Hong Kong and Macau airfare agents are now allowed to set up wholly owned companies on the mainland market, as China's civil aviation authority further opened its ticket distribution sector.

 

The new market entrants, allowed to begin operations this month, are expected to heighten competition among the country's tens of thousands of airfare agents in the fast-growing air travel market, industry officials said.

 

Hong Kong and Macau airfare agents that set up joint ventures with local partners or operate as a wholly owned concern will enjoy the same capital thresholds as mainland companies, the General Administration of Civil Aviation, the industry regulator, said on its Website yesterday.

 

The new rule is consistent with the Closer Economic Partnership Arrangement trade pact that opens the mainland's service sector one step earlier to Hong Kong and Macau firms than to other overseas investors, the administration said.

 

"The new players are set to fuel the already heated competition on the mainland market," said Li Qishi, an official with an airfare agent under China Eastern Airlines Group.

 

"It's certainly a trend that the market will be further opened to more overseas companies with advanced management and marketing skills. Domestic agents, including us, are sharpening our competitive edges by consolidating online services."

 

The strategy to promote electronic services has been adopted by several domestic airfare agents after the success of Ctrip.com and the growing popularity of e-tickets, industry officials said.

 

Foreign giants like American Express and United Kingdom-based Business Travel International have set up joint ventures with domestic partners to tap the profitable booking services sector.

 

Foreign investors are now allowed to hold minority shares in a Sino-foreign airfare agent. Each foreign company can own no more than 25 percent of the shares.

 

Chinese airlines carried 147 million passengers in the first 11 months of last year, up 15.3 percent from a year ago.

   

(Shanghai Daily January 22, 2007)