China Mobile pulls plug on VIP rooms

Chinese carriers have experienced sluggish business growth for the past few years after the mobile phone penetration rate reached a plateau.

The telecom industry in China registered more than 862 billion yuan ($139 billion) in business volume in the first half of this year, up by 15 percent year-on-year, according to the Ministry of Industry and Information Technology.

But its growth rate was 0.3 percentage point lower than that of the first five months.

China Telecom, the smallest of the big three, also said it was closing VIP lounges and other minor services

Beijing Capital International Airport Co Ltd said no one had informed the airport about the closing of the lounges.

Luo Zhijuan, an information center staffer at Guangzhou Baiyun International Airport, told China Daily the airport had not heard anything about the closing but that it was simply a commercial decision, as the operators are just clients of the airport.

She refused to comment about whether the closings would reduce the airport's income.

But analysts said the effect on airports would be minimal.

Income from VIP rooms is considered non-flight income, which accounts for some 30 to 40 percent of the airports' total revenue, said Su Baoliang, analyst from CITIC Securities Co Ltd.

But among the various sources of non-flight income, VIP rooms contribute very little, he said.

"The closing of the VIP rooms will have some adverse effect on airport revenues, but not too much," Su said.

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