CHINA CAA TO GIVE DOMESTIC CARRIERS TAX ADVANTAGES

Dino D'Amore
By Dino D'Amore July 11, 2011 19:41

CHINA CAA TO GIVE DOMESTIC CARRIERS TAX ADVANTAGES

Li Jiaxiang, the head of the Civil Aviation Administration of China, has stated that the country would initiate favourable tax policies to help domestic airlines open new international passenger and cargo routes. Li said that China’s three top carriers, Air China, China Southern Airlines and China Eastern Airlines, were still too small in scale compared with global rivals. “Via government guidance and market operations, we must push ahead industry consolidation to form, as soon as possible, two or three airline companies with wide networks that are strongly competitive internationally,” Li said.

The central government is expected to announce latter this year a huge program of building works to develop regional airports with a substantial proportion to be spent in the west of the country.  The CAAC has already said that China will add more than 45 airports over the next five years, bringing the total to more than 220.

Three domestic Chinese agencies have published reports surrounding the aviation sector over the weekend. They seem to agree that China will invest over 1.5 trillion yuan ($232 billion) in the aviation industry over the next five years. More interestingly though is a report from Shanghai Securities News today suggesting that Beijing wants to see domestic airline consolidation take place within the next five years so that a Chinese super airline can take on the world and take more control over prices. This is bad news for the consumer in China and suppliers across the globe. The eventual airline or airlines that emerge from this round of consolidation will, one assumes, try to merge or purchase other international airlines in order to become global players.

Dino D'Amore
By Dino D'Amore July 11, 2011 19:41
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