No access to key routes

Spring Airlines is one of the few private operators that still maintain profitability. [Hexun.com]

The private airlines' tricky competition environment is also reflected in the routes they are authorized to fly. A ranking official with a private airline tells China Business News that although CAAC allows the existence of private airline operators, the administration is very harsh in their review and approval. For example, state-owned air companies still monopolize the "golden" routes to and from Beijing, Shanghai and Guangzhou, leaving the less desirable journeys to the private air charters.

In addition, due to the lack of available pilots, the private airlines can only recruit pilots who resign from state-owned companies. State regulations on the administration of resigned and freelance pilots make this process even more difficult. A memo issued by CAAC in 2004 requires resigned pilots to hand in their flight record and health certificate to the care of the CAAC regional office, which in practice becomes another restriction on pilot job-switching.

Trying to win the battle by squeezing operation costs is also not an option in China. Airline companies' costs are largely made up of takeoff and landing fees, aircraft depreciation, fuel charges, and human resources, all of which, other than the last item, are "uncontrollable costs", as fuel supply is monopolized by China National Aviation Fuel Group Corporation (CNAF). Fuel charges, along with aircraft maintenance, become the two largest portions in air companies' expenditure.