Chinese authorities have fined a low-cost airline almost $20,000 for selling tickets for 13 U.S. cents in a promotion, saying they broke national pricing rules, a newspaper said on Monday. Spring Airlines, set up last year by travel agent China Spring International, sold more than 400 tickets on a new route between Shanghai and the northern city of Jinan for just 1 yuan ($0.13), the Beijing Times said.
But that went against a 2004 rule—designed to help carriers’ bottom lines after a vicious price war—that the maximum discount an airline can offer is 45 percent off a government-set base price, the report added.
A standard one-way ticket between Shanghai and Jinan costs 760 yuan ($97.10), excluding tax and fuel surcharge.
The Jinan government said it would fine Spring Airlines’ local travel agent branch 150,000 yuan ($19,160) as a punishment, though the company denies wrongdoing and will appeal, the newspaper said.
The case underscores the difficulty facing Chinese low-cost airlines, which are trying to model themselves on the likes of Ireland’s Ryanair in bringing cheap no-frills travel to the world’s most populous nation.
China’s airline industry is dominated by three main state-run carriers, with which a clutch of low-cost airlines are trying to compete.