Hainan Airlines (HU) reported a 12.7 percent loss in net profit in 2011, compared with the previous year’s results, citing fuel costs as a detrimental cause.
Last year’s net profit (CNY 2.63 billion) was significantly less than that of 2010 (CNY 3.01 billion). 
The airline’s expenses rose 26 percent, outweighing operating revenue which also gained 21 percent on the previous year.

In a market where growth is sustainable and steady Hainan said they would leverage “more favourable policies for the domestic airline industry” in China and build upon Beijing’s strategy of “building Hainan as international tourism island,” according to the Centre for Aviation.

In 2011, Hainan Airlines acquired 14 new aircraft and phased out 3 older planes.

Hainan acknowledged increased fuel costs, extensive market competition, high speed rail construction and interest rates as major challenges faced by the airline.

HU may transform its subsidiary, Hong Kong Express Airlines, into a low cost carrier with previous limitations on domestic carriers operating as low cost airlines removed.

As reported in e-Travel Blackboard Australia, China Eastern and Qantas have sparked a partnership to form Jetstar Hong Kong within this burgeoning market.

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