China Eastern Airlines (CEA) and partner China Ocean Shipping (Cosco) are planning to launch the country's first international air cargo carrier, equipped with a fleet of converted Boeing MD-11 freighters.

Local industry sources say the carrier is to be named China Air Cargo and will be a standalone all-freighter operation - the first of its kind in China. The company is understood to be a 60:40 venture between Shanghai-based CEA and state-owned shipping firm Cosco.

CEA plans to convert its five passenger MD-11s to freighters and transfer the tri-jets, along with its single MD-11 freighter, to the venture. The first two aircraft are pencilled in for conversion in early 2000, with the rest following in 2001-2. As a stopgap, it is looking at wet-leasing 747-200Fs from Evergreen or Polar Air Cargo.

The conversions are contingent on CEA finding replacements for its MD-11s, which are heavily used on routes from Shanghai to Los Angles and San Francisco. Boeing has submitted a proposal for six 747-400s and four options, while Airbus has been trying to interest the carrier in A340-500s.

Efforts are now focused on securing the new carrier access to the USA, alongside China's three existing designated carriers Air China, CEA and China Southern Airlines. China and the USA opened talks on a revised bilateral air services agreement in April in Washington and are due to continue the process in Beijing shortly.

US carriers already operate the maximum 27 weekly cargo-only frequencies permitted under the existing agreement, including four FedEx MD-11 flights to Shanghai and Beijing. China still has unused rights, with CEA's single MD-11F operating only twice a week to Chicago. It also operates cargo flights to Japan and Brussels.

China Air Cargo potentially represents a major expansion of what many have long regarded as an underdeveloped Chinese air freight market. While passenger traffic growth has slowed, freight increased by 8.4% in 1997 to 1.2 million tonnes and is projected to expand to 2 million tonnes by 2000.

The Civil Aviation Administration of China says more than 93% of cargo is belly freight on scheduled passenger flights. The country has only eight freighters, including three Shaanxi Y-8s operated by China Postal Airlines. Air China has converted a 747-200 to a freighter and plans a second.

Source: Flight International