(Yicai Global) May 30 -- China will suspend state subsidies to airline companies from June 4 because of a market recovery, bringing a planned two months of support to an end after just two weeks, Yicai Global has learned.

The Civil Aviation Administration of China has notified a number of airlines about the impending end of the policy, which was launched on May 21, the carriers said. The notice said the decision was also made based on its execution in the first two weeks and the wishes of carriers.

Compared with last month’s sluggish aviation market, demand has been picking up this month, with the number of flights gradually rising. But as one of the policy’s conditions was that no more than 4,500 daily flight should operated, some airlines are unable to expand the number that could be resumed.

Another condition was that passenger loads should not exceed 75 percent of capacity, so airlines have been hiking their prices amid the restrictions, meaning tickets are costlier with the policy in place. In the policy’s first week (May 21 to May 27), passenger numbers fell 10.7 percent from the previous week, while ticket prices surged 35 percent.

Earnings at many mid-sized airlines jumped in the first week of the policy, and some even returned to profit in a single day, they told Yicai Global.

The subsidies were originally aimed at tackling market uncertainty, an industry insider said, noting that it will likely be relaunched if the market stumbles again. The CAAC will notify carriers in the event that the policy is revived, its notice said.

Editor: Peter Thomas