China will tighten up its price control on the aviation market by cracking down on the illegal discounts now prevalent in the industry, said Liu Jianfeng, director of the Civil Aviation Administration of China.
Liu made these remarks recently in response to the recent rampant price cuts in China to win more market share in the 40-day spring rush,a peak season for Chinese to travel home for a family reunion during the Chinese Lunar New Year.
Liu said the aviation administration will stiffen laws to punish the companies that offer such illegal discounts to ensure healthier development of the market.
"The price cuts will not only mess up the domestic air market,but also hurt the carriers themselves,"Liu said.
Under the CAAC policy,only 15 air routes are granted to offer cheaper tickets. But many air companies and air ticket sales agencies are offering under-the-counter discounts on the routes beyond these lines. Some are even slashing the prices to under the costs, according to Liu.
He said many domestic carriers are falling into the illusion that low pricing tragedy is the only key to more market share.
"In fact,competition for the market falls in many other fields besides prices,"Liu said," such as costs, profit margins, services and efficiency." Five domestic air companies,including China Eastern and Shanghai Airlines, jointly launched a discount program on the Beijing-Shanghai route for the Spring Festival holidays last Friday. The program was also put a sudden halt that day by the CAAC. It's regarded as a public challenge to the industry authority.
(eastday.com February 10, 2002)
