Nicholas Ionides/SINGAPORE
Six Chinese carriers have agreed a wide-ranging commercial alliance aimed at challenging the soon-to-be formed giant groups headed by Air China, China Eastern Airlines and China Southern Airlines.
China Postal Airlines, Shandong Airlines, Shanghai Airlines, Shenzhen Airlines, Sichuan Airlines and Wuhan Airlines announced the partnership, to be known as China Sky Aviation Enterprises, at the end of April.
Although initially aimed at rationalising operations and reducing competition through codesharing and other ties, member carriers have not ruled out future equity links.
China Sky is aimed at helping its members avoid being swallowed by the major airlines, which are being expanded through the take-over of seven other airlines under the direct "control and administration" of the Civil Aviation Administration of China (CAAC).
The CAAC has been pushing carriers to consolidate for some time and has confirmed the make-up of its merger exercise.
Air China will take-over China Southwest Airlines and China National Aviation Corp (CNAC), owner of Zhejiang Airlines and Air Macau and main shareholder in Hong Kong-based Dragonair. China Eastern Airlines' parent Eastern Air Group will take-over China Northwest Airlines, Great Wall Airlines and Yunnan Airlines. Southern Airlines Group, parent of China Southern, will take-over China Northern Airlines and Xinjiang Airlines.
Although the merger plan only applies to the 10 airlines under direct CAAC control, second-tier carriers have been in consolidation talks to survive a possible second wave of forced rationalisation.
China Sky members have a combined fleet of around 100 aircraft, operating on some 500 routes. They say they will form the fourth largest airline grouping in the country.
Questions are being asked about the future plans of Hainan Airlines, which has also been aggressively seeking merger partners but which is not a China Sky member. Hainan last year acquired Changan Airlines and earlier this year agreed to take-over China Xinhua Airlines.
As part of the sweeping industry restructuring, the CAAC will cut equity ties in the airlines it directly controls. It has also confirmed that it will give up stakes in four aviation service companies, which will be merged into two.
The Civil Aviation Computer Information Centre will be combined with the Accounting Centre of China Aviation, CAAC minister Liu says, creating the Civil Aviation Information Service Group.
China Aviation Oil Supply Co and China Aviation Supplies Import and Export Corp will also merge, creating the China Aviation Security and Service Group Co.
Source: Flight International
