Okay Airways and Shanghai Auspicious, two private Chinese
airlines, are proposing a link-up which will give the fledgling
private carriers much-needed weight in an otherwise State-dominated
Shanghai Securities News yesterday quoted Okay
President Liu Jieyin as saying his airline will buy a stake in
Auspicious Airlines, while Zhejiang Junyao Group, which owns Shanghai
Auspicious, will purchase a 30 percent share in Okay.
If the cross-shareholding proceeds the two private air firms
will be able to improve their competitiveness and be in a better
position to deal with high oil prices.
Okay and Shanghai Auspicious will engage in strategic
cooperation in certain areas including capital supply, the renting
and purchasing of planes, human resources, flight routes, marketing
and sales, said Liu.
Junyao Group's further foray into the aviation industry and the
possible cross-shareholding reflects Chinese private enterprises'
ambitions in the country's largely monopolized flight sector,
"But private airliners are still too small to have an impact on
China's aviation market which is dominated by State-owned giants
such as Air China, China Southern Airlines and China Eastern
Airlines," said Li Shurong, an aviation industry analyst at Shenyin
Okay, for instance, only runs a couple of rented planes flying
obscure routes. It's mainly engaged in air cargo and express
delivery services while it also operates some chartered flights and
land-based distribution services.
China's aviation industry has been growing more quickly than the
country's GDP. According to official statistics it posted a
turnover of 26 billion-ton kilometers last year, provided
transportation services for 138 million people and delivered around
3 million tons of cargo.
Private enterprises were only recently allowed into the
previously State-monopoly sector as part of the authorities'
efforts to introduce market mechanisms to the skies.
(China Daily August 8, 2006)