HNA Group reportedly stated it will be the holding company responsible for the operational management for its proposed JV with Fuzhou City Government, as per reports by Yicai and Beijing Business Today. As previously reported by Nhaidu.com, HNA Group and Fuzhou City Government signed a strategic cooperation framework agreement on 17-Aug-2012 to jointly establish Fuzhou Airlines. Also under the agreement, the local government and HNA will strive to establish a comprehensive strategic partnership on the following eight areas: airline, airport industrial park, industrial funds, financial leasing, financial institutions, tourism culture, urban construction and industrial development, and a headquarters establishment. Both parties will cooperate to initiate the establishment of an industrial fund to invest in Fuzhou Airport among other infrastructures. China Southern Airlines subsidiary Xiamen Airlines, which also has an operating base in Fuzhou, currently has approximately 50% market share at Fuzhou Airport.
HNA Group to be responsible for operational management of proposed Fuzhou Airlines
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North America is the long-haul bright spot for Chinese airlines
When North America turns its attention to the international market, it has lately been Turkish Airlines and the Middle East network carriers that capture the public eye. But not to be overlooked are airlines from mainland China. Since mid-2012 China Southern made the first notable upgrade to its Los Angeles route by up-gauging from the 777-200 to A380. Air China has increased Los Angeles and New York services and launched Houston. Hainan Airlines is planning Chicago and now Boston while China Eastern is waiting on new 777-300ERs to double its presence. Further growth comes from Canada too, which in Jul-2013 expanded its air service agreement with China.
This growth is not coincidental. Chinese carriers look favourably at North America more than any other long-haul market. Competition is lower and easing of the visa application process is seeing demand rise. Actual or announced Chinese growth in North America is pale to what is to come. There are challenges: international marketing and perception is weak, and this impacts yields. With time they will get there and change North America-Asia traffic flows as well as alliances and partnerships.
Gulf carriers and Turkish Airlines ready to expand in China, if only air rights were available
For all their success elsewhere, the Gulf carriers and Turkish Airlines are looking rather thin in China. This is not by their choosing. Emirates, Etihad, Qatar and Turkish have reached the limit of air rights and slots made available to them.
All are ready to expand, and Turkish has even said it has service to five cities ready to launch if approved. That is probably of little comfort to China. While the country wants a flourishing aviation market, it also wants its airlines to have a fair share. But this is not classic protectionism. The argument is Chinese carriers are still young and need time to gain experience before being on equal footing with peers.
Yet Etihad and Qatar are younger than China’s long-haul airlines. With a mindset change that favours liberalisation in China being unlikely in the medium term, the foreign carriers will have to find ways to stress their value and why they should receive more air rights. Partnerships are one such answer.