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Second-tier China airlines struggling as provinces default on subsidy commitments
October 18th 2024
The finances of several Chinese airlines, especially those predominantly operating regional routes, are suffering as local governments fail to pay subsidies promised to them, Yicai Global reports. Read More » One carrier in trouble is China Express Airlines, which earns about a third of its revenue from routes agreed with local governments or airports the governments fund. Between 2013 and 2016, Chongqing-based China Express signed agreements with 40 local authorities or government-owned airports. As an increasing number of provincial governments have missed payments in recent years, airlines such as China Express and Joy Air, are in a tight spot cash flow wise. In a bid to collect the overdue subsidies, some airlines have taken local authorities to court. Joy Air launched legal action against the state planner of the Alxa League government in the Inner Mongolia Autonomous Region and Loong Airlines has sued Qinhuangdao’s transportation authority and two firms controlled by local leaders in two other provinces. “Subsidy arrears are a common issue for airlines in China today. Typically, these disputes are resolved through negotiation and legal action only is taken as a last resort,” an airline source told Yicai.
