East Star Airlines, China's fourth registered private airline, on Sunday signed a letter of intent with Airbus to buy 10 A320s, and a lease deal with GE Commercial Aviation Service (GECAS) for another 10 A320s.

The deals are valued at a total of 12 billion yuan (US$1.5 billion) and the 20 A320s will be delivered over the next five years.

The deals are the largest single orders Airbus and GECAS have signed with a private Chinese airline.

East Star is owned by China East Star Group, one of the largest private enterprises in Hubei Province.

Based in Wuhan, Hubei Province, East Star received approval for the operation of its service from the General Administration of Civil Aviation in June this year and plans to start its flight service next May.

"With the fast growth of Wuhan's economy and its important location, the city's aviation service demand is expected to soar, particularly to neighboring provincial capital cities," said Lan Shili, president of China East Star Group, the airline's parent company.

Lan said his confidence in the new company also comes from the fact that flights from and to Wuhan, operated by China Eastern and China Southern, are now flying at almost full capacity.

By next May, the first three A320s will fly from Wuhan to cities including Shenzhen, Nanjing, Xi'an, Hangzhou and Haikou. Special charter flights for tourists will also be launched.

The leased A320s from GECAS will be delivered from the second quarter of next year.

"The A320 family of aircraft is undoubtedly the best choice for our new airline company. Its unmatched low operating costs combined with the high level of passenger comfort will help the company take off smoothly and successfully," Lan said.

"The private airline business is a new sector in China and we have been paying close attention to this," Laurence Barron, president of Airbus China, said.

Lan said to attract potential passengers they will offer seasonal discounts and supporting services, like free airport transfers and snacks.

Another two private Chinese carriers, Shanghai-based Spring Airlines and Chengdu-based United Eagle, currently each have one A320 aircraft in service. Spring Airlines leased its second A320 earlier this month. Okay Airways, based in Tianjin and China's first registered private airline, has two B737s on lease from Korean Air.

(China Daily, Xinhua News Agency November 28, 2005)