Hit hard by competition from high-speed rail, Shanghai-based Spring Airlines, the most profitable Chinese LCC, is abandoning plans to open a second base in Zhengzhou to the north and shifting its attention south to Sanya in Hainan Province.

"We have allocated two A320s to Sanya to operate on ten new routes to Xi'an, Guiyang, Hangzhou, Jinan, Nanjing, Nanchang, Nanning, Tianjin, Wuhan and Zhengzhou," a Spring spokesperson said. "We intend to establish Sanya as our second domestic base, but it needs to be approved by CAAC." The carrier is expected to allocate three more A320s to Sanya by year-end and increase its fleet to 30 A320s with 44 daily departures by 2015.

Zhengzhou was attractive because it boasts China's only low-cost terminal, but Spring changed its mind owing to the presence of high-speed rail, "which has exerted a big negative impact on our passenger load factor," the spokesperson said.

Hainan, by contrast, "has rich tourism resources, which can guarantee high load factors as we have the support from our tourism agencies around the country," the spokesperson explained. He revealed that Sanya Fenghuang International Airport plans to build a low-cost terminal for the carrier.

Spring cancelled its Shanghai-Zhengzhou service in March, but the spokesperson said it is "still optimistic" about Zhenghzou and is considering adding frequencies.

Recovery of the domestic market helped the LCC post a 15.9 million yuan (US$2.3 million) first-quarter profit, up 40% from the year-ago period. But it is cautious about the remainder of the year due to the swine flu scare and an increase in domestic fuel prices. Beijing raised the jet fuel price by 11.5% to 4,450 yuan per ton this week.