Provisions on Domestic Investments in the Civil Aviation Industry

• Document Number：Order No. 34 [2017] of the Ministry of Transport
• Area of Law： Traffic and Transport
• Level of Authority： Departmental Rules
• Date issued：12-18-2017
• Effective Date：01-19-2018
• Status： Effective
• Issuing Authority： Ministry of Transport

Order of the Ministry of Transport
(No. 34 [2017])
The Provisions on Domestic Investments in the Civil Aviation Industry, as adopted at the 24th executive meeting of the Ministry of Transport on December 13, 2017, are hereby issued and shall come into force on January 19, 2018.
Minister: Li Xiaopeng
December 18, 2017
Provisions on Domestic Investments in the Civil Aviation Industry
Chapter I General Provisions
Article 1 To regulatethe investments made by domestic investors in the civil aviation industry, these Provisions are developed in accordance withthe Civil Aviation Law of the People's Republic of China and other laws and administrative regulations of the state.
Article 2 The state encourages and supports the investments made by domestic investors in the civil aviation industry, so as to promote the rapid and sound development of the civil aviation industry.
The investments made by domestic investors in the civil aviation industry shall be conducive to consolidating and developing the public sector of the economy, to encouraging, supporting and guiding the development of the non-public sector of the economy, as well as to upholding and improving the basic economic system with public ownership playing a dominant role and different economic sectors developing side by side.
The investments made by domestic investors in the civil aviation industry shall comply with the national and civil aviation industry development policies, and be conducive to promoting fair and orderly competition.
Article 3 These Provisions shall apply to the investments made by domestic investors in the civil aviation industry.
For the purpose of these Provisions, “domestic investors” include state-owned investors and non-state-owned investors.
“State-owned investors” means the governments at all levels and their authorized state-owned asset investment institutions, wholly state-owned enterprises or state-controlled enterprises, and other state-owned economic organizations.
“Non-state-owned investors” means the collective enterprises, private enterprises, and other non-state-owned economic organizations and individuals.
For the purpose of these Provisions, “civil aviation industry” includes the following fields:
(1) Public air transport.
(2) General aviation.
(3) Civil airports, including civil transport airports and general aviation airports.
(4) Air traffic control system.
(5) Projects related to civil aviation activities, including the sale, storage, transport and filling of aviation oil, aircraft maintenance, air freight and warehousing, ground services, aviation food production and sale, operation of parking lots, passenger-cargosale and agency, computer reservation system services, aviation settlement and other relevant projects.
Article 4 The Civil Aviation Administration of China (hereinafter referred to as the “CAAC”) and CAAC regional administrations (hereinafter referred to as “regional administrations”) shall conduct supervision and administration of the investments made by domestic investors in the civil aviation industry.
The civil aviation industry shall, while relaxing restrictions on investment access, offer various civil aviation enterprises with equal treatment in respect of the management policies.
Chapter II Investment Access
Article 5 State-owned investors and non-state-owned investors may separately or jointly invest in the civil aviation industry, except as otherwise clearly restricted by these Provisions.
Article 6 The domestically-invested public air transport enterprises that need to be specially administered shall remain state-controlled companies or state-relatively-controlled enterprises. The relatively controlling stake of a state-relatively-controlled enterprise thereof shall be held by a single state-owned investor or any of its holding enterprises.
Article 7 Civilian transport airports are public infrastructures, in which various domestic investors are encouraged to make diversified investments. However, the international hubs and regional hubs (hereinafter referred to as “hub airports”) incorporated into the civil aviation development planning and the civil transport airports of strategic significance (hereinafter referred to as “strategic airports”) shall remain wholly state-owned, state-controlled or state-relatively-controlled enterprises. The relatively controlling stake of a state-relatively-controlled enterprise thereof shall be held by a single state-owned investor or any of its holding enterprises.
Article 8 Whoever constructs or operates a civil transport airport via Public-Private Partnership (“PPP”) or by other means shall concurrently comply with the provisions of the state on PPP, among others.
Article 9 Where a civil transport enterprise, an enterprise engaging in the sale, storage, transport and filling of aviation oil, or a computer reservation system service enterprise, or any of its affiliated enterprises invests in a public air transport enterprise other than an all-freight air company, the investment proportion shall not exceed 5%.
An enterprise or any of its affiliated enterprises as mentioned in the preceding paragraph that invests in an all-freight air company shall not hold a controlling or relatively controlling stake therein.
The affiliated enterprises as mentioned in the preceding paragraph exclude public air transport enterprises.
Article 10 Where a public air transport enterprise or any of its affiliated enterprises invests in a hub airport orits terminal for common use, the investment proportion shall not exceed 25%, and it shall not hold a relatively controlling stake therein.
A public air transport enterprise may, in an airport with terminals and parking aprons for common use, invest in building, operating, owning or renting any terminal or parking apron for exclusive use on the premise of conforming to the overall planning for the airport.
Article 11 Where a hub airport or any of its affiliated enterprises invests in any enterprise engaging in the sale, storage, transport and filling of aviation oil or the facilities thereof within the scope of the airport, the investment proportion may not exceed 25%, and it may not hold a relatively controlling stake therein.
If, among hub airports, an airport has only one enterprise engaging in the sale, storage transport and filling of aviation oil, the proportion of investment made by a public air transport enterprise or any of its affiliated enterprises in the enterprise engaging in the sale, storage, transport and filling of aviation oil or the facilities thereof may not exceed 25%, and the investor may not hold a relatively controlling stake therein. Where an airport has already had an enterprise engaging in the sale, storage, transport and filling of aviation oil, a public air transport enterprise or any of its affiliated enterprises that invests in the formation of or acquires a non-controlling stake in another enterprise engaging in the sale, storage, transport and filling of aviation oil shall not be subject to the investment proportion restriction.
