Hainan Airlines has received approval from the Civil Aviation Administration of China (CAAC) to set up a new carrier in the Xinjiang Uyghur autonomous region, together with the investment arm of the local government.
The airline and Urumqi City Construction Investment will together invest yuan (CNY) 3 billion ($492 million) to start the joint venture carrier, to be called Urumqi Airlines. The carrier will be based at Urumqi International Airport.
Hainan Airlines will invest CNY2.1 billion to hold a majority 70% stake in the carrier, while its partner will take the remaining 30% share with a CNY900 million investment.
CAAC has given the parties a two-year period, ending November 2015, to prepare for the launch of the new carrier.
In a statement to the Shanghai Stock Exchange, Hainan Airlines said the new carrier will allow it to enhance its air transport business and promote the development of civil aviation in Xinjiang.
CAAC had previously granted preliminary approval for the new carrier to operate passenger and cargo services, both domestically and internationally, with a fleet of Boeing 737s.