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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Aviation changes in China: an airline and airport review Part 2
The good news for foreign airlines is that Chinese carriers, independently and with guidance from regulator CAAC, will want to expand partnerships and seek closer ties in existing arrangements.
The downside is the typical difficulty in aligning with the Chinese airline nuances: their inexperience with open markets; ambiguity about larger political events that could influence alliances; deeper mistrust if a partner’s partner is a competitor, no matter to what degree; and service on the ground and in the air that is improving, but still lags significantly.
This extract is Part 2 of a detailed review of China's aviation outlook contained in the October-November issue of Airline Leader, CAPA's journal for aviation CEOs. To receive your personalised e-copy of Airline Leader, sign up by clicking the panel on this page.
Chinese carriers in for the long haul but face stumbling blocks along the way
There is no doubt that Chinese carriers will be a force to be reckoned with. They are working with the world’s largest population and when travel propensity increases this will quickly make China the biggest market; they have the potential to maintain a low cost base; and they have favourable geography – through hubs in each corner of the country they will be able to route traffic efficiently, their sixth-freedom operations posing a threat to existing hubs in Asia and the Middle East. Realising all of this remains a question of when, how and with whom.
Long-haul aircraft deliveries are scheduled to pick up around the middle of the decade and ensure expansion (the short-term deliveries are mostly single-aisle equipment). The key will be to ensure profitable expansion. Service delivery and international marketing still lags noticeably. Functional non-Chinese-language websites can be a novelty.
The following is an extract from the special China edition of Airline Leader, CAPA’s management journal for CEOs. Click on the side panel on this page to obtain full access to the soft copy.