WSJ on Developments in China's Travel Market

Air travel in China is expected to become more affordable for the average Chinese over the next few
years. Why? China's
state-owned airlines have acquired new planes and thus increased capacity, competition has
grown from the introduction of low-cost, no-frills private airlines, and disposable income levels are higher than ever. Some key points from the WSJ:

• Foreign carriers are taking note of the popularity of air travel, increasing international routes from China, and launching promotions for Chinese tourists
• A China-US aviation
  agreement last year will more than double the number of US airlines
  allowed to serve China
• Less than 10% of
  the population travels by air
• China's new plane purchases by new and incumbent
  airlines are expected to boost seat capacity 15% during the next two
  years. Last month, China's state-owned airlines
  collectively bought 60 Boeing 787s
• China's aviation industry last year
  notched $1.04 billion in profit, equivalent to the sector's cumulative
  profit for the previous 10 years
• China's planes now
  fly at about 70% of capacity, compared with only 50% five years back
• Aircraft usage averages about 10 hours a day, up from 8 hours or
  less five years ago
• The
  government regulates how much domestic airlines
  can raise or cut ticket prices
• A shortage of pilots and
  the high cost of jet fuel make it difficult for airlines to make
  significant cost cuts
• With wages rising, some of China's 100 million migrant
  workers are getting affluent enough to be desirable customers

Quick thought: While more air travel means more airplane tickets sold, online travel companies Ctrip (ticker: CTRP) and eLong (ticker: LONG) are simply banking on increased travel. Until credit cards are more prevalent, and secure online and mobile payment systems are in place, CTRP and LONG will continue to generate a bulk of their revenue from hotel commissions - hotels accept reservations without any prepayment. But of course, all of this will undoubtedly change with time.