China may open military airports to budget airlines

BEIJING, Oct 17 (Reuters) China's civil aviation regulator has asked the military to let low-cost airlines use secondary airports across the country, even as it is holding back foreign budget carriers that hope to fly to China.

In an effort to boost economic growth, the government will also spend one billion yuan (133.1 million dollar) a year to subsidise regional airports and airlines flying to smaller cities, top regulator Yang Yuanyuan told Reuters in an interview today.

Despite soaring demand, the development of low-cost airlines in China has been hampered by a lack of the secondary airports, ticket price controls and high import taxes for aircraft and parts. In the United States and Europe, by contrast, budget carriers make heavy use of their networks of secondary airports.

''At the moment, it's one city one airport, and that's the main airport, which are big and have very full schedules. But we are devoted to developing low-cost airlines,'' Yang said on the sidelines of a Communist Party Congress.

''Beijing has a few military airports surrounding it. We are having talks with the military, so perhaps we can open some up and they can be joint civil-military airports. Guangzhou also has some military airports nearby. We're also talking about opening up some of those,'' he added.

''The terminal facilities and service will be simpler.

Although if airlines fly there, transport (to downtown) will not be as good as at large airports. So prices will be lower. I think low-cost airlines have a great future in China,'' said Yang, 41.

''I really appreciate what the boss of Malaysia's AirAsia has as his slogan: 'Now everyone can fly'. This is great. This is my dream,'' added Yang, who is also a pilot.

China has a handful of companies that are trying to make money with a budget business model, to varying degrees of success. But none of them approaches the scale of Ireland's Ryanair or US- based Southwest Airlines. Last year the regulator fined China's low-cost Spring Airlines for selling tickets for 13 US cents in a promotion, saying they broke national pricing rules.

Still, the government is being cautious in response to fears that China's main state-run carriers, such as Air China Ltd and China Eastern would lose out should foreign budget airlines open too many routes to China.

Malaysia's AirAsia already flies to a few cities in southern China, but its long-haul offshoot AirAsia X has identified cities in eastern and northern China to serve once it gets off the ground.

''If I encourage this, our airlines will curse me. But we're willing to open the door slightly for them, to see how it goes,'' said Yang. ''If we open the door too wide, there'll be too much impact on our airlines, and that's not good.'' ''If they are willing to fly to secondary cities, that's fine.

It's a good thing,'' he added.

The government has invested billions of dollars upgrading old airports and building new ones, but many lose money and either have few flights or none at all as they are in remote, economically backward areas.

To help alleviate this situation, regional airports will get 600 million yuan annually to improve their finances, and airlines 300 million to fly to these cities, Yang said.

''They give as much of an economic boost as do highways,'' he added, referring to smaller airports.

Yang said he was not too worried about them losing money, even as he added it was important to build airports rationally and not purely as ''image projects''.

''I think airports are public facilities. They are not there to make money,'' he said. ''Of course I want more airports and not fewer. But we can't blindly build them. It's a waste.'' (1 dollar =7.514 Yuan) REUTERS RN RS1056