China to ease investment access to aviation industry

Monday, 15 January 2018 00:00 - - {{hitsCtrl.values.hits}}

SHANGHAI (Reuters): China will make it easier for state and private enterprises to invest in its fast growing civil aviation industry from Jan. 19, but retain the state’s grip over key airlines and airports in sensitive regions.

China is the world’s fastest growing aviation market and is forecast to surpass the United States as the world’s biggest from 2022, says the International Air Transport Association.

The Civil Aviation Administration of China (CAAC) said on its website on Friday that new rules would allow state and private firms to independently or jointly make investments from Jan. 19, to drive the industry’s healthy development.

There would be limits, though, and certain entities needed to remain controlled by state-owned shareholders. These included the country’s three largest airlines, Air China, China Eastern Airlines and China Southern Airlines, and some airports in certain hub cities and western Xinjiang and Tibet regions.

It said that airlines could not own more than a 25% stake in international and regional airports, while airports in turn could not control more than 25% of companies involved in the sale, storage and transport of aviation fuel.

The Chinese government has promised to open up more sectors to private investment as part of efforts to make its companies more globally competitive.

The CAAC said it first started looking at allowing more private investment in aviation in 2005. In recent years it has routinely sought public opinion to fine-tune investment rules.

In 2016, it proposed to reduce the number of state-owned cargo airports and scrap restrictions on the types of investors in other airports, and also allow private firms to make certain aviation investments without requiring CAAC approval.