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China Threatens Airline Penalties in Crash-Free Olympics Bid

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Jan 14, 2008

China, bidding to use this year's Beijing Olympics to attract overseas tourists, said it will strip domestic airlines of routes and new planes if they have a major safety incident during the event.

The rules will also apply during the annual meeting of the National People's Congress, the country's top legislative body, in March, the General Administration of Civil Aviation said in a statement today.

The move follows plans to close polluting factories and to ban smoking in much of Beijing as China aims to impress the 1.5 million overseas visitors expected in the capital for the games, which start in August. The focus on penalties likely to hurt airlines' profits may also reflect a tougher approach by the regulator under new head Li Jiaxiang, said analysts.

``These punishments are exactly what airlines fear,'' said Li Lei, an analyst at China Securities Co. in Beijing. ``Li knows the most effective way to manage carriers.''

Li, an ex-air force general, was appointed to replace Yang Yuanyuan as the regulator's head in late December. He was previously chairman of Air China Ltd., the country's largest international carrier.

China, the world's second-largest air travel market, hasn't suffered a fatal commercial airplane crash since November 2004, according to the Flight Safety Foundation's Aviation Safety Network Web site.

China Southern Airlines Co., the country's largest carrier, and other Chinese airlines will likely boost passenger numbers 14 percent this year to 210 million, the regulator said in a separate statement today.

Air China, China Southern and China Eastern Airlines Corp., the third-biggest carrier, are all ultimately controlled by the State Council, China's cabinet. The country's government makes airplane orders centrally before allocating aircraft to individual carriers.

bloomberg.com

China Threatens Airline Penalties in Crash-Free Olympics Bid



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