China's Airlines Fly the World Riding on $1.3 Billion Subsidies
- Incentives worth close to half of 2016 airline profit: Report
- Flights hardly make money from smaller cities if unsubsidized
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China is set to become the world’s biggest aviation market in five years thanks in part to hefty subsidies from local governments beseeching airlines to fly mainland tourists overseas.
Local governments, especially those outside mega cities like Beijing, Shanghai and Guangzhou, spent at least 8.6 billion yuan ($1.3 billion) subsidizing airlines in 2016, mostly for them to start direct services to far-flung places such as New York and Paris, according to data compiled by Civil Aviation Data Analysis. These payments, to both Chinese and foreign carriers, equate to close to half the 19.49 billion yuan in profits earned by the top four mainland-based airlines last year, according to the consultancy known as Cadas.