The “aviation oil storage, transport and filling facilities of an airport” as mentioned in the preceding two paragraphs means the specialized aviation oil unloading stations, specialized aviation oil warehouses inside and outside the airport, specialized aviation oil pipelines outside the airport, tarmac aviation oil pipelines, aviation oil transport vehicles, fueling vehicles, tarmac fueling system, and aviation oil filling stations, among others.
Article 12 The air traffic control system shall be mainly invested in by the Central Government. An air traffic administrative department shall not invest in any civil aviation field other than air traffic control system.
Article 13 No director or senior executive of a public air transport enterprise may concurrently serve as a senior executive of a civil transport airport, and no director or senior executive of a civil transport airport may concurrently serve as a senior executive of a public air transport enterprise.
Chapter III Legal Liabilities
Article 14 Where a public air transport enterprise or civil transport airport, in violation of the provisions of Article 6 or 7 of these Provisions, fails to meet the specified requirement for the proportion of state-owned shares it should hold, the CAAC or the regional administration shall order it to take corrective action during a specified period, give it a warning, and impose a fine of not less than 10,000 yuan nor more than 20,000 yuan on it; and where the circumstances are serious, it shall be fined not less than 20,000 yuan nor more than 30,000 yuan.
Article 15 Whoever falls under any of the following circumstances in violation of these Provisions shall be ordered by the CAAC or the regional administration to take corrective action during a specified period, given a warning, and fined not less than 10,000 yuan nor more than 20,000 yuan on it; or be fined not less than 20,000 yuan nor more than 30,000 yuan if the circumstances are serious:
(1) A civil transport airport, enterprise engaging in the sale, storage, transport and filling of aviation oil, or computer reservation system service enterprise, or any of its affiliated enterprises illegally invests in any public air transport airport in violation of Article 9 of these Provisions.
(2) Apublic air transport enterprise or any of its affiliated enterprises illegally invests in a hub airport or the terminal for common use thereof in violation of Article 10 of these Provisions.
(3) A hub airport or public air transport enterprise, or any of its affiliated enterprises illegally invests in any enterprise engaging in the sale, storage, transport and filling of aviation oil or the facilities thereof in violation of Article 11 of these Provisions.
Article 16 Where an air traffic administrative department illegally invests in any civil aviation field other than air traffic control system in violation of Article 12 of these Provisions, the CAAC or the regional administration shall order it to take corrective action during a specified period; and where it fails to take corrective action during the specified period, relevant administrative disciplinary actions shall be taken against the relevant liable persons in accordance with the law
Chapter IV Supplemental Provisions
Article 17 Where a domestic investor that intends to invest in the civil aviation industry is required by any law or regulation to obtain a license, it shall apply to the relevant competent department for obtaining the corresponding license as required.
Article 18 For the purpose of these Provisions, “holding a controlling stake” means having a share of more than 50% of the total capital of an enterprise.
For the purpose of these Provisions, “holding a relatively controlling stake” means having a share of 50% or less of the total capital of an enterprise, which, however, is relatively more than that of any other investor, and being able to actually control the enterprise through a shareholders' agreement, bylaws, a decision of the board of directors or any other scheme of arrangement.
Article 19 For the purpose of these Provisions, an “affiliated enterprise” means an enterprise (hereinafter referred to as “one party”) that has any of the following relationships with another company, enterprise or any other economic organization (hereinafter referred to as “the other party”):
(1) One party directly or indirectly holds an aggregate proportion of 25% or more of the shares of the other part, or vice versa.
(2) Both parties are owned directly or indirectly by a same third party, or 25% or more of the shares of one party and of the other party are held by a same third party.
(3) The loans received by one party from the other party account for 50% or more of the one party's self-owned funds, or 10% or more of the total amount of the loans received by one party are guaranteed by the other party.
(4) Half or more of the board directors or senior executives or one or more executive board directors of one party are appointed by the other party.
(5) One party cannot conduct its production and operation activities normally unless it is franchised by the other party (including being given industrial property right, or know-how, among others).
(6) The raw materials and components and parts, among others, purchased by one party for its own production and operations (including prices and terms of transactions, among others) are controlled by the other party.
(7) The sale of the products or commodities produced by one party (including prices and terms of transactions, among others) is controlled by the other party.
(8) Any other relationship that can actually control the production, operations and transactions of one party, or any other affiliation relationship in terms of interest, including family relationship or kinship, among others.
Article 20 For the purposes of these Provisions, “more than” shall include the figure itself, and “less than” shall exclude the figure itself.
Article 21 The administrative penalty, administrative compulsion and other handling measures against a domestic investor, and the information on the implementation thereof shall be recorded in the law abidance and credit information records, and be disclosed to public under relevant provisions.
Article 22 Investments in the civil parts of airports for both military and civil uses shall be governed by the relevant provisions of the state.
Article 23 The scope of domestically-invested public air transport enterprises, hub airports, and strategic airports which need to be specially administered in these Provisions shall be provided for separately and issued to the public by the CAAC in light of the actual circumstances.
Article 24 These Provisions shall come into force on January 19, 2018, upon which the Provisions on Domestic Investments in the Civil Aviation Industry (Order No. 148, CAAC) issued by the CAAC on July 15, 2005, shall be repealed.