Chinese airlines to obtain government subsidies to overcome operational difficulty

The Ministry of Finance and China’s civil aviation regulator launched a two-month subsidizing plan on Thursday to aid passenger flights in an effort to reactivate the struggling industry, on the heels of the State Council’s rolling out a comprehensive package of measures to bolster Chinese economy which has seen a marked slowdown recently due to coronavirus lockdowns.

According to the government plan, subsidies will be doled out to Chinese civil aviation carriers when the average daily domestic passenger flights are less than or equal to 4,500 flights per week, and the maximum government grant could reach RMB 24,000 (USD 3,573) for per hour of flight.

The Civil Aviation Administration of China (CAAC) said that any domestic carrier could apply for the government subsidy when its average daily flights in any week does not exceed 4,500 flights; the weekly average passenger load factor for each flight does not exceed 75%; adding that actual flight revenue should not be sufficient to cover variable costs.

The funds to be used for the subsidizing plan will be shared by the central government and provincial finances, with the central government financing 65%, 70% and 80% of the eastern, central and western provinces, respectively, with the remainder being financed by local authorities.

The CAAC said the new policy will come into force from May 21 to July 20.