The wraps were removed from China's aviation reform plans Tuesday as a top aviation official announced that nine existing State-owned airlines would be eventually merged into three aviation groups.
Beijing-based Air China will be combined with China Southwest Airlines and China Aviation Corporation, Shanghai-based China Eastern Airlines will be merged with China Northwest Airlines and Yunnan Airlines, and Guangzhou-based China South Airlines will be combined with China Northern Airlines and Xinjiang Airlines.
Each of the three groups will have assets of 50 billion yuan (US$6 billion) and a fleet of 150 or so aircraft.
The names and logos of the new groups will be taken from Air China, China Eastern and China Southern respectively.
Liu Jianfeng, minister of the General Administration of Civil Aviation of China (CAAC), told the annual working conference that the merging of the airlines would start soon and that the airlines were being urged to complete the process at an early date.
He said the plan had undergone wide-ranging discussion within the airlines and related regulatory departments in 2001. The State Council formally approved the plan on January 23 at a routine working conference.
Liu indicated that the three aviation groups would cut their economic relations with CAAC after the reform, and his administration will then regulate the industry with legal and economic measures, and would no longer act in an administrative role.
Local airlines, financed by local governments or big State-owned enterprises, are welcome to join the three groups in the future, but it's up to them to decide what they do, Liu said.
CAAC plans to delimit the air routes involving the cities of Beijing,
Shanghai and
GuangZhou this year. Airlines whose headquarters are not located in the three cities, will no longer be able to fly the three lucrative air routes from the start of this summer.
From around the beginning of next winter, flights transferring through the three cities will also be stopped.
Liu said the measure is expected to help stop the disorderly competition on the routes among the three cities, and establish a clear and rational aviation network across the country.
Other flights between non-provincial capitals or tourist cities and the three centre cities will also be restricted and cancelled in the future. CAAC will then encourage local airlines to develop more short-distance flights between provincial capitals and smaller cities.
In line with the tight air route regulations, CAAC plans to limit the purchase of new airplanes in the near future.
Airlines which have ordered redundant aircraft will be encouraged to postpone delivery dates or to rent the planes to third parties.
"If airlines cannot convince CAAC with precise details that the new planes will bring in profits, the purchase applications are unlikely to be approved,'' Liu said.
He confirmed that China would need more planes in the future to fill the demands of the expanding aviation market, but "it will be far less than some plane manufacturers had predicted.''
Official statistics from CAAC showed that some 75 million passengers travelled by air in the 2001 financial year, a 10.9 per cent increase over the figures for 2000.
The industry as a whole managed to take in 690 million yuan (US$83 million) in profits in 2001. The debt-plagued airlines including Air China, China Southwest Airlines, China Northern Airlines and Xinhua Airlines all turned a slight profit in 2001, while some profitable airlines like China Southern Airlines and China Eastern Airlines further improved their performance.
CAAC has set its income goal for this year at 1 to 2 billion yuan (US$120 to 240 million), hoping the merger of the nine airlines will help the aviation industry make more money.
CAAC predicts 83 million passengers will travel by air this year.
