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Tourist Magnet Yunnan Gets a New Airline

06-12 17:35 Caijing Magazine

A deal to create Yunnan Airlines as a regional carrier has been signed by Hainan Airlines and the provincial government.

By staff reporter You Shanshan

Government officials in Yunnan Province and Hainan Airlines Group (HNA) have announced plans to establish a regional airline to serve the flourishing tourism industry in Southwest China.

HNA and the provincial State-Owned Assets Supervision & Administration Commission inked a strategic agreement to create Yunnan Airlines.

The plan calls for transferring most of the new airline’s assets from Lucky Air, an HNA subsidiary launched in 2006. Another HNA subsidiary, Grand China Air, would hold a controlling stake in the new carrier.

The deal, which is pending regulatory approval, would reportedly create an airline with registered capital of more than 3 billion yuan.

An HNA source said Yunnan Airlines would be based at Kunming Wujiaba International Airport in the provincial capital Kunming. It would begin with a fleet of 10 planes and expand to 30 in three years.

Lucky Air, based in Dali, currently flies six Boeing 737-700 airliners. The carrier operates more than 20 routes that include Yunnan’s most famous destinations.

Yunnan Airlines is expected to compete directly with China Eastern Airlines in the regional market.

China Eastern has been the province’s dominant player since 2002, when it merged with the former Yunnan Airlines, and it reportedly controls more than 50 percent of the highly profitable market today.

China Eastern officials refused to say whether the new rival would affect business, although the company’s Luo Zhuping told Caijing “competition will help us improve operations.”

In April, the Civil Aviation Administration suspended China Eastern’s operating licenses for some Yunnan routes after some of its pilots deliberately returned flights to their departure airports, including Kunming.

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