What’s new: China’s civil aviation regulator halted a newly launched plan to subsidize airlines amid concerns that the policy might discourage carriers from resuming operations.
Several airline sources confirmed with Caixin that the Civil Aviation Administration of China (CAAC) notified carriers that the implementation of a subsidy policy announced two weeks ago would be suspended between June 4 and 10. “It is unclear whether the suspension is temporary or not,” one person said.
The suspension came amid rising concerns that airlines might intentionally reduce services to collect the subsidies, industry experts said.
The background: The CAAC announced the subsidies for pandemic-hit airlines starting May 21. According to the plan, airlines would receive compensation of as much as 24,000 yuan ($3,564) per flying hour in weeks when they lose money and their average passenger flights are less than 75% full.
The industrywide subsidy program was to be effective as long as the average daily number of domestic passenger flights didn’t exceed 4,500 in a week, and some other conditions were met.
Between May 18 and 20, the average daily number of domestic passenger flights in China reached 4,644, according to flight tracking site VariFlight. But after the subsidy policy took effect, the number dropped to between 4,126 and 4,551 from May 21 to 25.
Contact reporter Han Wei (weihan@caixin.com) and editor Bob Simison (bob.simison@caixin.com)
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