010. Approval for airlines to set up new units has also been tightened as CAAC moves to beef up the industry’s efficiency and safety, while stressing that it will treat cargoand regional units exceptionally.

CAAC has released a new set of rules entitled ‘Opinion on the Management of Establishment of Branches by Airlines’, outlining, among others, how airlines dealing with freight can set up a new branch, in a bid to prevent rapid overheating and expansion of the country’s airline companies.

“Airlines that have set up a company or branch solely dealing with freight can add one or two branches, while those that possess five companies or branches must not set up new operational bases,” CAAC said. “Operational bases of airlines that have operated for over three years andaccount for a 10 per cent share of their market may be turned into a branch.”And despite the impact of the globalfinancial crisis on global import andexport trade, domestic private Chineseenterprises have been continuing withtheir original enthusiasm to enter the aircargo industry or proceeding with theirexpansion plans. And the latest suchexpansion involved Air China increasingits stake in a cargo venture.