Air China has expanded its domestic reach with the purchase of a large minority stake in Shandong Airlines. Shandong confirms that Beijing-based Air China has paid more than 500 million yuan ($60 million) to acquire 22.8% of Shandong Airlines directly and 42% of the carrier's parent company, Shandong Aviation Group. The airlines have not yet agreed whether Air China will gain seats on Shandong's board.
Air China had been working on the purchase for some time in a bid to bolster its domestic market reach. Shandong Airlines is based in the north-east Chinese city of Jinan and is one of the few remaining independent Chinese carriers. It operates nine Boeing 737-300s, nine Bombardier CRJ200s, two CRJ700s and four Saab 340Bs to nearly 50 destinations in China. It also has codeshare relationships with Air China and China Southern Airlines.
China's aviation industry is undergoing a period of consolidation in which smaller airlines have been encouraged by the government to join one of the three main airline groups, namely Air China, China Eastern Airlines and China Southern.
Source: Flight International