China's Shanghai Airlines has secured a strategic secondary operations base in Beijing through a deal to acquire air force-controlled China United Airlines.
Shanghai Airlines has agreed to pay 70 million yuan ($8.5 million) for China United, which for now will continue to operate flights under its own name and designator code. The Beijing-based carrier is controlled by China's air force and operates domestic government VIP flights as well as limited domestic charter and scheduled passenger services, using about 20 Western and former Soviet-era aircraft.
The deal is strategic for Shanghai Airlines, which from its Shanghai base has remained independent of the country's three main carriers, Beijing-based Air China, Shanghai-based China Eastern Airlines and Guangzhou-based China Southern Airlines. The "big three" have been expanding through government-supported takeovers of smaller carriers in recent years.
China's other major independent airline group, Hainan Airlines, has also expanded by taking over other carriers, including Beijing-based China Xinhua Airlines.
Shanghai Airlines is expected to boost China United's domestic operations ahead of the Beijing Olympic Games in 2008. Industry observers suspect it may also look at future international services.
Shanghai Airlines' 30 aircraft include Boeing 737-300/700/800s, 757-200s, 767-300s and Bombardier CRJ200s. Four 757-200s and one 737-800 are on firm order.
The airline has extensive domestic routes but a limited international network. It is planning its first long-haul services - to Germany.
NICHOLAS IONIDES / SINGAPORE
Source: Flight International