China Eastern, the nation’s third-largest carrier, has won official approval to establish a regional airline called Happy Airlines. (The name sounds a bit daft but so did EasyJet and Virgin the first time you heard them.)

The Beijing News reported that China Eastern will invest RMB400 million ($55.8 million) and take 40% in the new company, which will cater to west China’s middle and low-end tourist market.

The rest of the airline will be owned by the state-owned China Aviation Industry Corporation I (AVIC I), manufacturer of China’s first home-made passenger airliner ARJ-21.

The new airline will be based in Xi’an Xianyang International Airport in the country’s northwest and expects to hire transport plane pilots from the air force.

The newspaper said there are a handful of Chinese air companies running regional airlines, whose services are in huge demand but suffer from low profitability.

It further said, without elaboration, that China Eastern expects the new company to get beneficial treatment by the government. Beijing wants to boost the economy in the west to tackle unbalanced regional development. Note the illustration has nothing to do with the airline but this might be the image it wants to convey with its name.
Source: Economic Times

Most major airlines see budget airlines as a threat. (The exception appears to be Cathay Pacific where the managing director, Tony Tyler, in an interview downplayed it as a potential problem.)

The potential problem will come from many directions. From Korea comes Jeju Air and Hansung Airlines, which have been operating domestic services for more than two years and plan to launch international services in the second half of this year.

They are expected to compete most on routes between Korea and China.

Typically budget airlines charge 50% less than the traditional services although, of course, the schedules may not be quite so convenient, the inflight service spartan and the ticket totally non-flexible.

An official with the airline industry said, ‘I expect that there will be a huge influx of low-cost flight services at various fare ranges launched on routes between Korea and Japan and China, with which Korea has already signed aviation agreements. New budget routes will also likely be opened from Shandong and Hainan to more remote areas throughout China.’
Source: The Chosun Ilbo

China Eastern has said it couldn’t consider a wide-ranging proposal offered by Air China’s parent to link up with China Eastern Airlines until August.

China Eastern said it is barred from accepting deals with other carriers until August 9, as part of a lock-up clause in its failed attempt to sell a stake to Singapore Airlines and its parent, Temasek Holdings.

China Eastern’s minority shareholders rejected the planned link-up on Tuesday. Air China’s parent, China National Aviation Holding has said it would bid for a stake of up to 30 percent in its Shanghai-based rival.

China Eastern, which has made clear it wants no deal with Air China, said it couldn’t even consider a bid from CNAHC for the time being. China Eastern official said the airline has a nine-month lock-up agreement with Singapore Airlines.

Singapore Airlines confirmed such a clause was in place, with spokesman Stephen Forshaw saying the lock-up measure hadn’t required shareholder approval.

China Eastern’s shareholders have voted to reject the proposed $923 million tie-up with SIA, which would have given Singapore Air a significant foothold in China while giving China Eastern a partnership with one of the world’s most respected airlines.

The CNAHC official said the state-owned company would make its proposal soon. CNAHC’s proposal will include the three principles outlined in a statement it issued in late December, said a second CNAHC official.

The three principles include Air China and China Eastern establishing a cross-shareholding structure, integration of their cargo operations into a single joint venture, and joint operation of international air routes.

China Eastern has said it still hopes to reach a deal with Singapore Airlines. Singapore Airlines also said it still wants a deal, but it doesn’t plan to raise its offer.
Source: CargoNews Asia

Malaysia’s low-cost carrier, AirAsia X has begun operating flights five days a week between Kuala Lumpur and Hangzhou in east China.

The flight is from Kuala Lumpur International Airport’s low- cost carrier terminal. At the other end, Hangzhou, the capital of east China’s Zhejiang province, is located about two hours from Shanghai by bus.

The New Straits Times reported AirAsia X is offering passengers as low as $60 for a one-way travel between Kuala Lumpur and Hangzhou.

The airline has already sold 10,000 seats, valued at over $1.5 million for travel in February and March possibly because of its extra low price promotion which it is currently running.

The use of secondary airports provided AirAsia X with the impetus to select Hangzhou airport, where it can serve not only the 6 million residents of Hangzhou and 80 million in its Zhejiang province, but also serve as a secondary airport to key cities such as Shanghai, Suzhou, Nanjing and Wuhan, each with convenient ground transportation links from Hangzhou.

AirAsia X hopes to expand its network to cover destinations which are more than four hours in flight duration from Kuala Lumpur, offering daily point-to-point frequencies to popular destinations in China.
Source: East Day

According to provincial transport bureau sources East China’s Jiangsu Province has serious plans about expanding air routes to and from the area.

Pan Yonghe, the transport bureau director, said the plan is to open more than 40 air routes and carry 13 million passengers in 2008. 30 of the air routes will be linked to domestic cities, with the rest overseas.

To deal with this increase in passengers the province will spend RMB400 million (about $53.3 million) in building a new airport in Huai’an City which should be finished this year , and in expanding three others, including the Nanjing Lukou International Airport.

Are the figures quoted likely?

Last year, the province’s airports handled 10.76 million passengers. That is an increase of 30.3% over 2006 so, yes, it is very likely.

Since 1978, Jiangsu has been a hot spot for economic development, and is now one of China’s most prosperous provinces.
Source: Window of China