China Eastern to hold 65% in new Yunnan venture

China Eastern Airlines is expected to hold 65% of its new Kunming-based joint venture with the Yunnan provincial government, with which it signed an agreement Sunday.

The government will hold the remainder and is investing both real estate and cash. The new carrier will not fly with CEA's logo or code but will use the green logo of Yunnan Airlines, the predecessor of CEA's local branch company that merged with the larger airline in 2002. It will adopt its own name and flight code.

CEA Chairman Liu Shaoyong shrugged off the competition the new venture will face in the Yunnan market (ATWOnline, June 1). The government reportedly was expected to inject capital yesterday into Lucky Air, which will form the foundation of its joint venture with Hainan Airlines. Shenzhen Airlines subsidiary Kunming Airlines launched in February. "We are open to market competition, as no company can monopolize the market. But our new venture will be the 'national team' of Yunnan province, which will definitely make it better positioned compared with other companies," Liu said.

CEA's Yunnan branch currently operates 37 aircraft and transports approximately 6 million passengers annually. It plans to expand the new carrier's fleet to 50 aircraft next year and increase passenger boardings to 8 million in the same timeframe. In addition, it is committed to boosting its share of the Yunnan market from 45% to 50% this year.