In these days of doom and gloom, when all news seems to be the bankruptcy of this carrier and fleet grounding of that, there’s news from of China that China Eastern and Juneyao are planning the creation of a new airline based in Hainan province: Sanya International Airlines.
The province, the most southerly in China—and including the disputed Spratly and Paracel islands—is designated as a free trade zone, with Hainan island itself as a free trade port. The initiative has the personal endorsement of Secretary Xi Jinping. Hainan is a booming tourism centre both for domestic and overseas tourists—akin to China’s Hawaii. The intent seems to be to create a centre with large scale economic liberalisation as a rival to Hong Kong, Singapore and to a lesser extent Shanghai. The increased economic benefit would be supported by Sanya.
The proposed airline will have initial registered capital of between three and six billion yuan ($420-840 million) China Eastern will own 51%, Juneyao Airlines based in Shanghai will have 15%, Sanya Development Holdings and Hainan Communications Investment Holdings both with 10% and interestingly the Chinese on-line travel agency Trip.com 14%.
While China Eastern lost almost four billion yuan ($560 million) in the first quarter of the year, it’s generally assumed that Chinese carriers have enormous reserves in hand and while the costs of starting Sanya might be high, the long-term benefits will be substantial.
While the airline focuses on Beijing, Shanghai, Kunming and Xi’an, and Juneyao centres its operations on Shanghai, neither has a particularly large presence in the far South of the country.
We don’t yet know the profile of Sanya, but an announcement by China Eastern to the Hong Kong stock exchange described it as ‘a boutique aviation brand’.
We’ll watch developments closely.