The total market share of the nation's three major airlines is sinking quickly from 63 percent in 2010 to 57 percent this year, indicating increasingly fierce competition within the industry.

The participation of giant multinational airlines and low-cost airlines from home and abroad is undermining the dominance of the major carriers, and as more airlines are being allowed to enter the industry, the problem of excess capacity will worsen, Guangzhou Daily reported on Tuesday.

The nation's rapidly sprawling high-speed railway network also poses a threat to short distance flights and, in order to maintain their seat kilometers levels, an index measuring capacity utilization, airlines have had to lower ticket prices. Their profitability per kilometer declined 6 percent year-on-year, a report from Haitong Securities said.

Demand for cargo business also remains tepid. In the first six months of this year, a total of 2.6 million metric tons of cargos were handled by Chinese carriers, up 3 percent year-on-year, data from the Civil Aviation Administration of China said.

Cargo volume on international flights dipped 3.2 percent year-on-year due to the economic slowdown in Europe and the US, Liu Haiming, an aviation analyst was quoted as saying.