Chinese airline consolidation: Second tier airlines in the sights of the 'Big Four'

China’s fragmented airline industry is undergoing a shakeup. Merger and acquisition activity is intense – probably more so than any other aviation market in the world. In the space of a few short years, the majority of China’s second tier airlines have, at least partially, become owned or controlled by one of the "Big Three" carriers and/or HNA Group, as consolidation accelerates in China. In this report, CAPA reviews what’s fuelling the feeding frenzy and who the targets are. [6473 words]

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This report contains the following subheadings:

• Capital Airlines shifting to business focus
• Chengdu Airlines to have fleet of 40 aircraft by 2015
• China Express Airlines under going comprehensive review and reorganisation
• China United Airlines celebrating fifth anniversary
• Grand China Air
• Hebei Airlines (formerly Northeast Airlines) relaunches in Jun-2010; Plans to be ‘Top Five’ carrier by 2020
• Henan Airlines – Grounded by fatal air crash in Aug-2010; Had been hoping to shake up the regional Chiense market
• Joy Air – Signing strategic agreements to establish regional hubs
• Juneyao Airlines to launch international services
• Lucky Air passengers up 22%
• Okay Airways makes profit in 1H2010
• Shandong Airlines witnessing continued profit growth
• Shanghai Airlines benefiting China Eastern Airlines
• Shenzhen Airlines now China’s fourth largest carrier
• Sichuan Airlines planning to expand international presence and size
• Spring Airlines putting pressure on full service carriers
• Tianjin Airlines – a fast-growing regional carrier with plans for a 150-aircraft fleet by 2013
• West Air continues to expand from Chongqing
• Xiamen Airlines notches 23 consecutive years of profitability

This report contains the following charts and tables:

• China domestic capacity breakdown by carrier (seats per week and as % of total): Independent carriers in bold
• Second-tier carriers passenger numbers: Aug-2008 to Aug-2010
• Beijing Capital Airport capacity share by carrier
• Chengdu Airlines route changes
• China Express network capacity share (%) by destination: Oct-2010
• Grand China Air network capacity share (%) by destination: Oct-2010
• Kunming capacity share by carrier
• Shandong Airlines route changes
• Shandong Airlines net margin: 2006 to 3Q2010
• Shandong Airlines passenger numbers growth and revenue growth: 2006 to 1H2010
• Shandong Airlines passenger numbers: 2006 to 1H2010
• Shenzhen capacity share by carrier
• Sichuan Airlines route changes
• Tianjin Airlines route changes
• West Air route changes
• Chongqing capacity share by carrier