Hainan Air Group, one of China's most profitable carriers, announced yes-terday in Shanghai it will establish its own all-cargo airline, in a bid to tap into the nation's huge freight market.

The carrier, the fourth largest in the country, formally filed an application to operate the Yangtze River Express Co. Ltd. with the Eastern branch of the Civil Aviation Administration of China yesterday.

"China's cargo market, especially the air express sector, is still somewhat untapped and at a very initial stage of development," said Chen Feng, chairman of Hainan Air. "Unlike other domestic counterparts, we will provide express and logistics services in addition to the traditional transport-ation, aiming to become integrators like UPS and FedEx of the United States."

Shanghai-based Yangtze River Express is China's second all-cargo carrier, following China Cargo Airlines, an arm of China Eastern Air Group, the country's third-largest carrier.

With a registered capital of 200 million yuan (US$24 million), Yangtze River Express receives investment from Hainan Air Group, Hainan Airlines Co. Ltd. and Shanghai Airport Group, which contributes 85 percent, 5 percent and 10 percent, respectively.

Company officials said the new venture will probably begin operations in the first half of the new year, with an eye on air cargo transport-ation, express delivery, freight forwarding, ground distribution and warehous-ing as well as e-business.

As a wholly owned subsidiary of Hainan Air Group, Yangtze River Express will take over all of its cargo businesses, including Haikou-based Hainan Air, Beijing-based Xinhua Air, Xi'an-based Changan Air and Taiyuan-based Shanxi Air, and will have a domes-tic air freight network cover-ing more than 30 cities nationwide.

The company said it is planning to expand that number to 100 cities in the near future.

In addition to the new cargo unit, Hainan Air will also expand its operations in quite a few areas.

"For instance, we will in-troduce three new Boeing 737 aircraft into our fleet next year and further develop our airport and hotel business," Chen added.

Hainan Air Group, esta-blished in 1993, runs a fleet of 68 aircraft and operates more than 300 flights covering nearly 80 cities.

(eastday.com December 25, 2001)