China's budget airlines spread wings, add routes

Mon Dec 7, 2015 12:32am EST
 
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By Fang Yan and Siva Govindasamy

BEIJING/SINGAPORE (Reuters) - Xia Lili, marketing chief at a privately-owned Shanghai software firm switched to flying with Spring Airlines 601021.SS after China's first low-cost carrier took off in 2010. Her company has since made it mandatory for staff to use budget airlines when available, and has cut its travel costs by a fifth.

Xia and her colleagues are among an increasing number of Chinese who are fuelling fast growth in what is often called the "last" big market ripe for low-cost carrier penetration.

Since late 2013, the Civil Aviation Administration of China has encouraged budget airlines as Beijing has seen how they have taken off elsewhere. Freeing up new routes for low-cost carriers also helps develop economic growth in western China.

Low-cost carriers account for 7 percent of China's domestic air travel market, and that's expected to more than double by 2020, according to OAG, an aviation data and analytics company.

China, the fastest growing major air travel market, has overall passenger volume of 392 million, rising at more than 10 percent a year, according to official data, and planemaker Airbus (AIR.PA: Quote) predicts it will leapfrog the United States as the world's largest domestic air traffic market within 10 years.

"Low-cost travel has become a life style. Many of my colleagues would start chatting about how to get those 9 yuan ($1.41) or 99 yuan ($15.48) special offer tickets," Xia said.

As Europe's pioneer no-frills airlines such as Ryanair (RYA.I: Quote) and easyJet (EZJ.L: Quote) mature and move more upmarket, they are attracting business travelers as a way to stand out in the budget crowd.

  Continued...

 
Members of the ground service crew check a China United Airlines aircraft after it landed at the Nanyuan Airport in Beijing, China, December 4, 2015. REUTERS/Jason Lee