Tough competition in the air travel market in 2006 meant the lowest air ticket prices for passengers in three years.

Statistics show that the average price of a ticket for a domestic flight in December 2006 was 590 yuan (74 U.S. dollars), down 5 percent on the same period last year.

A quick surf on major websites shows that discounted tickets are still available for holiday travel.

Passengers flying one-way from Beijing to Shanghai in the January 1-3 period could pick up a ticket for 280 yuan, a 78 per cent discount.

To gain market share, airlines are falling over themselves to offer discounted tickets, generating some "unbelievable deals".

Passengers flocked to start-up Spring Airlines which has been selling tickets at 199 yuan, 99 yuan tickets and even one yuan.

CAAC statistics show that with 95.3 percent of seats booked on average, Spring Airlines -- set up in 2005 -- had the best seat-occupation ratio of any domestic airline.

Chairman Wang Zhenghua said Spring Airlines' tickets were 36 percent cheaper than its competitors.

But Jinan Spring Holiday Travel Agency,a subsidiary of Spring Airlines in East China's Shandong Province, has been fined 150,000 yuan by the local government for selling tickets for one yuan (13 U.S. cents) each.

The Jinan Price Bureau said in a notice that Jinan Spring Holiday Travel Agency had breached the regulations issued by the National Development and Reform Commission and the CAAC regarding the sale of discounted air tickets.

According to national regulations, the maximum discount an airline can offer on standard air ticket prices is 45 percent.

The CAAC said many more airplanes will enter Chinese fleets in 2007, further sharpening market competition.

It added that China will issue a slew of policies to regulate the air ticket market while ensuring that passengers benefit.