Chinese airlines will experience a drop in demand on international routes by as much as 10 percent this year despite a recovering domestic aviation market, the International Air Transport Association warned in a report Tuesday.

China has been able to stimulate demand in the domestic aviation market by adjusting prices but international demand to and from China is set to shrink by between 5 percent and 10 percent over the year, said IATA, which represents 230 airlines.

Concerned about the waning demand, domestic carriers have offered special discounts on air tickets to lure more passengers and the aviation regulator also exempted fuel surcharges on domestic routes.

The average ticket price on domestic routes dropped by as much as 15 percent in January from a year earlier, despite the one-week Lunar New Year holiday that usually allows travel agents and airlines to charge higher ticket prices.

China Southern Airlines, the country's largest carrier by fleet size, launched the X99 project, to run from April 1 to October 31, under which tickets from the Chinese mainland to Europe, America and Australia will cost as low as 1,199 yuan (US$176), and tickets between the mainland and Southeast Asia will sell for as low as 199 yuan.

The international passenger traffic in China dropped 10.8 percent last year while cargo traffic gained 1.5 percent, according to the Civil Aviation Administration of China.

(Shanghai Daily March 25, 2009)