How low-cost carriers are changing the shape of China’s aviation industry

China’s low-cost carriers are thriving and poised for further growth as their larger rivals struggle to turn a profit during tough times for the airline industry, according to analysts. With a business model based on cheap air tickets and reduced operating costs, the budget airlines are maintaining profitability at a time when the mainland’s aviation industry is haunted by a weaker yuan and the prospect of rising fuel costs. Their success may even force long-haul operators to copy some of their cost-cutting tactics, according to some industry experts. Offering cheap air tickets has proved a big selling point for China’s growing army of domestic travellers, said Sun Fei, an analyst at Deutsche Bank. For example, the one-way trip from Shanghai to Chengdu departing on December 19 offered by China’s largest budget carrier, Spring Airlines, offers one of the lowest priced tickets, at just 449 yuan. The flight has a similar departure time to others on the same route but with reduced services such as in-cabin catering, and a fee for checked-in baggage. “I will choose to buy a cheaper ticket for our family trip if the departure time is suitable,” said Lily Wang, an education consultant from Guangzhou, who flies frequently in China. “I think people have a misunderstanding that low-cost equates to a lack of safety, but that is not the case. I think it is unnecessary to provide additional services such as food and drinks or entertainment for a journey of less than two hours. Sometimes I do not eat what the network carriers serve because the food in the planes is always not tasty.”<br/>Many of the mainland’s bigger, long-haul airlines are finding it hard to stay profitable, weighed down by dollar-denominated debt made more expensive by the devalued yuan. On top of this, many industry analysts believe Opec’s recent agreement to cut oil production will drive up fuel costs.<br/>