A merger plan between two of China's largest airlines - Air China and Southern Airlines (Group) - has been aborted. The plan was rejected by the Civil Aviation Administration of China (CAAC), the industry regulator, to avert the merged company having a monopoly in the sector, the semi-official China News Agency said. Negotiations on a possible merger between Beijing-based Air China - China's flagship carrier - and Guangzhou-based Southern Airlines (Group), the mainland's largest airline group, began last year. Neither airline is publicly traded. It was hoped that mergers or alliances would help turn around the then struggling aviation sector. The talks subsequently collapsed because of a gap between the carriers' business culture, geographic position and aircraft fleet. However, no public announcements have been made on whether the merger is still on track, but industry officials have privately said the plan is as good as dead. The ending of the merger plan between the two firms has come as Beijing announced two months ago it would consolidate its airlines into three large groups.