One of China's most profitable carriers announced yesterday it has established its own all-cargo airline, in a bid to tap into the country's huge freight market.
Hainan Air Group, the fourth largest carrier in the country, has been granted approval to operate the Yangtze River Express Co by the Eastern branch of the Civil Aviation Administration of China.
The Shanghai-based Yangtze River Express Co is China's second all-cargo carrier, following China Cargo Airlines, an arm of China Eastern Air Group, the country's third-largest carrier.
The new venture will focus on air cargo transportation, express delivery, freight forwarding, ground distribution and warehousing as well as e-business, said Liu Weining, chief executive officer of the company.
Chen Feng, chairman of Hainan Air, said: "China's cargo market, especially the air express sector, is still somewhat untapped and at a very initial stage of development.
"We will provide express and logistics services in addition to traditional transportation, aiming to become integrators like UPS and FedEx of the United States."
Estimates by both Boeing and Airbus show China's freight market will grow quicker than the passenger market in the next few years.
Prompted by its World Trade Organization entry and soaring national economy, China is expected to become a logistics centre for the region and perhaps the world.
With a registered capital of 200 million yuan (US$24 million), Yangtze River Express has Hainan Air Group, the Shanghai-listed Hainan Airlines Co and Shanghai Airport Group as investors. They contributed 85 per cent, 5 per cent and 10 per cent to the group respectively.
As a wholly-owned subsidiary of Hainan Air Group, Yangtze River Express will take over all of its cargo business, including Haikou-based Hainan Air, Beijing-based Xinhua Air, Xi'an-based Chang'an Air and Taiyuan-based Shanxi Air. It now has a domestic air freight network covering more than 30 cities. The express company said it is planning to expand to 100 cities in the near future.
"Unlike China Cargo Airlines, whose attention is mainly paid to the international freight market, Yangtze River Express will focus more on the domestic freight market, to meet the flourishing need of timely cargo services in the country," Chen said, adding the company will be a "good partner" of China Cargo Airlines instead of competitor.
Chen revealed that the express company is negotiating with international express giants like UPS and FedEx to co-operate.