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Airline shares surged on Monday amid expectations that the move
will boost profits, with the Lunar New Year national holiday
approaching in February.
The Civil Aviation Administration of China said late on Friday
that it would allow airlines to decide their own prices on
domestic routes that have at least five carriers competing.
Price increases of no more than 10 percent would be allowed for
each travel season.
"Every one percent rise in the domestic ticket price system-wide
boosts the Chinese airline sector's earnings by 7 percent based
on our estimates," said Corrine Png, Singapore-based chief
executive of transport research firm Crucial Perspective.
China Southern Airlines <1055.HK> likely would be the biggest
beneficiary as it had the largest domestic market share, she
added.
China Southern shares leapt more than six percent to an over
two-year high, while Air China <0753.HK> rose more than 8
percent to its highest level since Nov 2010 and China Eastern
Airlines <0670.HK> climbed more than 5 percent.
Beijing has pledged to allow market forces to play a more
decisive role in its aviation industry to improve service
quality and efficiency.
It relaxed airfare restrictions for the first time in nearly a
decade in 2013, and two years later allowed airlines to set
ticket prices on 101 routes.
The new ruling applies to at least another 306 routes, including
the profitable Beijing to Shanghai route, according to the
document that was dated Dec. 17 and published by the regulator
on its website.
(Reporting by Brenda Goh; Editing by Stephen Coates)
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