China Cargo Airlines is a Shanghai-based cargo airline was the first all-cargo airline to commence operations in China. It was established in 1998 as joint venture between China Eastern Airlines (70%) and China Ocean Shipping (COSCO) (30%). China Cargo operates domestic and international services from its main base at Shanghai Hongqiao International Airport.
Location of China Cargo main hub (Shanghai Hongqiao Airport)
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Asia Pacific, particularly China, is one of the current destination hotspots for European carriers, with connections between Europe and China improving in recent months and over the past couple of years. The initial focus was obviously on providing connectivity between key European hubs and the capital city of Beijing, with services to Shanghai also quite extensive, although a number of carriers are adding service to secondary, albeit still large destinations in China, such as Chengdu, Guangzhou, Hangzhou, Nanjing, Chongqin, Urumqi, Sancha, Dalian and Harbin.
Tibet Airlines, Tibet’s first airline, on 20-Jun-2011 received its public air carrier's licence from CAAC, after receiving approval from the aviation authority in Mar-2010. Tibet Airlines will be the first and only airline based in Lhasa when it launches operations next month and will benefit from the booming Tibet market.
The spectacular rebound in China’s airfreight demand of 2009 and 2010 has slowed in 1Q2011. Chinese air cargo volumes increased by 2.0% in Mar-2010 to 489,000 tonnes, according to CAAC. Domestic cargo, which accounted for 66% of the total, increased 2.7% to 321,500 tonnes. Regional (Hong Kong, Macau and Taiwan) cargo volumes increased 2.2% to 19,500 tonnes and international cargo increased 0.6% to 167,500.
Singapore Airlines (SIA) is dipping its toe back in the water in China after a tumultuous – and ultimately unsuccessful – attempt to buy a 24% stake in China Eastern Airlines in 2007/08. The airline’s cargo arm has agreed to acquire a 16% stake in China Cargo Airlines, the cargo subsidiary of the Shanghai-based airline, subject to regulatory and other approvals.
The CAAC has come out with an extraordinary prediction this month: Chinese airlines will nearly double their fleet size to as many as 5,000 aircraft by 2015. In the shadows of a major international air show on home soil, one might expect some bullish sentiment from the hosts. But the comment, by CAAC Head Li Jiaxiang, that the nation's domestic carriers will have an expected combined fleet of 4,800-5,000 aircraft in just five years (from 2,600 at present) is a breathtaking assessment. Even if it's only 50% accurate, aircraft manufacturers big and small are in for a bonanza.
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.