Fare fluctuations more likely with further liberalisation on Chinese air routes

As the Chinese authorities further loosen controls on airfares, travel industry players are expecting greater fluctuations on popular domestic routes as early as this summer.

Last December, the Civil Aviation Administration of China and the National Development and Reform Commission allowed Chinese carriers to set their own prices on a significantly larger number of routes.

According to BCD Travel, only 31 China air routes operated without price control in 2013. After the new ruling kicked in, the number jumped to 724 in 2017 and 1,030 this year.

More than giving airlines pricing control, a greater implication of the reform is that prices become subject to free market forces, BCD Greater China, managing director, Jonathan Kao, stressed.

Changes in airfares are “the result of many different factors including competition between different carriers flying the route, competition with high speed rail, and behavior changes – travellers booking earlier, choosing cheaper flights”, Kao explained.

Yet, Kao expects that airfare in China will continue to increase modestly in the near future, “consistent with the rise in prices in most categories of products/services in China”.

Kao noted that TMCs will play a role in procuring options most beneficial for his corporate travellers. “There is no evidence so far that the price reform will affect the demand for business and leisure travel. However, we do feel that forward-planning and travel policy controls will become more important.”

On the leisure front, Century Holiday International Travel Group, Shanghai branch, vice general manager, Frank Kao said the market has already been regulating itself by supply and demand without much government control.

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