Vol. 5 Num 263 Tue. February 22, 2005  

Private airlines ready to take off in China

China's top civil aviation authority plans to allow a privately funded company to operate an air transportation business as it widens market access to the sector.

This marks an important step by China to allow private capital to enter the civil aviation market. Three others are waiting in the line.

According to a document provided by the General Administration of Civil Aviation of China (CAAC), the administration is considering giving an operating licence to Okay Airways Co Ltd.

Okay Airways is expected to become the first private carrier, thanks to the nation's policy support.

A regulation on the introduction of domestic private capital into civil aviation industry will be unveiled sometime this year, a CAAC official said.

"The draft version of the regulation has been completed," said Ma Zheng, deputy director of the CAAC Department of Policy and Regulations.

He said the regulation will provide legal support for the private capital into the sector.

"While helping to widen the investment channels, the regulation will also aim to limit monopolies over the civil aviation sector," Ma said.

China began to ease its control over private capital entering the industry early last year. It had suspended the approval of the air transport companies since 1994.

At a recent national working conference, CAAC Administrator Yang Yuanyuan said private investment is encouraged into the sector.

"While ensuring the State-owned capital dominate the sector, privately owned capital should be restricted to a certain extent," Ma said.

But he gave no details about the percentage of private capital the new regulation will allow into the sector.