China approves KAL's cargo JV in China

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China has approved the cargo airline Korean Air (KAL) is establishing in China in joint-venture partnership with mainland Chinese logistics firm Sinotrans.

The Civil Aviation Administration of China (CAAC) says in a statement it has granted approval for KAL and Sinotrans to establish the dedicated cargo carrier.

It says Sinotrans is investing $33 million for a 51% stake, while the Korean side has the remaining stake shared between KAL which is investing $16 million for a 25% stake, Hana Capital is investing $8 million for 13% and Shin Han is investing $7 million for 11%.

The carrier will be based at Tianjin Binhai International Airport and will operate on domestic and international routes.

Tianjin is Beijing’s port city and the same place KAL was originally planning to establish a cargo airline last year in joint venture partnership with privately-owned Chinese carrier Okay Airways.

But talks with Okay failed to reach an agreement and then last September KAL disclosed it was starting a cargo airline with Sinotrans, a Chinese state-owned company that is one of the country’s largest logistics firms.

The CAAC statement fails to mention when the new cargo carrier will start operating and what type of aircraft it will use. KAL operates Boeing 747Fs and the CAAC statement says most of the start-ups’ pilots will come from Korea.

Generally speaking, the CAAC prevents start-up airlines, backed by foreign investors, from recruiting pilots from mainland Chinese carriers.