CRI听力:Low-cost Airlines Expanding in China

With the surging prices in fuel, the entire aviation industry is suffering as operation costs soar. The International Aviation Industry Association estimates that the overall turnover in the industry this year will reach 6.31 trillion US Dollars, and the profit ratio will probably only be 0.5 percent.

At the same time, airline companies operating at lower costs and offering cheaper air tickets are seeing larger numbers.

Air Asia is one of them. CEO Azran Osman-Rani says he is quite optimistic about the development in the industry.

"This is a big step for us, because we see Beijing as one of the economic centers for global aviation. In a very short time, Beijing will be the world's largest airport. I think there is lot of room to expand. The market we look at in the Asia-Pacific has over three billion people. Europe has only about five hundred million people, but there are at least ten low-cost carriers that are very big and successful with more than a hundred planes. In Asia, we haven't even reached that yet, so the growth potential is definitely very big. "

Air Asia is not the only one eyeing at the Chinese low cost aviation market. Foreign aviation companies like Singapore's Scoot, Australia's Jetstar Airways, and AirAsia Berhad are all entering the Chinese market.

So far, 25 percent of the global aviation market share is made up of low-cost companies, but in the Chinese market, low-cost aviation companies only account for five percent.

What is special about low-cost airlines is the cheap tickets. The price is usually 30 percent lower than normal air tickets, with some even offering 70 percent off.

The lower prices have also attracted many travelers, enhancing efficiency. According to statistics from Civil Aviation Administration of China, the average seat occupancy in 2011 was 82 percent, but the figure from low-cost airline companies reached 95 percent.

President of China Spring Airlines Wang Zhenghua says the company has made a profit of 500 million at an annual growth rate of 30 percent, but still, the company has been trying hard to suppress costs.

"Our office working costs are only one third of other airline companies, and business costs are only a quarter. We've sought multiple ways to save money. But I've also encountered many challenges. For example, our pilots now have to stay in three-star hotels. It's quite hard for them to accept, especially when they used to staying in four and five-star hotels. Such expenses also add to the operation costs."

The Civil Aviation Administration of China requires that all the low-cost airlines establish a complete operational and managerial system, which is quite difficult when they are attempting to reduce costs.

But international rivals say the challenge comes from airline resource allotment. CEO Azran Osman-Rani from Air Asia.

"I think in China the biggest one is the slots. It's not just the airport slots, it's also the airway slots. As long as those are restricted, it will be very hard to expand for low cost companies."

Normally, these companies do not compensate travelers. Domestic low-cost companies are receiving more complaints about their services but the business keeps growing.

For CRI, I'm Liu Min.