By Channel NewsAsia's China Correspondent Ca-Mie De Souza
14 June 2006 1809 hrs

TIANJIN, China: It has been nearly a year since China's first budget airline took to the sky, but it has been a turbulent ride for the pioneer.

Passengers are hoping Okay Airlines will fly more routes - because they are generally satisfied with its service.

"The service is about the same as the others. Their planes, compared with Air China, is very spacious, rather comfortable," said Wang Zhaoping, Passenger, Okay Airways.

Not only is there more leg room, but there are also real leather seats onboard this Okay Airlines Boeing 737.

But a year on, the budget carrier said it has been a struggle to keep fares low.

"In China, if you want to be a low-cost carrier, where do you find your pilots? If you pay more to hire foreign ones, your costs will be higher than others, oil prices cost the same for everyone. How do you compete," said Liu Jieyin, President, Okay Airways.

The Chinese budget carrier also claims that current civil aviation policies hinder long-term planning and this affects the hiring of pilots, the buying of planes and sourcing for funding.

To survive, Okay Airways is planning to diversify into aircraft servicing as well as cargo transportation within China.

"If we are following the model of Air Asia, Singapore's Tiger Air as budget carriers, I think it's tough to achieve this in 3 to 5 years. We need the support of major policies so that I can import planes at a much lower price, and in terms of petrol supply, use of airports, sale of tickets, I can get strong support from the market," said Mr Liu.

Shanghai-based budget carrier Chunqiu is also running at a loss but it is optimistic that a third plane will make all the difference.

Chunqiu flies to 12 destinations and ticket prices have been kept at 50 to 60 percent cheaper than what the Civil Aviation authorities recommended.

One thing keeping Chunqiu in the air is the ever growing demand for cheap air travel in China.

Experts describe China's low-cost carrier market to be still in its infancy.

Each company has on average 2 to 3 planes.

But industry players believe that with consumer demand coupled favourable policies, they can take off in a bigger way.