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Airfares in China are about to soar

China's aviation regulator has just eased control over capped fare prices

In news that deals a blow to keen travellers, China's aviation regulator has just lifted a cap on how much government-owned airlines can charge passengers for domestic flights. In a joint statement made last Friday by the Civil Aviation Administration of China (CAAC) and the National Development and Reform Commission (NDRC), airlines now have the freedom to set their own fares for domestic routes, as long as they're served by at least five carriers.

Until now, many of the most profitable routes – such as Shanghai to Beijing or Guangzhou – have been subject to government pricing caps. The easing of state control over prices reflects the CAAC's latest effort to create a more market-led pricing system, which began back in 2016 when the aviation regulator allowed carriers to set prices for routes that were either in competition with high-speed rail or less than 800 kilometres in length. This new ruling now adds an additional 307 routes to a list of 677 existing routes that airlines were already able to set their own prices on.

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Since Friday's announcement, Chinese airline shares have surged amid expectations that the move will boost profits, particularly with the approaching Lunar New Year. State-owned rivals Air China and China Eastern Airlines have both jumped by 10 percent, while China Southern Airlines has jumped as much as 11 percent.

For frequent business travellers, these changes mean that your flight to Beijing is likely to get more expensive, making high-speed rail a more attractive option than ever.

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