Spring Airlines to list in Shanghai in 2012

Spring Airlines, China's only budget airline, plans to list on the Shanghai Stock Exchange as early as the first quarter of next year to help expand its fleet and international network.

The Shanghai-based airline, founded in 2005, submitted its listing application in January and hired UBS as sponsor. The airline is worth a total of 8 billion yuan (HK$9.66 billion), and the portion to be listed has yet to be disclosed.

It will be the first privately owned airline to list on the mainland, where the four existing listed airlines are either state-owned or partially funded by local government.

Spring Air will grow its fleet size to 60 by 2015 from 24 at present. The company had originally planned an even bigger fleet but was affected by restrictions imposed on aircraft purchases, said Zhang Wuan, Spring Air's director of executive office.

Due to an austerity regime imposed by the Civil Aviation Administration of China, Spring Air had revised down its fleet expansion plan to 60 from 100, Zhang said.

It is believed the regulator wants to rein in mainland carriers' fleet expansion plans to avoid a cut-throat price war on airfares. Mainland carriers also face a challenge from high speed railways.

However, mainland airlines ended the first half in good shape. Air passenger numbers rose 9.8 per cent year on year to 139 million, while cargo traffic rose 7.6 per cent to 27.4 billion tonnes/kilometres.

Spring Air became one of just a few budget airlines servicing Japan when it launched its first service to Ibaraki last July. It also said that it planned a joint venture in Japan which had an abundant supply of pilots.

However, AirAsia beat it to the punch yesterday with the announcement that it would team up with All Nippon Airways (ANA) to form a new budget airline in Japan. AirAsia Japan, 51 per cent owned by ANA and 49 per cent owned by AirAsia, is the first budget airline based at Narita International Airport. It will be operated under the AirAsia brand and service model, AirAsia and ANA said.

The budget airline will have starting capital of 5 billion yen (HK$50 million) and will start operating in August next year, serving domestic and international destinations.

It follows the establishment of Peach Airlines, a low-cost carrier formed by ANA and Hong Kong-based First Eastern Investment Group, last year. The Kansai-based airline is said to be starting operations in the second half of this year, targeting domestic and international routes into mainland China.