China Eastern Airlines said Wednesday it would transform one of its units into a budget airline, the first Chinese state carrier to do so.
China's second biggest airline by passenger volume said its Beijing-based domestic carrier China United Airlines would become a low-cost flyer as the country liberalises its commercial aviation market.
"We believe the low-cost carrier market has enormous growth potential in China given its low penetration rate," the airline's company secretary James Wang said.
Ticket prices may be reduced by up to 40 per cent, the company said according to the official Xinhua news agency, as it seeks to compete with several private budget carriers already operating there, including Spring Airlines and Juneyao Airlines.
Last year, the government lifted a six-year ban on establishing new airlines as it deals with growing air-traffic demand.
China United Airlines, which operates 26 Boeing 737 aircraft flying to around 70 locations in China, plans to triple the size of its fleet to 80 aircraft by 2019.
China's airlines carried 350 million passengers last year, up nearly 11 per cent from 2012, according to official figures.
The country's civil aviation authorities said it will have more than 230 airports by 2015, up from 193 last year.
China's huge and growing high-speed rail network, however, has resulted in some shorter flight routes being terminated.
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