HNA Group to establish four new regional carriers

Hainan Airlines (HU, Haikou Meilan International (HAK)) and its parent group, HNA Group, plan to establish four new airlines following the relaxation of CAAC laws regarding the issuance of new operating licenses to airline enterprises and the associated cuts in administrative approvals for new airline routes as announced by CAAC Director, Li Jiaxiang, on May 17.

Reports state that HNA plans to pump USD810million (CNY5billion) into four recently established airlines – Urumqi Airlines (Urumqi Diwopu International (URC)), Heilongjiang Airlines (Harbin Taiping International (HRB)), Fuzhou Airlines (Fuzhou Changle (FOC)) and Guangxi Airlines (Guilin Liangjiang International (KWL)) – all of whom are awaiting Civil Aviation Administration of China's (CAAC) approval.

In addition it plans to expand Chang An Airlines (CGN, Xi'an Xianyang International (XIY)) as a more independent carrier again. The airlines are described as follows: Urumqi Airlines – formed on February 26, 2013 following the signing of a strategic cooperation agreement between HNA and the Urumqi Municipal government. Its equity structure is still under discussion.

Heilongjiang Airlines, set to focus on Northeast Asia, may apply the operational model employed by Capital Airlines (China) (JD, Beijing Capital (PEK)) in which regional and charter travel are a core feature. The carrier was formed in March when HNA Group and the local government signed a strategic cooperation framework agreement.

Chang'an Airlines, whose planned base will be Xi'an Xianyang International (XIY), is a wholly owned subsidiary of Hainan Airlines. Guangxi Airlines, based on Tianjin Airlines (GS, Tianjin Binhai International (TSN)), will be used to further improve Tianjin's regional network and to expand into South Asia. Lastly, Fuzhou Airlines, HNA Group's most capital intensive airline, has not been established yet, though investment has been readied.

In October 2012, capital was contributed by: 60% – HNA Group with CNY1.2 billion, 20% – Fuzhou National Investment Company with CNY400million, and the rest, 20%, was invested by another two shareholders with CNY400million combined. It is hoped that, supported by local governments and coupled with the enthusiasm of private capital, private airlines usher in a new boom in the Chinese domestic market.

SOURCE: ch-aviation.ch