Weaning China's airlines from decades of state support to gird them for global competition, the government now lets them plan their own routes, set their own fares, even sell stock to private investors.
They just can't buy their own airplanes.
This mix of latitude and paternalism is a sign of Beijing's ambivalence toward a full-fledged market economy. It also reflects the political usefulness of a relic of communist central planning when it comes to dealing with China's Western trading partners.
Under the Chinese aircraft-purchasing system, an airline negotiates with a manufacturer such as Boeing Co., of Chicago, or its European rival, Airbus SAS, and then draws up a wish list of jets that it submits to the Civil Aviation Administration of China, or CAAC. Officials there scrutinize the request and refer it to a ministry-level agency for final approval.
Even a straightforward purchase can take months, sometimes years, and airline executives say they often get approval for far fewer planes than they asked for. Sluggish approvals hamper the carriers' ability to respond to changes in the market, while the government's role deprives them of an important means of developing expertise in strategic planning. Meanwhile, they face intensified competition from nimbler foreign rivals that suffer little if any interference from their own governments.
"It is a vestige of the past," said Andrew Miller, director of consulting at the Centre for Asia Pacific Aviation in Sydney.
Chinese authorities are deregulating in steps but are being "selective about which strings they cut," Miller said.
CAAC didn't respond to a request for comment.
Chinese carriers must also contend with state-approved monopolies in ticket sales and jet fuel. With the government in charge of all three of these crucial parts of their business, the airlines lack effective control over as much as half of their total operating costs.
The archaic arrangement persists even as Chinese aviation is coming of age. As the state completes its consolidation of its once-fragmented industry into three big carriers -- Air China, China Eastern Airlines and China Southern Airlines -- and a few smaller, regional players, China's people are flying more and farther than ever before. Opportunities are springing up for domestic and foreign carriers, as China gradually opens up its skies under new regulations and international pacts.
So why won't the government let go?
Industry experts, including a number of Chinese airline executives, say that for all its drawbacks, centralized purchasing offers some compelling benefits. It lets Beijing pool orders to maximize bargaining power with the plane manufacturers. And it lets the government regulate the growth of its airlines, which are eager to swell their fleets to boost market share. So far, Beijing has been able to prevent the carriers' capacity from outstripping passenger demand -- a mismatch that is afflicting the U.S. airline industry, among other problems.
"The airlines order more than they need, and the government knows that. It's like a game," said Li Wei Jian, formerly the executive president of China's Hainan Airlines Co.
Safety is an issue, too. During the 1990s, Chinese airlines had a hard time training enough pilots to keep up with rapid expansion, and they suffered many crashes as a result, Xiamen Airlines President Wu Rongnan said.
"Even though I have the discipline not to order too many aircraft at a time, I don't trust others to show the same discipline," he said.
Then, as ever, there is politics. "From the central government's perspective, one of the levers that they have with the United States and with Europe is the contest between Airbus and Boeing," said Joseph A. Massey, director of the Center for International Business at Dartmouth College's Tuck School of Business and assistant U.S. trade representative for Japan and China from 1985 to 1992.