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CAAC Announces Significant Changes to Long-Disputed “One Route, One Carrier” Policy

The Civil Aviation Administration of China (CAAC) recently unveiled updates to its long-disputed policies governing the number of Chinese airlines operating flights on certain routes. Concurrently, the process for how international traffic rights are allocated for Beijing’s twin-hub aviation market will see numerous changes ahead of a third Beijing airport, Daxing, opening in 2019.

CAAC officials determined adopting the updates was necessary because the previous policies were “out of touch with reality today.” The updates will be introduced gradually as though not to disturb China’s overpowered civil aviation market.

The updates come following President Xi’s desire to develop Beijing’s new airport into a leading global hub providing a new driving source for the economic growth of China.

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The most notable update to the CAAC policy includes steadily abandoning China’s “one route, one carrier” rule where only one Chinese airline was permitted to operate flights between a city-pair (i.e. PEK to SEA, PVG to LHR, CTU to SYD, etc.); although, some routes were subject to exemption.

Routes of mainland China—excluding Hong Kong, Macau, and Taiwan—to destinations in the Americas, Europe (excluding Russia), Oceania and Africa are classified by the CAAC as Category II International Routes and are therefore subject to heavy restrictions. The CAAC wants to gradually weaken these restrictions and allow competition from Chinese airlines on certain long-haul, international routes. Routes that are already served by two or more Chinese airlines are granted to host an additional Chinese airline, provided at least one of the following requirements are met:

  1. Routes currently operated by Chinese airlines account for less than 70% of the total flights served on the route AND the combined total of weekly flights by both Chinese and foreign airlines averages at 14 (a flight being two-way).
  2. Failing the first requirement listed above, an existing Chinese airline has solely operated the route for more than 6 years since the date the updated regulation takes effect.

The updates mark a turning point in commercial Chinese aviation. Airlines once unable to operate certain routes will likely now have the freedom to operate such routes. Cities popular with Chinese airlines like London, Los Angeles, New York, San Francisco, Seattle, and Vancouver—among others—could see major route announcements from Chinese airlines in the near future. According to market analysis, the updates could also mean new, substantial long-haul aircraft orders from Chinese airlines.

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