China, the biggest air-travel market in Asia, will stop approving orders for new planes and the establishment of new carriers to avoid overcapacity during an economic slowdown.
Liu Shaocheng, head of policy and research at the Civil Aviation Administration of China said airlines will be able to buy planes that have already been approved. Some orders would also be signed next month, he added, without saying when the ban would take effect.
Slowing capacity growth may help the nation’s airlines cope with the global recession, which is expected to hold down air travel in China for as much as three years.
The government may also lower fuel prices and cut taxes after granting an RMB3 billion, or $439 million, bailout to the parent of China Southern Airlines, the biggest carrier in the country.
The move to aid China Southern Airlines appears to be the first step in a government rescue of state-controlled airlines, including Air China and China Eastern, hit hard by weak air traffic demand and hefty losses on fuel price hedging.
Source: International Herald Tribune