Consolidation among Chinese carriers appears likely, given the “unprecedented challenges” that the global airline industry is facing. 

A HSBC Global Research report into the Chinese airline industry says it does not “rule out the possibility of further consolidation”, adding that the three largest Chinese carriers — Air China, China Southern Airlines and China Eastern Airlines — would likely lead such efforts. 

The report flagged China’s fourth largest carrier Hainan Airlines as a key target for consolidation, given its well-documented financial troubles over the past year. 

Media reports earlier this year have suggested that one, or more, of the three largest Chinese carriers might absorb Hainan’s operations. This was after its parent company, the HNA Group, sought help from the Hainan state government. 

The HSBC report did not list any other carriers that could face merger or consolidation. It notes that the three largest carriers have had a history of consolidating operations within Mainland China. 

China’s “Big three” undertook a massive merger spree in the early 2000s, after the September 11 attacks and under the Chinese government’s consolidation plan. 

Air China, for instance, acquired a 22.8% stake in Shandong Airlines in 2004, three years after it bought over Zhejiang Airlines and merged its operations. 

China Eastern itself bought over Shanghai Airlines’ operations in 2009, but kept the latter’s branding. It absorbed the operations of China Yunnan and China Northwest Airlines in 2003. 

As for China Southern, it merged operations of Xinjiang Airlines and China Northern Airlines in 2004.