CAAC to ‘loosen grip’ on controlled airline industry

The Civil Aviation Administration of China (CAAC), the country's aviation watchdog, is considering more moves to free up the airline industry that has for years been refrained from expansion due to safety concerns, a Chinese newspaper reported Tuesday, quoting a source familiar with the matter.

New rules designed to remove restraints on the establishment of subsidiaries or branch firms of domestic airlines are likely to be announced by CAAC, the Shanghai-based National Business Daily reported Tuesday, without revealing the timing.

CAAC has yet to confirm the speculation, but its recent announcements of plans to approve two new airlines, Ruili Airlines and Qingdao Airlines, already signaled an end of a policy in place since 2007 - suspending approvals for any new airlines on safety worries.

CAAC's lifting of the approval ban came amid lackluster growth seen in the domestic airline sector, which has suffered from rising fuel costs as well as the growing popularity of high-speed rail.

China's aviation industry registered income totaling 556.1 billion yuan ($90.65) in 2012, an increase of 10.5 percent compared to the previous year, however, the industry's total profits shrank by 7.65 billion yuan year-on-year to 29.59 billion yuan during the same period, according to data released Monday by CAAC.