The Civil Aviation Administration of China ("CAAC") has recently formulated and issued the Administrative Provisions on the Establishment of Branches by Airline Companies (Draft for Comment) (the "Draft for Comment") for public comments by December 31, 2019.
The Draft for Comment clearly states that the CAAC is responsible for examining and approving the establishment of branches proposed by airline companies, while the local civil aviation bureaus are responsible for preliminary reviews concerning the establishment of branches proposed by airline companies. A branch of an airline company shall carry out its business activities within the business scope of the airline company, and the branch's operation period shall be consistent with that specified on the Business License for Enterprise Legal Person of the airline company. In addition, the Draft for Comment prescribes that an airline company that intends to apply for setting up a branch shall satisfy seven requirements, including the requirement that "it has no major flight accidents in the past 24 months, and the rate of civil aviation incidents caused by human reasons per 10,000 flight hours in the last 12 months is no higher than the average level of the civil aviation industry". The Draft for Comment also requires that airline companies shall strengthen management of their branches and ensure the capacity, organizational structure, professional technicians and other aspects of their branches always meet the conditions for approval of the establishment of branches on an on-going basis.