Spring Airlines, a Chinese budget airline based in Shanghai, has appealed to the price watchdog in east China's Shandong Province for a public hearing over the proposed fines for selling allegedly below-cost tickets last month.

 

"The price authorities are continuing investigations into the case and a final penalty would be handed down after the public hearing," said Sun Jianmin, director of the municipal price bureau of Jinan, the provincial capital.

 

He said the date of the public hearing had not yet been decided.

 

Sun said the proposed fine of 150,000 yuan (US$19,000) was not the final penalty and they would consult with other departments, including the civil aviation department, for a final conclusion.

 

Spring Airlines and its subsidiary Jinan Spring Holiday Travel Agency put 400 one-yuan tickets on the market on Nov. 28 and they sold out in three days.

 

The tickets were for flights between Jinan and Shanghai from Nov. 30 to Dec. 10 and accounted for 10 percent of all the seats.

 

Several days later, the Jinan price bureau informed Jinan Spring Holiday Travel Agency that it had been fined for 150,000 yuan for selling tickets for as little as one yuan (13 U.S. cents).

 

The bureau said in a notice that Spring Airlines had breached the regulation on discounted air tickets promulgated by the National Development and Reform Commission and the General Administration of Civil Aviation of China (CAAC).

 

But the China East Air Traffic Management Bureau has not made any comments on whether the one-yuan air tickets violate the regulation.

 

The regulation stipulates that airlines can only offer discounts of up to 45 percent on standard air tickets.

 

The benchmark price for a regular one-way ticket on the Jinan-Shanghai route is 610 yuan, and the bottom line should be 275 yuan. The one-yuan ticket is clearly lower than the bottom line, some people have argued.

 

But the travel agency defended its parent company by saying the regulation did not specify whether it referred to every ticket sold or the total number of tickets sold by the airline.

 

Zhang Lei, a spokesman for the Spring Airlines, said they sold cheap tickets to attract passengers because the flights are arranged close to midnight, a time most people would be reluctant to travel.

 

Zhang said, selling one-yuan tickets was not a long-term practice of the company, but a move to promote the Jinan-Shanghai flight.

 

"I think the one-yuan ticket is fair and reasonable because it enables more people to travel by air and it helps make full use of the seats," Zhang said.

 

Spring Airlines launched its maiden flight in July last year, becoming the first airline to announce a cheap-price strategy in China.

 

(Xinhua News Agency December 22, 2006)