Domestic airline companies are slashing fares as they compete for passengers over the slow winter season.

The price war is being led by China Eastern Airlines, which is offering tickets between Beijing and Shanghai for as little as 280 yuan (US$34.5), according to Yoee.com, an online seller of air tickets in Beijing.

A full-price ticket for the economy-class seat on the Beijing-Shanghai route is 1,130 yuan (US$139.3).

China Eastern Airlines' offer is lower than a rail berth ticket for the same route, which costs 332 yuan (US$41) for a hard bed and 504 yuan (US$62) for a soft bed.

Air China and China Southern Airlines are also offering low fares on the route, giving discounts of up to 30 per cent.

Cut-price tickets have also been launched on routes such as Beijing-Guangzhou, Beijing-Shenzhen and Shanghai-Guangzhou.

Competition has intensified as more private carriers, such as Shanghai-based Spring Airlines, Tianjin's Okay Airways and Eagle Airlines in Chengdu, try to cash in on the fledgling regional flights aviation market.

Experts said the competition will ultimately benefit the customers, although the industry regulator allows no airlines to drop ticket fares below 55 per cent of the government-regulated price on some busy routes to try to avoid price wars.

"As the market is increasingly open to more airlines, both State-owned and private ones, air fares should be regulated in line with the market," a professor with the Civil Aviation Management Institute of China said during a telephone interview with China Daily on Friday.

It will benefit both carriers and customers, he said, only giving his surname as Liu.

China is gradually easing controls over air fares, letting market forces play a key role in regulating air ticket prices, said a press official from the General Administration of Civil Aviation of China (CAAC), the industry watchdog.

"In the long run, the air fares could be fully regulated by airlines in line with the market demand," the official said.

According to Liu, airlines could look at decreasing loads on planes to cut back on fuel and improve profits. Jet fuel takes up around 40 per cent of their operational costs.

Last week, China extended the collection period for jet fuel surcharges on domestic flights until the end of March in a move to help carriers survive rising fuel prices.

The surcharge, which was due to have run out on December 31, allows domestic airlines to charge each passenger 20 yuan (US$2.5) for flights under 800 kilometers.

For flights longer than 800 kilometers, the surcharge is 40 yuan (US$4.9). Passengers will not have to pay the surcharge on tickets booked before the announcement.

(China Daily December 3, 2005)