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UPDATE 1-China to give airlines more freedom to set domestic fares
October 14, 2016 / 9:31 AM / a year ago

UPDATE 1-China to give airlines more freedom to set domestic fares

* Airlines to decide prices on shorter routes

* Rule changes to take effect on Nov. 1

* Shares of Air China, China Eastern gain on Friday (Adds details of reforms, share moves)

By Brenda Goh

BEIJING, Oct 14 (Reuters) - China will give some airlines greater independence to set domestic fares, the Civil Aviation Administration of China (CAAC) said on Friday, as Beijing moves to boost airfare pricing reforms amid a broader easing of controls over aviation.

Local airlines will be allowed to decide ticket prices on routes that are less than 800 kilometres (497 miles), as well as on longer routes which compete directly with high-speed rail or train lines, the CAAC said in a document on its website on Friday. Prices are currently mostly set by the regulator.

The government has pledged to deepen its reform of the world’s fastest growing civil aviation industry and allow market forces to play a more decisive role in order to improve service quality and efficiency.

It relaxed airfare restrictions for the first time in nearly a decade in 2013, and in January last year begun to allow airlines including Air China and China Eastern Airlines to set ticket prices as high as they wanted to on 101 routes.

The latest rule changes will come into effect on Nov. 1, the CAAC said, adding that authorities would also continue efforts to establish a monitoring system for domestic flight fares.

It also said that airlines will need to publicise their planned adjusted ticket prices a week before they come into effect, but no more than 10 routes will be allowed to be subject to price changes in each season.

Air China’s mainland-listed shares closed 5.7 percent higher on Friday, while those of rival China Eastern Airlines finished 3.6 percent up, against a 0.1 percent gain in the blue-chip CSI300 index. (Reporting by Beijing Monitoring Desk and Brenda Goh; Editing by Clarence Fernandez and Muralikumar Anantharaman)

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