Domestic tourism has been a bright spot for China’s economy this year, but smaller regional airlines have yet to benefit, while they are also facing increasing competition from the sprawling high-speed railway network.
“As with any regional domestic carrier’s viability, it requires government subsidies to remain economical and the impact it has on local communities，” said Mayur Patel, head of Asia at OAG Aviation.
Official data does not indicate the amount of subsidies local governments have provided to regional airlines, but analysts said small state carriers like Joy Air are highly dependent on government allowances, with the local governments named in Joy Air’s lawsuits among the most indebted in China.
