The mainland may be close to implementing a crucial reform of its airline industry by raising the foreign ownership cap to 49 per cent from 35 per cent now. According to a report in yesterday's Wen Wei Po newspaper, the Development Research Centre of the State Council said there was a 'possibility that the foreign ownership restrictions would soon be lifted in the short term'. The newspaper said the plan was aimed at strengthening the airlines' co-operation with foreign carriers. The research centre said that Guangzhou-based China Southern Airlines, the country's largest airline, indicated in September last year that it would apply to have the restriction lifted. It added that China Eastern Airlines had said it would follow suit. Wang Jinglin, an aviation analyst at BNP Paribas, said it would be 'good news' for mainland carriers if the foreign ownership restriction was formally lifted. Ms Wang said China Southern and China Eastern urgently needed to raise funds to help pay for the industry restructuring championed by regulator Civil Aviation Authority of China. CLSA analyst Jim Lam said that while 'short term' could be quite subjective, he believed it would happen within this year. China Southern vice-chairman Wang Changshun and China Eastern company secretary Luo Zhuping said they had not received official notice from Beijing regarding the relaxation of the foreign investment ceiling.