Mainland carriers face higher charges for international flights

PUBLISHED : Thursday, 31 January, 2008, 12:00am
UPDATED : Thursday, 31 January, 2008, 12:00am

Mainland airlines flying international routes face higher airport fees from March as Beijing implements rules to comply with World Trade Organisation regulations to equalise rates for domestic and foreign carriers.

Currently, mainland airlines on international flights pay lower landing fees at domestic airports than foreign carriers. The fee increases will be phased in over several years, under a complex plan, while landing fees for most domestic flights will be lowered.

For Air China - 25 per cent of whose passengers are on international flights - costs will increase slightly, said company secretary Huang Bin.

Analysts said Air China would have to pay 100 million yuan more in the first year with further increases over subsequent years.

China Eastern Airlines - 80 per cent of whose passengers fly on domestic routes - predicted that its airport costs would decrease, but did not give figures.

China Southern Airlines said it was studying the impact of the move.

The impact for airports would be mixed, said Daiwa Institute of Research analyst Kelvin Lau.

Beijing Capital Airport could charge a Boeing 737 operated by a domestic carrier 15 per cent more for an international route but 2 per cent less on a domestic route.

'The net-net implication is difficult to calculate and has to take into account too many assumptions,' Mr Lau said. The adjustment of landing charges will vary by aircraft size and airport location.

A spokesman for Beijing Airport said a preliminary study had determined that the impact of the new fees would be neutral.

A Citigroup report released on Tuesday said Meilan Airport in Hainan would benefit from the changes with a 14 per cent rise in profit this year. Meilan Airport is categorised as a second-tier airport and is allowed to raise landing charges on domestic flights by 6 per cent on aircraft similar in size to the B737 or Airbus 320. But the landing charges will decrease when airlines use bigger aircraft.

After a three-year consultation process - and negotiations with airports and airlines on the reform - the General Administration of Civil Aviation released the policy on Tuesday. The measures were revised several times as domestic airlines objected to an increase in charges when their bottom lines were already under pressure from high jet fuel prices.

On incoming international flights, domestic airlines now pay one-third to one-quarter the landing fees charged to foreign carriers.

After the adjustments, landing fees for foreign airlines will be lowered by an average of 40 per cent beginning in March, depending on aircraft type. Domestic carriers will receive a 40 per cent discount on landing charges in the first year of a five-year transition period before paying the same as foreign airlines.

However, international airlines will have to pay a passenger handling charge of 70 yuan per passenger, a fee they do not have to pay at present.