When businesswoman Ren Hong flew home after a recent trip toBeijing on state-owned Air China, she was hoping for a decent inflight meal totide her over until she got back to the spicy cuisine of her native Sichuanprovince.
The airline's meager offering, which was little more than"just bread," was a galling experience for Ren who wondered why thecarrier didn't cut both the pretense of full service and the price of theticket.
Her gripe highlights how Chinese travelers have been leftout of the massive budget airline boom that has swept Asia. From almost none adecade ago, the region now has more than 50 low cost carriers. The fast growthof no-frills airlines such as AirAsia and the slew of recent start-upsincluding Singapore's Scoot and AirAsia Japan underline surging demand in theregion for affordable air travel. The rise of budget carriers in Asia followssimilar expansion in Europe and North America in previous decades.
But in China, where the government still keeps tight controlof the rapidly growing airline industry, three big state-owned carriersdominate. Aviation authorities' efforts to shield them, as well as keep theindustry from growing too rapidly and compromising safety, mean travelers likeRen pay up to twice as much.
"I've found that flight tickets domestically sometimesare more expensive than the international ones due to monopolization and lesscompetition," said Ren, a 37-year-old who runs an export business and alsoblogs about her travels in her spare time. Even for tickets on Shanghai-basedSpring Airlines, considered China's only discount carrier, "their price isjust as same as the big airlines" during high season, she said.
While Chinese travelers are benefiting from foreign budgetairlines flying to some Chinese cities, analysts and consultants say governmentpolicy measures are preventing the domestic aviation market from opening up tooquickly. China's domestic market is one of the biggest prizes in Asia's travelindustry, with 264 million passengers last year, according to the CivilAviation Authority of China, which forecasts the number will grow aboutsix-fold by 2030.
"The domestic market in China has more or less remaineda fortress," Xiaowen Fu, an aviation expert at Hong Kong PolytechnicUniversity, said at a recent conference in Macau organized by the Sydney-basedCAPA-Center for Aviation.
Like other essential industries in China, the policymeasures are aimed at protecting the chosen few national champions from toomuch competition. China's three major state-owned airlines, Beijing-based AirChina Ltd., Shanghai-based China Eastern Airlines Corp. and Guangzhou-basedChina Southern Airlines Ltd., carried 191 million passengers among them in2011. But in the first half of 2012 their profits collapsed because of higherfuel prices and foreign currency losses. The rest of the market is dividedbetween smaller state carriers — some owned by the big three — and a handful ofprivate operators.
An unsurprising outcome of the cossetted state airlineindustry is a perpetual sense of grievance among travelers at poor service andlack of choice.
"The food on Chinese airlines is worse and more basicthan it is on the international airlines," said 25-year-old Li Peng, whorecently quit his job in Beijing to travel overseas for a year.
"And when the flight is delayed, I never get anyfeedback after my complaints. Many flights are delayed more than twohours" he said. "I do wish there were more budget airlines, especiallyin China," he said.
China's civil aviation policy hinders the country's budgetairline industry in two ways, according to experts. First, it makes it almostimpossible for a private company to start a new airline. Second, the policylimits growth by existing airlines, including state-run carriers, throughmeasures including requiring approvals for new airplanes and routes.
For airlines operating in China, "they've gotconstraints whether it be on operating strategy, or what they're allowed to doat the airports, or how they're allowed to recruit pilots, or what the airportcharges," said Con Korfiatis, director of Flight Ideas Consulting."So the low-cost carrier explosion in China is still beingconstrained."
In contrast, discount airlines continue to spread theirwings elsewhere in Asia. Three started flying in Japan this year, includingPeach Aviation and local ventures from Malaysia's AirAsia and Australia'sJetstar. Also taking flight in 2012 were Singapore Airlines' Scoot, ThaiAirways International's Thai Smile and AirAsia Philippines. Next year,Indonesia's Lion Air plans to start flights on Malindo Airways, a low-costMalaysia operation, the company said earlier this month.
Even China Eastern Airlines Co. is joining in, although itslow-cost carrier is a joint venture with Qantas subsidiary Jetstar that will bebased in Hong Kong rather than mainland China.
The Civil Aviation Authority of China hinted in July that itwould support budget airlines by loosening price controls. But director Li Jiaxiangstopped short of announcing any major policy reforms.
The measures aren't just aimed at China's private ordiscount carriers — they also apply to China's state-owned carriers. Analystssay policies are designed to prevent unfettered growth. Authorities clampeddown following a spell of supercharged growth during which the number ofpassengers expanded by 40 percent in 2003-2004. Such red-hot growth putstremendous strain on pilots and infrastructure such as air traffic control andairports, especially on heavily congested air routes between major Chinesecities including Beijing, Shanghai and Guangzhou.
"The market is already growing at 11-16 percentdomestically at average fares," said Mario Hardy, a vice president atresearch firm UBM Aviation. "Imagine if an AirAsia or a Spring was abletomorrow to lower that price by half. How many more people would betravelling?"
Hardy and other experts and industry insiders believe thatChinese authorities will allow the aviation market to open up gradually so thatthere's enough time to build up the required infrastructure. China is building82 new airports and renovating 101 others in a five-year plan that runs until2015.
"Otherwise it will be a mess," Hardy said."It would be chaos."
Until then, travelers like Ren, the businesswoman and travelblogger, will have to put up with higher prices. Ren is thinking of going toIndia on her next trip but is disappointed with the limited options. She couldfly with Air China at a cost of 4,000-5,000 yuan ($$635-$790) round trip. Orshe could pay 2,000 yuan ($320) on AirAsia — but she would need to changeplanes at AirAsia's home base in Malaysia.
"It's annoying," said Ren. But "life is notperfect and I have no choice. I could not ask for the flight to be both cheapand offer the perfect route."