From middle of next year, new carrier aims to penetrate market with three freighters

Korean Air (KAL) and logistics giant Sinotrans are to set up a joint-venture cargo airline in China operating both domestic and international services.

A joint-venture agreement on the as-yet-unnamed new airline was signed in China last week between KAL and a unit of state-owned Sinotrans, which is China’s largest logistics company.

The new airline plans to launch services in the middle of next year with an initial fleet of three freighters. Capitalised at $65 million, it will be 51%-owned by Sinotrans Air Transportation Development and 25%-owned by KAL. Two other South Korean companies will hold the remaining 24%. KAL had been trying for some time to buy into a Chinese cargo airline and the deal with Sinotrans followed its failure to conclude an agreement with small passenger start-up airline Okay Airways, which is expanding into the cargo market.

In May Singapore Airlines jointly launched a new Shanghai-based international cargo carrier called Great Wall Airlines, but it was forced to halt operations last month after the Chinese majority owner had sanctions imposed on it by the US government.

Last month another new international cargo airline – Jade Cargo International – launched out of Shenzhen. Shenzhen Airlines has majority ownership, while Lufthansa and a German bank own large minority stakes.

Taiwan’s China Airlines (CAL) and EVA Air have also been investing in the Chinese market, although the Chinese government does not consider them foreign carriers as it regards Taiwan as a renegade province. CAL owns 25% of Hainan Airlines-controlled Yangtze River Express, which has domestic and international operations, while EVA has partnered with Shanghai Airlines to establish a new joint-venture international freight airline.

Source: Flight International