The maiden flight of Chunqiu Airlines last month, one of China's first private airlines, has started the ball rolling in encouraging "robust" domestic travel agencies to establish airline companies. Chunqiu Airlines was established by Shanghai Chunqiu International Travel Services Co Ltd and Shanghai Chunqiu Chartered Flight Travel Services Co Ltd.

 

If all goes according to plan, China's first joint-venture (JV) private airline, backed by Guangdong China Travel Service, will make its maiden flight next year, a local newspaper reported.

 

According to sources from Guangdong China Travel Service Co Ltd (GDCTS), the joint venture plan, for company aimed at providing cheap transportation services, has already been submitted to the Guangdong Provincial Commission of State-owned Assets Supervision and Administration. The plan took about one year to complete.

 

GDCTS plans to apply for approval to the General Administration of Civil Aviation of China (CAAC) by the end of this year, and hopes to launch the airline's maiden flight next year, the Yangcheng Evening News reported on August 8.

 

The JV will have a registered capital of US$12.8 million with GDCTS as proprietary shareholder. The remaining 49 percent stake in the JV will be held by A-Sonic Aerospace Limited and Airocean Group Limited from Singapore, and China Xpress Pte Limited from Hong Kong collectively.

 

If the plan is approved, the airline will be the country's first JV airline providing cheap domestic and regional flights. The JV will be based in Guangzhou.

 

Currently, another two or three overseas investors are considering buying stakes in the company, although GDCTS will remain the majority stakeholder. 

 

The legal name of the company has yet to be decided.

 

Besides Chunqiu and GDCTS, other domestic travel service companies have also considered establishing airline companies. These include China CYTS Tours Holding Co Ltd (CYTS), Wuhan-based China East Star Group Co Ltd, which has received approval from the CAAC to establish East Star Airlines in June providing passenger and cargo transportation from Wuhan to major Chinese cities, and the Junyao Group, long established in the chartered flight business. Junyao has joined hands with Three Gorges Travel Investment Company to establish East Express Airlines based in Shanghai.

 

According to the report, industry insiders revealed domestic travel agencies don't make a great deal from selling tickets. They only get a cut of ticket prices, which is determined by the airline companies. This less-than-ideal bargaining position is what is driving many travel agencies to set up their own airline companies.

 

(China.org.cn by Zhang Tingting August 15, 2005)