Summary of Key Points
This article takes Spring Airlines as an example to reveal the dual logic behind the "low-cost airline tickets" phenomenon in China: on the surface, domestic airlines control costs by being frugal (using a single aircraft model, densely packed seats, and charging for services), but in reality, a significant portion of their profits comes from government subsidies. In 2025, 41% of Spring Airlines' profits came from subsidies, and this reliance is not a short-term issue—the China Securities Regulatory Commission warned about the risk of subsidy dependence during the company's IPO. The article also compares the subsidy policies of European and American airlines, pointing out that domestic subsidies lack transparency. Local governments are willing to provide funding for the economic benefits and tourism revenue generated by flights, but key details such as whether mature routes still need subsidies, how much to subsidize, and for how long remain hidden in non-public business contracts. The article raises the question: is it reasonable for a profitable and dividend-paying company like Spring Airlines to continue receiving public subsidies?
I. Spring Airlines' Frugality Is Just a Mask; Subsidies Are the Hidden支柱 of Profit
Everyone knows about Spring Airlines' cost-saving measures: using only the A320 aircraft model (to reduce maintenance and training costs), packing more passengers into each seat, and charging for meals and drinks (except for using the restroom). However, financial reports show that these efforts only account for part of the cost control; the majority of profits come from subsidies. In 2025, Spring Airlines' total profit was 3.03 billion yuan, of which 1.242 billion yuan came from government subsidies, accounting for 41%—meaning that for every 10 yuan earned, 4 yuan came from the government.
What's more interesting is that this dependency has a long history: subsidies accounted for 74.5% of profits in 2011 and 59.9% in 2012, and although the proportion decreased in 2025, the absolute amount still increased. Spring Airlines itself acknowledged during its IPO that without subsidies, its performance would be affected. Therefore, behind those nine-yuan tickets is not just frugality; it's also the support of government subsidies.
II. Why Are Local Governments Willing to Fund Airlines?
Local governments are not philanthropists; they are funding the "chain benefits" brought by flights. When a new route is established, it increases airport capacity (raising airport revenue), fills hotels (boosting tourism revenue), and attracts investment (improving local economic performance). As long as these benefits outweigh the cost of subsidies, governments are willing to provide them. For example, if a new route incurs a loss of 10 million yuan in the first year but generates an additional 50 million yuan in tourism revenue, it's considered a worthwhile investment.
The issue lies in the boundaries of these subsidies: it's reasonable to subsidize new routes for a few years to help them gain popularity. But what if the route is already mature (like Spring Airlines' with a 91% occupancy rate and nearly 10 hours of daily flights)? Should such routes continue to receive subsidies, like covering a fully grown tree with a greenhouse?
III. The Paradox of Spring Airlines' Three Roles: Profitability, Dividends, and Subsidies
In 2024, Spring Airlines had a net profit of 2.273 billion yuan and distributed 798 million yuan in dividends (38%); it plans to continue distributing dividends in 2025. This creates a conflict among its three roles:
1. A mature and profitable company with top-notch occupancy rates and aircraft utilization, indicating that the market has recognized its business model.
2. A publicly traded company that distributes profits to shareholders.
3. A company receiving government subsidies using public funds.
Each of these aspects seems reasonable on its own, but together they create a dilemma: using taxpayer money to fund the company, which then distributes it to shareholders—is this the proper use of public funds? The question is whether these subsidized routes truly still need support. If the subsidies were removed, would the routes continue to operate? These details are hidden in non-public agreements, unknown to the public.
IV. How Do Europe and America Regulate Subsidies? In contrast, China Lacks Transparent Rules
The article provides two examples:
- European Union: There are clear guidelines (Guidelines on State Aid for Local Airports) requiring subsidies to serve public interests (e.g., supporting remote areas), with time limits and a gradual reduction until they are phased out. Violations result in the recovery of subsidies. For instance, Ryanair had its planes seized by France due to illegal subsidies and was forced to repay them.
- Southwest Airlines (USA): The airline was profitable for 47 years before the pandemic, relying on efficient operations (a single aircraft model, high turnover) and received little regular funding. During the pandemic, it received aid with conditions such as maintaining employee jobs, limiting executive salaries, and suspending dividends—receiving public money comes with responsibilities.
In China, subsidy agreements are considered trade secrets, and no one knows which routes receive subsidies, based on what criteria, or for how long. Without clear rules and external oversight, it's possible for subsidies to be granted to unnecessary routes.
V. Subsidies Are Not a Bad Thing, but They Should Not Encourage Laziness
The article concludes that subsidies themselves are not a problem; they can help new routes grow in their initial stages. However, once a company becomes mature and stable, it should rely on its own efforts rather than continuous government support. For mature companies like Spring Airlines, the public deserves to know where the subsidy money is going and which routes truly need it. Are there plans to gradually reduce or phase out subsidies? These questions are not only for shareholders but also for local governments to answer to taxpayers. After all, subsidies are public funds, not discretionary bonuses.
In summary, while nine-yuan tickets may seem attractive, they come with hidden costs—either incurred by the airline through cost-cutting measures or covered by government subsidies. This analysis explains the nature of airline subsidies in plain language, clarifying both the rationale for their use and the timing of their provision, making the logic understandable to non-experts.