The amended Provisions on Domestic Investment in Civil Aviation Industry (the Provisions) will officially enter into force on January 19, 2018. The Provisions further alleviate the barrier for state-owned and non-state-owned entities to invest in the civil aviation industry, encourage and support domestic investors to put money in the civil aviation industry, and guide and regulate the investing activities of civil aviation enterprises, aimed to promote the rapid and sound growth of the civil aviation industry.

According to the Provisions, state-owned and non-state-owned investing entities may make separate or joint investment in the civil aviation industry. As the civil aviation industry lowers the investment barrier, civil aviation enterprises of all kinds are subject to equal administration policies.

The Provisions specify that public air transport enterprises that are subject to special administration over domestic investment shall remain controlled or relatively controlled by state, and those state-relatively-controlled air transport enterprises shall be relatively controlled by sole state-owned investing entity and its holding companies. Meanwhile, the Provisions encourage investment to be made in diversified civil transport airports, but hub airports included in the civil aviation development plan and civil transport airports with strategic bearing shall remain solely state-owned, state-controlled or relatively-state-controlled. Civil transport airports invested, constructed or operated via public-private partnership such as franchise shall also comply with national provisions on public-private partnership including franchise operation.

The Provisions also regulate investing activities among civil aviation enterprises. For civil transport airports, aviation fuel sales, storage and filling enterprises, computer reservation system service companies and their affiliated companies, investment into public air transport enterprises other than all-cargo transport airlines shall not exceed 5% of their total investment. For a public air transport enterprise and its affiliated companies, investment into civil transport airports included in state’s planned international hubs or regional hubs and their shared terminals shall not exceed 25% of its total investment, and the public air transport enterprise and its affiliated companies shall not obtain relative control with their investment. For civil transport airports, investment into aviation fuel sales, storage and filling companies and facilities within the airport shall not exceed 25% of their total investment and the civil transport airports shall not obtain relative control with their investment.

The Provisions also point out that since the air traffic management system is mainly funded by central government’s investment, air traffic management departments shall not invest in other fields but air traffic management system. Board members and senior operation managers of public air transport enterprises shall not hold a post as senior operation managerial personnel at civil transport airports, and board members and senior operation managers of civil transport enterprises shall not hold a post as senior operation managerial personnel at public air transport airports.

In accordance with the Provisions, CAAC published an announcement with the list of public air transport enterprises, hub airports and strategic airports that are subject to special administration over domestic investment: Air China, China Eastern Airlines and China Southern Airlines Company Limited (transport enterprises); civil transport airports at places where provincial governments, governments of autonomous regions and municipal governments are located, and civil transport airport at the eight cities of Shenzhen, Xiamen, Dalian, Guilin, Qingdao, Wenzhou, Ningbo and Sanya (hub airports); and civil transport airports at Xinjiang and the Tibet Autonomous Region (strategic airports).