Analysts believe that the fundamental significance of canceling the "minimum price" of civil aviation is to cancel price control and return the price dominance to enterprises, so that enterprises can truly become the main body of market competition.
In the off-season, many passengers have bought "cabbage price" tickets, but you may not know that the previous "cabbage price" tickets as low as 10% or 20% are actually illegal. Because according to the Civil Aviation Domestic Air Transport Price Reform Plan jointly issued by the Civil Aviation Administration of China and the National Development and Reform Commission in April 2004, there are very clear provisions on the fare level of domestic routes, that is, the fare level of domestic routes implemented by airlines shall not exceed 25% of the benchmark price (full price) and shall not exceed 45%. This also means that the lowest price of domestic air tickets cannot be less than 5.5 fold.
For many years, in the name of preventing vicious competition and protecting the interests of enterprises, CAAC first issued a "no discount order" and then issued a "lowest price" to prohibit airlines from fighting price wars. About 10 years ago, the Civil Aviation Administration of China issued a "no discount order" to restrict airlines from launching a "price war" with high discounts. In the following years, despite repeated applications by the Civil Aviation Administration of China, the ban was repeatedly broken. Around 2005, the "no-folding order" came to an end.
In order to prevent the low-price war between airlines, the National Civil Aviation Administration intervened in the price of 699 routes, stipulating that airlines cannot sell air tickets below the cost price. According to the price law, in order to crowd out competitors, enterprises take dumping measures below the cost price, which is unfair competition. But the "cost price" mentioned here is the cost price of the enterprise, not the average cost price of the whole industry, nor the cost price of competitors.
Breaking the restriction of air ticket price reduction reveals that China's civil aviation industry will be more market-oriented. However, handing over the ticket pricing power to the market is only the first step. The loosening of this policy means that civil aviation will be further marketized and eventually bring benefits to consumers. However, airlines have mixed feelings: on the one hand, the cancellation of ticket "price floor" means the opening of price war, which also means that the civil aviation market will be further expanded, opening up new channels for the development of low-cost airlines; On the other hand, in the environment of high operating costs, the price war of air tickets is the last thing airlines want to see. Cancelling the "price floor" will easily lead civil aviation enterprises into a melee situation of price competition. However, the cancellation of the air ticket "price floor" is good for ordinary consumers and not bad news for the development of the aviation market.
For a long time, the "price limit order" of the civil aviation department has been regarded as "hurting enterprises rather than protecting them" because it restricts competition and intervenes in the market. At present, the domestic "four vertical and four horizontal" high-speed rail network directly affects nearly 60% of China's civil aviation market. Compared with the favorable conditions that the high-speed rail is less affected by the weather, the advantages of air travel have been exhausted. With the continuous opening of new high-speed rail lines and the gradual networking of high-speed rail, civil aviation enterprises are facing tremendous pressure. If they insist on "price floor", it means waiting for death and handing over customers.
The greatest significance of canceling the "price floor" is that government departments give up price intervention on market players. On the one hand, it is the inherent call for the survival and development of civil aviation to return the pricing power to airlines so that enterprises can have flexible and independent competitive rights in the fierce market competition environment; On the other hand, under the ban of price floor, a discount of less than 5.5% on air tickets means that it is illegal. If the pricing power is not given to enterprises, how can civil aviation face the competition of high-speed rail?
The greatest significance of liberalizing the price limit order now lies in the justification of low-cost air tickets, so that we can directly face the competition with high-speed rail from now on. Especially after the restriction of ticket price reduction is lifted, airlines will be forced by competitive pressure to choose cheaper labor, formulate more accurate marketing plans and implement stricter performance management. If the price comes down, the service level goes up, and finally win more customers, it is undoubtedly a win-win move.