Twenty one airlines will receive 433 million yuan in subsidies for regional flight operations by the end of this year, according to the 2013 Budget Plan for Regional Aviation Subsidy released recently by the Civil Aviation Administration of China (CAAC).

However, some airline insiders believed that the allocation basis of the subsidy is not clear, and the amount is too small to provide timely help, Beijing Business Today reported.

According to the plan, China Eastern Airlines (MU) will get the highest subsidy of 110 million yuan, followed by 98.52 million yuan for China Southern Airlines (CZ) and 58.77 million yuan for Tianjin Airlines (GS). The following airline companies with a subsidy of more than 10 million yuan are Air China (CA), Sichuan Airlines (3U), Tibet Airlines (TV) and Lucky Air (8L).

Regional aviation generally refers to short-haul and non-mainline flights between small and medium-sized cities operated by smaller aircraft with less than 110 seats, with a flying distance between 600 and 1,200 kilometers. Studies show that currently, the mainline route network only covers 50% of China's civil aviation market, which leaves a large room for the development of regional aviation.

However, some have questioned why China's three state-owned airlines which have already clearly positioned themselves as a carrier with international hub network get so many subsidies. Industry insiders revealed that the answer comes from their past merger and acquisition history.

More than half of Air China's subsidies are to support its Tibet routes and over 80% come from the Southwest Regional Administration of CAAC, because China Southwest Airlines was merged into Air China in the Reform of the Civil Aviation System 11 years ago.

In addition, more than 50% of China Eastern's subsidies are from the Southwest Regional Administration of CAAC to fund its non-Tibet routes, while nearly 40% of China Southern's subsidies are from the Xinjiang Regional Administration of CAAC, due to their merger with the former Yunnan Airlines and Xinjiang Airlines, respectively.

"The amount of the subsidies provided by the CAAC is not large, mainly in accordance with the number of passengers transported, so the regional routes lack of customers are still hard to get strong support," according to an anonymous airline head.

What's more, although more specific subsidy conditions were previously introduced, it was also mentioned that the routes do not meet relevant conditions but necessary to be supported, may be reported to the CAAC or the Ministry of Finance for approval. So there are voices of doubt in the industry that the subsidy conditions seem to be more beneficial to large airline companies.

"The definition and subsidy conditions of regional aviation in China are really not clear, which need to be further defined by the regulator. Meanwhile, since the development process of regional aviation market is very difficult, we appeal the regulator to provide more subsidies to airlines in accordance with their flight hours, just like what the U.S. has been doing," said Liu Jieyin, founder of Okay Airlines (BK).