Lai See | Luxury crackdown brings fear of flying first class in China

Air China president Zhiyong Song didn't seem overly enthusiastic when asked about the idea of senior executives at state-owned enterprises having their salary reduced to 600,000 yuan a year.

"I've noticed it in the newspapers, but I haven't received any instructions about it," he told reporters at a meeting yesterday in Hong Kong to discuss the company's interim results.

The move stems from President Xi Jinping's crackdown on corruption and excessive perks. "Unreasonably high and excessive incomes must be regulated," he said recently.

Song said he had no objections but felt pay should be under review by the board of directors and be linked to company performance. This may not be such a good thing for him at this stage of the cycle.

Air China's net profit for the first six months of the year was down 55 per cent, although this was mostly due to foreign exchange losses. But it's not just executive pay that may feel the impact of Xi's crackdown. Air China is based in Beijing and is probably the most exposed among all mainland's airlines to the crackdown since lavish travel expenses are now frowned on.

Hence its premium classes have taken a hit. But Air China says it is not planning to adopt China Southern's approach and make its first class more politically acceptable by calling it business class.