China's General Administration of Civil Aviation (CAAC) will grant cash subsidies to airlines to incite them to develop services from major airport hubs to smaller cities.

Air China and Hainan Airlines are the first airlines to join the scheme.

CAAC's northwest branch said it will give the two airlines a 10 million yuan subsidy (1.25 million U.S. dollars) to fly feeder routes in northwest China on a trial basis.

The airlines have launched four feeder routes from Xining, capital of Qinghai, to Golmud, and from another hub, Xi'an, capital of Shaanxi, to three nearby cities -- Yan'an, Ankang and Qingyang.

The subsidy is expected to reduce ticket prices on feeder routes.

"The scheme aims to develop air routes in northwest China and make air transport there more convenient," said Zhou Yuhong, a senior official with CAAC's northwest office.

Many big domestic airports are extremely busy, while airports in smaller cities are crying out for services. But airlines have been unwilling to launch feeder routes due to insufficient passenger volume.

"The subsidies will go directly to the airlines and will be based on the shortfall between the airline's average earnings and earnings on feeder lines," said Zhou.