As Joy Air establishes regional carrier Hefei Airlines, is there room in China for regionals & HSR?

The more cynical of China watchers write off the country's future domestic network, believing high-speed rail (HSR) will obliterate the need for air travel. While HSR does pose a threat on short sectors, these comprise the minority in China. The larger competitive worry, rather than annihilation, is regional flying. Carriers have shied away from regional operations, but China Eastern's part-owned subsidiary Joy Air has signed an agreement with the Hefei Municipal Government to establish Hefei Airlines by the end of 2013, based in its namesake city in central China.

Hefei will be at the convergence of HSR lines, but there will be opportunities to connect the city with nearby cities that do not overlap with HSR. Indeed, the preliminary plan calls for the carrier to operate 50-70 routes with 30 aircraft by 2020.

While perhaps achievable, its success will be tied with the region's, which has some of China's poorest but also fastest-growing provinces, as manufacturing moves inland away from the expensive coastal region. Hefei has attracted Unilever while Zhengzhou, 450km away, is home to a Foxconn plant that reportedly produces 70% of the world's iPhones.