HNA Group: four airlines form U-FLY Alliance, world's first LCC grouping, showing HNA consolidation

China's HNA Group was expansive even before the deals it has made over the past year, where it acquired stakes in various companies including Brazilian airline Azul, the lessor Avolon, the ground handler Swissport and the ride-sharing service Uber. The group became wider but still fragmented, with the companies hardly stitching together to deliver synergies, or at least to avoid competitive overlap.

That will start to change with four HNA airlines forming the world's first LCC alliance, the U-FLY alliance. They operated 67 aircraft at the end of 2015 and project a fleet exceeding 218 by the end of 2020.

U-FLY will be beneficial for HNA. The airlines - HK Express and three from mainland China: Lucky Air, Urumqi Air and West Air - will work together for revenue and cost synergies. In the long term this cooperative action will hopefully spread across the HNA group and integrate it more effectively. The alliance's objective is to "build U-FLY to span the globe, similarly to existing full service airline alliances", and it reflects the ambition and high aspirations that often characterise Chinese aviation. The existing global alliances have attractions that are structurally different to passengers and prospective airline members. U-FLY is likely to provide some cohesion to various HNA LCC brands. Other LCC groups - AirAsia, Jetstar, Viva and FastJet - already benefit from the power of a single brand structure.