September 14, 2004
Guangdong China Travel Service Holdings, a unit of the country's biggest state-owned tour agency, will apply to start the first discount airline in Asia's second-biggest economy, tapping rising demand for air travel.
The yet unnamed airline plans to start passenger and cargo services by the second half of next year to destinations within a five-hour radius from Guangzhou, its investors said in Singapore.
The airline, with 80 million yuan (HK$75.4 million) of capital, plans to use aircraft with fewer than 150 seats.
The planned airline is the 10th discount carrier to be started in Asia in the past 18 months. Malaysia-based AirAsia, Singapore-based Tiger Airways and others are tapping demand for low-cost air travel in the region.
"We're seeing countries such as Malaysia, India, Brunei, China and, to a lesser extent, Hong Kong loosening the strings on air rights to secure a broader economic advantage," said Don Birch, chief executive of Singapore-based Abacus International, Asia's biggest computer travel reservation service.
Guangdong China Travel said it will own 51 per cent of the airline. Singapore-based A-Sonic Aerospace, which supplies aircraft equipment and owns a stake in Australia's Skywest, said it will pay S$5.43 million (HK$24.4 million) for 25 per cent.
AirOcean Group, a Singapore-based freight forwarder, may invest in 19 per cent of the airline to run its cargo business, the company's chief executive Thomas Tay said. China Xpress, a unit of Hong Kong-traded Heng Fung Holdings, will own the remaining 5 per cent.
The airline may need up to six months to get the regulatory approvals to begin flying, A-Sonic chief executive Jenny Tan said.
"We believe our partnership with Guangdong China Travel will give us a reasonably good chance of success in our application," Tan said.
As many as three other airlines have also applied to start a discount carrier, she said. None of the proposed discount carriers have started flying.
The growth of air travel in China is expected to grow 19 per cent this year to 104 million passengers while cargo volume expands 14 per cent to 2.5 million tonnes, according to government forecasts.
The new airline is considering using either Boeing's 737 aircraft or Airbus' A320 planes, Tan said. She did not say whether the airline plans to buy or lease those aircraft.
It will probably serve food and offer low-priced tickets to capture passengers currently using buses or trains in China, Tan said, without saying how cheap fares will be.
Guangdong China Travel will use its travel agency and tour business to provide passengers for the proposed airline, while China Xpress will link its credit cards to the airline's service, said chairman Chan Heng Fai.
A-Sonic may use the international flight rights already held by Skywest to partner with its China airline to expand flights between China and Australia, Tan said.
|