Low-cost carriers vie for market share

Competition among China's low-cost airlines is becoming increasingly fierce, with China United Airlines (CUA) planning a full scale, low-cost carrier from March 29.

The "brand-new" service will bring charges for "extras" like food and seat allocation, CUA President Zhang Lanhai announced at a press conference in Beijing on Wednesday. There will also be extra charges for insurance and baggage over 10 kilograms.

Ticket prices will range from 8 yuan (1.30 U.S. dollars) to 588 yuan. A total of 80,000 such tickets will be offered this year, said Zhang.

The CUA, a subsidiary of state-owned enterprise China Eastern, is the only commercial airline to use Beijing Nanyuan Airport as its base. The 105-year old airport is the oldest in China, just 13 km south of Tiananmen Square. The airport, which was primarily a military airfield, previously had only one terminal. A new terminal was constructed in 2012, and the airport is said to be able to serve 6 million passengers a year.

The CUA had 27 Boeing 737 aircraft at the end of July last year, and operates passenger services to more than 70 Chinese cities.

Under the guidance of the Civil Aviation Administration of China, airports in Beijing, Tianjin and Hebei signed an agreement on "collaborative development" in December. CUA is one of the first airlines to make concrete use of the agreement.

Shanghai's budget carrier Spring Airlines, is considering reopening its Shanghai-Tianjin route, joining the battle for Beijing's budget fliers.

"For sure, Beijing is a comparatively large and mature market in terms of capacity," said Mao Yi, publicity chief of the Spring Airlines, adding that the integrated development framework has provided a good chance for Spring Airlines to re-enter the market. Mao believes the new flights will be popular.

China's low-cost flights are entering a period of fast development, according to Zhang Lanhai.

The low-cost flights are a natural choice for differentiated passenger demands, said Zhou Laizhen, deputy head of the Civil Aviation Administration.

Founded in 2005, Spring Airlines claims to be "China's first and North Asia's largest low fare airline" in its website. Its net profit reached 730 million yuan in 2013.