The transfer of the 4 airports in China's northwest Gansu Province to the local government from Civil Aviation Administration of China marks the conclusion of the two-year plus reform of system in the country's civil aviation sector. The sweeping overhaul has resulted in the separation of government function from the enterprises, incorporation of three air transportation companies and three air back-up businesses, and handover of 90 airports to local governments.

However, problems in this sector have come to light as the reform process is pushed forward, such as serious losses among enterprises, distorted market competition, etc. Meanwhile, consumers are asking for better services, including more convenience, more affordable prices and more safety.

It is expected that the transportation turnover of China's civil aviation will notch up to the second of the world from the fifth now. New problems always go with the fast progress forward. And reform is the only way for it to get strong enough to face the market competition which will be due to get fiercer after China has signed an agreement with US to have its sky more open.

A tall order for internal reform

The three air transportation corporations as a result of the reshuffling are real giants with more air routes and more planes. For example, China Air has brought its maintenance costs down by building its Airbus fleet while Southern Air offers more choices for passengers by extending its flights to more areas.

But these behemoths are beset with redundant personnel and tangled corporate structure. For one plane, there are as many as 260 staff members, while there are only 100 for foreign airliners. That has raised costs but reduced efficiency.

In addition, the three are involved in too many businesses, air transportation, hotel, tourism, as well as real estate and manufacturing. What are they specialized in? In the mean time, they have to deal with price wars and hot market competition.

It is true that the reform gives airliners more freedom. But it is also true that the reform has also taken away care from the government. The enterprises have to learn to act as an independent player in the market.

In the past year, the three all accelerated their internal integration, but they are still struggling to be out of losses.

Higher expectation from consumers

Improvements have been made on service quality of airliners and protection of interests and rights of consumers. But consumers are far from being satisfied.

Passengers flying between Beijing and Shanghai can choose from more than 20 flights run by several airliners. But those traveling around the mid-west areas are not so lucky, where there is only one airliner and hardly any discount for a route.

There are many complaints about the service offered by Chinese airliners. Some of the airliners argue that their services are much better than rail and road. But consumers do not agree. For many passengers, what raveling by air means is more than taking them to their destinations. It means some comfortable. So they have high expectation from airliners. What's more, the land service is not as good as the air service. CAAC and airliners attach importance to improving their service. But their efforts have not been justified by satisfaction of consumers.

Some problems are brought about by the fast development of the industry. Disputes between passengers and airliners are escalating during the first half of the year when boycotts against take-off were rising and more flights failed to arrive as scheduled.

Weather is one of the reasons. But the underlying reason is that neither the equipment nor the service of the sector is ready enough to meet the brisk market demand and handle the surging turnover. Planes, pilots and staff responsible for maintenance and land service are all overloaded.

On the consumers' side, they expect more breakthrough on monopoly so that they can enjoy more benefits of competition. From January to May this year, 46.66 million people traveled by air, up 36 percent over the same period of last year. It is a good thing to have brisk demand. But airliners have more to do to please consumers when they have won more market share.

Administrative dilemma

CAAC will be responsible for the air security, market management, air control, macro-adjustment and relations affairs, said Yang Yuanyuan, Director-general of CAAC.

In the past year, China's civil aviation was open wider to the rest of the world, gave easier market access, and established diversified investment mechanism.

CAAC still has a lot of issues to address even after the government function was separated from the corporate governance in this sector. Take prices as an example. Consumers are looking forward to deregulating ticket prices. But CAAC is concerned about vicious competition if the prices are liberalized when the time is not ripe. It insists that the interests of consumers mean nothing if those of businesses are damaged.

Due to the different perspectives, consumers complain that CAAC is biased too much in favor of airliners. For example, consumers do not think CAAC has made its instructions clear enough about the compensation policy for delayed flights. But airliners regard such a policy nothing more than a marketing gimmick to improve competitiveness and the government should not have stepped in.

This put CAAC in an embarrassing situation. It has to manage a trade-off between its responsibility of appeasing consumers and its role in leading the whole industry without interfering corporate operation. Anyhow, it takes time for CAAC to act as a good "referee".

By People's Daily Online