Unofficial Translation for Reference Only

Notice on Implementing Financial Support Policy for Civil Air Transport Enterprises that Maintain and Increase International Air Cargo Transport Capacity during the Epidemic Prevention and Control Period

To financial departments (bureaus) of all provinces, autonomous regions, municipalities directly under the central government and municipalities separately listed in the State Plan, Financial Bureau of the Xinjiang Production and Construction Corps, CAAC Regional Administrations and transport airlines:

In order to proactively respond to the impact of COVID-19 epidemic on the civil aviation industry, maintain and increase international air cargo capacity, and safeguard the smooth operation of the global industrial chain and supply chain, China’s central government will provide financial support to both Chinese and foreign air carriers during the epidemic prevention and control period. The details are as follows:

I. Airlines eligible for financial support

During the epidemic prevention and control period, China’s central government will provide financial support to the modification of aircraft passenger cabins for carriage of cargo based on the design plan approved by the Department of Aircraft Airworthiness Certification CAAC (hereinafter referred to as “modification project”), and to the international cargo-only flights which have been operated since April 1, 2020 by Chinese and foreign airlines between points in China (excluding those in Hong Kong SAR, Macao SAR and Taiwan Province) and foreign destinations using their traffic rights for passenger transport.

II. Rules of financial support

1. Modification project

Subsidies will be provided to cover part of the costs incurred by airlines in modifying passenger cabins for air cargo transportation during the epidemic prevention and control period. Subsidies, which will cover 80% of the modification cost, can be divided into two tiers based on aircraft type: a maximum subsidy of 800000 yuan for single-aisle aircraft; and 1.45 million yuan for twin-aisle aircraft. The specific amount of subsidy will be determined based on the actual modification cost approved by CAAC.

2. International cargo-only flights

A. Financial incentives will be provided to the international cargo-only flights flown during the epidemic prevention and control period. The incentives will be divided into eight levels as follows, based on the flight distance in kilometers and the maximum takeoff weight (MTOW):

B. The amount of financial incentives will be approved based on the number of international cargo-only flights actually flown by the airlines concerned during the epidemic prevention and control period and the rules of financial support stipulated in this Notice.

III. Application and review process

1. Air China Limited, China Eastern Airlines Co., Ltd., China Southern Airlines Company Limited (hereinafter referred to as the three major airlines) and foreign airlines shall submit, on a monthly basis, subsidy application documents and relevant supporting materials to CAAC and the Ministry of Finance (MOF). Other airlines shall submit subsidy application documents and relevant supporting materials to CAAC Regional Administrations and provincial financial departments based on where the airlines are registered, for their review and approval before being submitted to CAAC and MOF.

2. CAAC will, based on relevant data, review the application documents and relevant materials of the airlines, and provide MOF with the review results.

3. MOF will allocate funds to the enterprises and local governments concerned based on CAAC’s review results and the above rules of financial support. The funds for three major airlines will be directly allocated by MOF; the funds for other domestic airlines will be transferred from the central to the local governments and be disbursed by local financial departments. The funds for foreign airlines will be included in CAAC budget and transferred by CAAC to the airlines concerned. Payment of funds will be made following relevant provisions governing the centralized payment by the state treasury.

4. All airlines are responsible for the authenticity and accuracy of the documents submitted, and no entities shall withhold or misappropriate the funds. If false statements or concealment of facts in relation to the applications are found during the review process, the airline concerned will be disqualified from the application process. Those entities and individuals who violate China’s national laws, administrative regulations and relevant provisions will be dealt with in strict accordance with the Budget Law of the People’s Republic of China and the Regulations on the Punishments and Disciplinary Actions for Fiscal Violations.

IV. Other issues

1. Financial support for the flights connecting mainland China with Hong Kong SAR, Macao SAR or Taiwan Province will be provided by referring to the rules above.

2. This policy will be in effect from April 1, 2020 to June 30, 2020.

MOF        CAAC

May 25, 2020