Mon, Jan 24, 2005 - Page 10 News List

First private airlines in China to launch services this year

TAKE-OFF With China's airline passenger volume rocketing 38 percent last year over 2003, small new companies are looking for a piece of the action

AFP , Beijing

China's fledgling private airline industry could take off in the first half of this year, using busy holiday travel seasons to launch their services, state media said yesterday.

The first group of private airlines could begin operations in the next few months, for example during the week-long May Day public holiday, the China Business Weekly reported, citing unnamed industry observers.

New rules by civil aviation authorities that took effect last week have set the bar low for entrants into the industry, allowing anyone with three planes to run an airline.

The rules, as reported earlier by the China News Service, also permit foreigners to have up to 25 percent ownership in the companies.

At least three private-sector airline operators have received approval from civil aviation authorities and plan to offer low-cost, no-frills services, the China Business Weekly said.

They include United Eagle Airlines (鷹聯航空) in the southwestern city of Chengdu, Air Spring (春秋航空) in the eastern city of Shanghai, and Okay Airways (奧凱航空), based in the Beijing area, according to the paper.

The paper quoted Hu Wenbin (胡文彬), a United Eagle spokesman, as saying the company's first three planes, all leased, could be in place before the end of the month.

Also suggesting an early start for the company, it placed an order of 350,000 tonnes of aviation fuel with China Aviation Oil (中國航油) last month, according to the paper.

United Eagle is likely to focus on offering cheap flights for China's western frontier region, it said.

The main business for Shanghai-based Air Spring will be chartered flights and regional services within China, according to the report.

Okay Airways will operate out of Binhai International Airport about 200km from the Chinese capital, and will probably seek to carve out a niche for itself in the cargo business, the paper reported.

The paper cited unconfirmed reports that a fourth company, Huaxia Airlines (華夏航空) headquartered in southwestern Chongqing municipality, had also obtained approval to operate.

No-frill carriers are spreading rapidly across Asia, with names such as Singapore's Tiger Airways, Malaysia's AirAsia and Thailand's Nok Air offering their services.

Concerns have emerged in China that the industry will be crowded with large numbers of more or less qualified would-be entrants, the China Business Weekly said.

The opening offered by the new rules could mean that eventually "every man and woman with deep pockets or financial backing from abroad" will want to set up an airline, it said.

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