With the Labor Day holiday week approaching, domestic air carriers are raising air ticket prices to profit from tourism's peak season.

It is reported that some air carriers will initiate a price hike on popular routes by 10 to 25 per cent from April 20. And after May 10, airfares will be raised all around by up to 25 per cent. Although aviation authorities have not officially confirmed the news, major domestic air carriers have already released details of the new pricing.

The price hikes are in response to the newly approved pricing reform by the National Development and Reform Commission and the General Administration of Civil Aviation of China.

According to the new regulation about the pricing of flight tickets, effective on April 20, airlines will be entitled to decide prices based on the base price, which remains at 0.75 yuan (US 9 cents) for each person per kilometer. The new policy also permits adjustments of 25 per cent up or 45 per cent down on the official face price.

The latest price adjustments make full use of the policy preference on price hikes.

And the enthusiasm of travel agencies and travelers with plans for the upcoming holidays has been dampened by the news.

Tourism has always paid attention to air ticket pricing since - according to industry insiders - airline costs could account for half of the cost of domestic travel business.

With the airfare hike, quoted prices will be raised by at least one third, leading to a reduction in travelers.

The Labor Day holidays traditionally mean golden business opportunities for travel agencies. However, they may not be optimistic this year.

Because of the ticket price hike, a reduction in chartered planes, and the speedy gearing-up of the railway network, spending on domestic travel has increased greatly over the past years.

And having learned a lesson from past experience of traveling in the holiday season, many people think that they would rather stay at home than spend money going to sightseeing spots amid swarms of people.

In the past year, people who had freedom to arrange their holiday agenda, chose to travel before and after Labor Day to avoid the week peak.

Now with the fare price rise, people will turn to railways, as their schedules are set up to provide utmost convenience for travelers.

China's air ticket pricing system has long been the subject of public argument and criticism. Although a public hearing system and price adjustment regulation have been set up, the public still files many complaints about it, saying the system and its regulations do not carry out its expected role in reasonable price adjustment. And prices always go up, seldom down.

Last year, when domestic air carriers decided to increase the prices, they gave the reason that the international price of fuel oil had gone up. But how about the international fuel oil price going down? The public never sees a corresponding adjustment in such cases.

The basic reason for the air carriers' random raising of prices is that in China's aviation industry competition is absent. Monopoly cannot be broken and the market still cannot play a role.

Although air carriers say the price hike this time is made in line with increasing demand at holiday time, such a large scale increase may witness a decrease in the number of passengers, resulting in a drop in total income.

The original aim of the holiday week was to boost tourism and spur domestic consumption. The price hike might prevent more people from traveling.

(China Daily April 17, 2004)