=20 ---------------------------------------------------------------------- This article was sent to you by someone who found it on SFGate. The original article can be found on SFGate.com here: http://www.sfgate.com/cgi-bin/article.cgi?file=3D/news/archive/2004/06/08/f= inancial1046EDT0064.DTL --------------------------------------------------------------------- Tuesday, June 8, 2004 (AP) China approves two new private airlines CHRISTOPHER BODEEN, Associated Press Writer (06-08) 07:46 PDT SHANGHAI, China (AP) -- China has given preliminary approval for two new private airlines, the companies said Tuesday as they hope to boost service and competitiveness in an industry dominated by state-owned carriers. The approvals follow the preliminary permission granted in February for China's first private airline, Eagle United -- an initial step toward breaking the government's monopoly on passenger air transport. Government aviation officials were not available for comment. But in a statement posted on its Web site, Spring and Autumn Airlines sa= id it plans to fly tourist charters and low-cost, short hop flights out of Shanghai's Hongqiao domestic airport. "China has a great deal of demand for low-cost air travel and we hope to allow more ordinary travelers to be able to fly," the statement said. A second airline, Aokai, intends to run charter passenger flights, domestic freight, mail freight and overnight delivery services out of the eastern port city of Tianjin, an airline official said. The creation of private airlines are part of efforts to step up reform of the state-controlled civil aviation market, long plagued by poor service and ticket price wars. The reforms began with the breakup of the monopoly carrier CAAC in the early 1980s. The ensuing rapid expansion of airlines resulted in excess capacity, with many half-full flights and huge financial losses. In 2002, China merged nine airlines into three in a consolidation aimed = at creating several big, world-class carriers and improving airline finances. Combined, those state-owned airlines control about 80 percent of the domestic passenger market. The airlines are also diversifying their routes to add feeder flights fr= om smaller airports to major hubs. China realizes it must open more to competition to be a major player in the industry, said Tom Ballantyne, chief correspondent for industry magazine, Orient Aviation. "The government carriers are beginning to settle down and get on with business, so it's time to open up to private carriers," Ballantyne said. China previously allowed only limited private investment in air transpor= t, although several carriers, including China Southern Airlines and Shanghai-based China Eastern Airlines, have shares listed on domestic and international stock exchanges. The new private airlines are expected to purchase airplanes and ground equipment, train staff and make other preparations within two years. An official at Aokai's planning office said the airline was approved on May 26. No public announcement was planned until preparations were underway, he said. Speaking on condition of anonymity, he said Aokai hoped to build up a network with international parcel service carriers. The airline's backers include the Aokai and Qili investment companies and Beijing-based Aokai freight shipping company. Spring and Autumn's main backer is Spring International, a 23-year-old travel agency that says it had revenues of 2 billion yuan ($242 million) and carried 1.6 million travelers last year. It has run a successful charter flight business using other airlines in preparation for setting up a low-cost carrier. According to industry estimates, passenger traffic is expected to soar to 140 million people by 2010, up from 84.3 million in 2002. ---------------------------------------------------------------------- Copyright 2004 AP