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Budget airline makes low-fare take-off
By Jin Jing in Shanghai？and Cao Desheng in Beijing (China Daily)
Updated: 2005-07-19 05:59

"The fare is much cheaper than those of the other airlines," said Zhang Junyu, a management consultant in Shanghai who booked a ticket yesterday. "Flying Spring Airlines saves me a lot."

To keep operating costs low, Spring sells tickets exclusively from its website and offers only bottled water instead of onboard meals. However, insiders say it will take time to see whether Spring can be as successful as other low-cost operations like Ryan Air in Europe and Southwest Airlines in the United States.

Low cost airlines are still in their infancy in China, said an official from the General Administration of Civil Aviation of China (CAAC).

"Considering the limited opportunities to control operation costs, it is hard to establish a low-fare, no-frills operation in the existing environment, particularly in the context of rising fuel prices," said an official from the administration's pricing department, who gave only his surname, Deng.

He said both the so-called low-cost airlines and other major airlines must compete on the basis of the existing pricing system.

According to CAAC regulations, on some tourist routes carriers can set their own ticket prices based on market demand.

For other busier routes ticket prices must adhere to CAAC guidelines. "We haven't seen the impact of Spring's low fares upon other airlines," Deng said. The administration, the industry watchdog, will intervene in the airline's pricing policy if there are justifiable complaints from its rivals, he added.

Besides reducing costs, Spring also expects to draw on the large pool of customers from its parent company to achieve efficiency by keeping its flights as full as possible.

"We expect the load factor can be maintained above 85 per cent, compared with the industry average of about 68 per cent," said the company's spokesman Li Weimin.

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