China has dropped restrictions on its airfare regulations, allowing airlines to charge prices as low as they want.

Previously, carriers were restricted to setting prices 45 per cent below or 25 per cent above regulations, Reuters reports.

The changes, effective from October 9th, will apply to 31 different routes, including Shanghai to Tianjin and Beijing to Nanjing.

According to the Centre for Aviation, China is also in need of Low Cost Carriers (LCC) - it refers to the country as the last market for LCC's in Asia. It states efforts are already underway at major destinations such as India, Indonesia and Japan - competition which could have the early advantage over China in this area of aviation.

However, Haitong Securities analyst Yu Nan told Reuters he does not expect costs to go too low - domestic airlines in China have been facing difficulties with a slow economy and may not be able to afford dropping fares.