Island hopes jets to bring in business

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Last updated at: (Beijing Time) Tuesday, February 24, 2004

Island hopes jets to bring in business

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Hainan Province, situated at the south tip of China, will grant foreign airlines the option of extending their air routes to Chinese inland cities as part of opening up its traffic rights on the island province.

The provincial government announced on February 23 that the General Administration of Civil Aviation of China (CAAC) had approved expanding the managerial authority of foreign airlines at the two international airports of Hainan - Haikou Meilan International Airport and Sanya Phoenix International Airport.

According to the latest approval from CAAC, international airlines in Haikou and Sanya are allowed to fly to any inland cities that are open to international flights except Beijing, Shanghai and Guangzhou.

Meanwhile, foreign airlines to inland cities can also fly to or via Hainan island.

But the flight frequency between Hainan and inland cities should not exceed seven flights each week.

The issue of flights by Hong Kong and Macao aviation companies will be discussed at a later time, according to the approval notice.

Hainan became the pilot province on the Chinese mainland to liberalize its third, fourth and fifth traffic rights on a trial basis last March.

However, the island's limited market and insufficient source of customers or tourists imposes an adverse impact for foreign airlines to open or add new flights to Hainan. That makes the policy of liberalizing traffic rights difficult in achieving immediate results.

Besides the latest moves,the Hainan government has worked out several preferential policies to encourage foreign airlines to expand their business in Hainan.

The provincial government as well as Haikou and Sanya municipal governments will give various tax abatements or subsidies to foreign airlines.

For instance, from the beginning of this year to the end of 2006, the local governments will give a full subsidy of turnover taxes to foreign aviation companies if they operate international flights to or from Hainan, or pick up passengers and cargo in Hainan en route to another destination.

Traffic rights, or freedom of the air, are formed at the Chicago convention on international civil aviation in 1944.

They are privileges granted by a government to an international airline registered in another country, including strict guidelines on how a foreign airline is to operate within its airspace.

The third and fourth freedoms of the air are limited to two countries, which grant an airline of the home country to carry passengers and cargo to another country or vice versa.

The fifth traffic right necessitates the inclusion of a third country. It is the privilege to bring passengers and cargo from one country to another country, other than the home country of the airline.

Wang Xin, vice-secretary general of the Hainan government, said opening traffic rights would accelerate the economic development of Hainan.

He said Hainan is an island economy whose raw material and market for its economic development depend on resources outside the island, and tropical agriculture and high-tech industry particularly need the support of efficient flow of goods.

Source:China Daily

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