China plans to open up the aviation sector to more private investments. The move is expected to attract more investors to join the playground. Mi Jiayi has the story.
The Civil Aviation Administration of China said that starting from Friday, state and private firms could independently or jointly make investments into the country's aviation sector. It said that airlines could not own more than a 25 percent stake in international and regional airports, while airports in turn could not control more than 25 percent of companies involved in the sale, storage and transport of aviation fuel. In the past, all of these investments were blocked by competition regulations.
CAI JUNYI, CHIEF ANALYST SHANGHAI SECURITIES "Airlines rely a lot on airports in their daily operations. Big airlines would get better lanes and spots in airlines and that's partly a result of their relationship with the airports. I think with the relaxation, the next step for airlines would be to invest in strategic airports that can give the best lift to their business."
The government isn't throwing open the whole aviation sector for investment. The country's three largest carriers - Air China, China Eastern Airlines and China Southern Airlines - as well as a few strategic airports, must remain in state-owned hands. But while control will stay with the state, private shareholders will still be allowed a bigger slice of these firms.
LIN ZHIJIE AVIATION INDUSTRY EXPERT "The new rules have provided more space for the three major airlines to conduct mixed-ownership reform. In the past, we know the major three airlines have worked with Delta and American Airlines as their strategic investors. But to be honest, the actual deal was worth only one or two A380 planes - that was very little, because of the old limits. So the new rules will be good news to potential investors."
China is expected to be the world's largest aviation market by 2022, and increased investment will be needed if the country's airlines and airports are to cater for the rapidly growing demand.