(Yicai) Dec. 2 -- The first auction of franchise rights for the Chinese low-altitude economy was recently held in Jinan, the capital city of Shandong province. After some controversy arose from the news, an official from the local government explained to Yicai that the auction was not for airspace.

The auction in Jinan’s Pingyin county was an effort from the local finance department to establish a state-owned platform for the low-altitude economy, an official from the local branch of the National Development and Reform Commission told Yicai. The auctioned rights are not for airspace, which is a public resource, they added.

Shandong Jinyu General Aviation, a one-month-old firm owned by the Pingyin County Finance Bureau, won the franchise rights for the low-altitude economy in Pingyin for 30 years with a bid of CNY924 million (USD127 million), according to a notice on the website of the Jinan Public Resource Trading Center published on Nov. 26. This resulted in widespread concerns about the government “asking money for air.”

Jinyu Aviation will actually use the CNY924 million to finance and participate in low altitude projects and improve the local airports’ supporting facilities, the official pointed out, adding that the sum will be paid in installments throughout the 30 years, supporting the local economy.

Relying on Pingyin’s two airports, Jinyu Aviation will carry out drone test flights, provide flight training, and sell small aircraft, an official source from the company told Yicai.

Pingyin’s two airports are not open to the public. They are generally used for agricultural and forestry purposes, aerial photography, and flight training.

In October, the Jinan government released a plan for the high-quality development of the low-altitude economy, emphasizing the essential role of state-owned capital in managing related operations, air traffic, airports, and aviation manufacturing.

Pingyin was approved as a demonstration area for Jinan’s low-altitude economy. The county is actively promoting the development of industries such as drone logistics, aviation tourism, and flight training. Three logistics vertical take-off and landing sites have already been built for drone logistics, with seven operational routes.

Pingyin has attracted several low-altitude enterprises engaged in aerial photography, drone assembly and testing, and agricultural and forestry pest control, including Shandong Qiquan General Aviation, Shenzhen Zhonghang Zhifei Technology, and Liaoning Liaohe General Aviation.

Editor: Futura Costaglione