Chinese mainland airlines to obtain government subsidies to overcome operational difficulty

posted on 26th May 2022 by Eddie Saunders
Chinese mainland airlines to obtain government subsidies to overcome operational difficulty

The Ministry of Finance and China’s civil aviation regulator launched a two-month subsidizing plan on Thursday to aid passenger flights in an effort to reactivate the struggling industry, on the heels of the State Council’s rolling out a comprehensive package of measures to bolster Chinese economy which has seen a marked slowdown recently due to coronavirus lockdowns.

According to the government plan, subsidies will be doled out to Chinese civil aviation carriers when the average daily domestic passenger flights are less than or equal to 4,500 flights per week, and the maximum government grant could reach 24,000 yuan ($3,573) for per hour of flight.

The Civil Aviation Administration of China (CAAC) said that any domestic carrier could apply for the government subsidy when its average daily flights in any week does not exceed 4,500 flights; the weekly average passenger load factor for each flight does not exceed 75 percent; adding that actual flight revenue should not be sufficient to cover variable costs.

The funds to be used for the subsidizing plan will be shared by the central government and provincial finances, with the central government financing 65 percent, 70 percent and 80 percent of the eastern, central and western provinces, respectively, with the remainder being financed by local authorities.

The CAAC said the new policy will come into force from May 21 to July 20.

The move is to stabilize the income of frontline air employees, boost confidence for industry growth, and alleviate the operating burdens of Chinese airlines, especially small and medium-sized carriers, the CAAC said.

Affected by multiple unfavorable factors such as the impact of the epidemic, the downward pressure on the economy and the high price of jet fuel, China’s civil aviation transportation sector has fared badly since April 1.

Data from the CAAC on Thursday showed that the total transportation turnover, passenger transportation, and cargo turnover were 2.95 billion ton-kilometers, 7.88 million person-times, and 420,000 tons, respectively, down 68.0 percent, 84.6 percent, and 35.9 percent year-on-year, respectively.

Earlier published data showed that in 2021, the civil aviation industry suffered a collective loss of 84.25 billion yuan.

China’s State Council, the cabinet, said on Monday that 33 administrative measures will be implemented to help reactivate the economy, including an additional 150 billion yuan of bank loans earmarked for helping the troubled airlines.

Global Times