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  • Trade war makes talk of Air China-United joint venture academic

Trade war makes talk of Air China-United joint venture academic

Air China would like to establish a joint venture with United Airlines, but current tense US-China trade tensions make such an arrangement all but impossible, according to an Air China executive.

The carrier's vice-president and general manager of North America Zhihang Chi says trade frictions comes amid a broader slowdown in demand for air travel from China to many international destinations.

"In the United States, we would like to have a joint venture relationship… with United Airlines," Chi says at the Boyd Group International Aviation Forecast Summit in Las Vegas on 26 August. "But given all that has been going on, this is virtually impossible."

Air China and United already have a codeshare arrangement and are both members of Star Alliance.

But in recent years Air China has sought to establish tighter relationships with partners by establishing joint ventures, which typically involve sharing revenue and joint marketing and sales activities.

Air China has signed such deals with Air Canada and Lufthansa.

But joint ventures require regulatory approvals, and the USA and China are currently battling in a tariff war.

Just days ago, US President Donald Trump announced he would raise taxes on imported Chinese goods in response to new tariffs imposed by Beijing.

Chi says other factors are affecting demand for air travel from China to places like the USA and Canada.

Such factors include a Chinese economic slowdown and a decline in the value of the Chinese currency, which has made travelling from China to the USA "a little bit more expensive" Chi says.

"The economy is slowing down a little bit. People are worried about their wallet a little bit," he says. "International is very challenging… Domestic is saving the day."

Additionally, Air China faces competition from other carriers launching flights from secondary Chinese cities to the USA.

On the bright side, Air China has seen stronger demand for flights from China to closer international destinations such as Japan, Thailand and South Korea, he adds.

Other airlines have struggled on some routes between the USA and China.

In June, American Airlines announced it was returning regulatory rights to operate 14 weekly flights to China, saying it had no intention to resume flights from Chicago to Beijing and Shanghai.

Just days ago, news surfaced that United Airlines will end its Hong Kong-Chicago flights.

All airlines carried 2.7 million seats in both directions between the USA and China in the second quarter of 2019, up 1.3% year-on-year.

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