CAAC Minister Yang Yuanyuan said the pricing reform will increase the range for fares.

The CAAC and State Development and Reform Commission will jointly settle on the base prices, which will guide the airlines, Yang said in an interview with Xinhua News Agency.

It will authorize price ranges for various air routes taking into account operational costs, market demand and supply, and consumption levels.

As long as they are within the range, the airlines can decide on their own prices during different periods.

Prices can also vary for different consumer groups and different types of aircraft.

For a long time, carriers were not allowed to offer discounts on tickets.

Yang said the CAAC will keep a close watch on new prices to ensure all practices are working as they should.

Yang said he believed the reform would allow the Chinese aviation industry to better adapt to the present market situation where supply exceeds demand, passengers are no longer necessarily just those with a lot of money and profit is being eroded by other modes of transport.

He said previous efforts by the CAAC to make Chinese airlines more flexible to the market situation through mergers and restructuring have laid favourable conditions for the new pricing mechanism.

Through the reform, the aviation administration is giving more autonomy to carriers, while it continues to develop itself into a supervisory body for the industry.

Yang also said that the CAAC has still much to do to improve the management of the country's aviation sector.

"The total number of flights that could be classified as normal in 2002 were 4 percentage points less than that of the previous year," Yang said.

As a remedy, Yang suggested that a stop be put to unreasonable expansion. The focus should be on restructuring airlines that have merged.

As for this year, the top priority should be enhancing safety through upgrading infrastructure, stricter personnel training, and improved regulatory and supervision mechanisms. An air police branch will also be established this year.

China's civil aviation industry has witnessed rapid development in recent years.

CAAC statistics show the industry transported 84.25 million passengers and 1.98 million tons last year, up 12 percent and 15.8 percent over 2001.

(China Daily March 31, 2003)