Aviation regulator in China to support restructuring, mergers

A man in a protective suit disinfecting the cabin of a Hainan Airlines flight at the Haikou Meilan International Airport in China's Hainan province last Friday. PHOTO: REUTERS
A man in a protective suit disinfecting the cabin of a Hainan Airlines flight at the Haikou Meilan International Airport in China's Hainan province last Friday. PHOTO: REUTERS

BEIJING • China's aviation regulator will support restructuring or mergers to help airlines cope with the coronavirus outbreak, it said yesterday, noting that the epidemic has hurt the bottom lines of many carriers.

The epidemic, which originated in the transportation hub city of Wuhan and quickly spread to the rest of China, has caused global airlines to cancel thousands of flights after dozen of countries imposed travel restrictions amid virus fears, dampening demand. The disease was named Covid-19 on Tuesday.

On Tuesday, airlines cancelled 12,662 flights in China, according to aviation data provider Variflight.

The Civil Aviation Administration of China (CAAC) will continue to lobby the authorities to subsidise airlines hurt by travel curbs due to the coronavirus, CAAC spokesman Xiong Jie told a media briefing, adding that more fees would be waived for carriers.

The regulator will also support restructuring and mergers among airlines based on their needs, and support them to optimise capacity so they can weather the difficult time and win the battle against the virus, the spokesman said.

Discussions of possible mergers have swirled since conglomerate HNA Group, which owns Hainan Airlines, started experiencing liquidity issues, said Chinese aviation expert Li Xiaojin.

Mr Li added that small airlines such as Lucky Air and Okay Airways were looking to get acquired.

"But the issue is the airlines looking to be bought were asking for a high price... After the outbreak, everyone is having difficulties, but small airlines may struggle more, so it's possible for them to lower their asking prices," Mr Li said.

Passenger traffic in China declined 5.3 per cent last month from a year earlier, compared with a growth rate of 7.9 per cent for last year.

"The coronavirus has had a huge impact on the civil aviation industry, which resulted in significant reductions in flight volume and could create new or spill-over safety risks," Mr Xiong said.

The CAAC hopes countries will lift virus-related travel restrictions as soon as possible, in line with guidance from the World Health Organisation and International Civil Aviation Organisation, said CAAC official Liang Nan.

For international flights affected by the coronavirus, the CAAC, in communication with other aviation authorities, will strive to retain the rights and landing slots for airlines, Mr Liang said, adding that flights would be restored as soon as possible when market demand returns.

REUTERS

A version of this article appeared in the print edition of The Straits Times on February 13, 2020, with the headline 'Aviation regulator in China to support restructuring, mergers'. Print Edition | Subscribe