All Nippon Airways, Japan's largest domestic carrier, is linking up with Shanghai Airlines to expand operations overseas.
While marking Shanghai as its eastern cargo hub on the mainland, the carrier also is eyeing other destinations, in the mainland's southwest and northeast, to drive growth in cargo as well as business traveller sales.
In an interview with the South China Morning Post, ANA president and chief executive Mineo Yamamoto said his company aimed to expand cargo sales seven-fold by 2015 from last year's level of 100 billion yen (HK$7.18 billion) to close the lead of passenger sales. Last year, revenue from passengers reached 700 billion yen.
ANA is looking to the mainland to help meet that target.
'Our development in China is on a par with the development of our entire company,' Mr Yamamoto said.
Although as a whole, the mainland contributes only 25 per cent of ANA's revenue while making up 50 per cent of its international routes, it plays a bigger role in the cargo sector. Mainland cargo sales comprise 20 per cent of ANA's air freight sales, compared with less than 10 per cent for Hong Kong and 50 per cent for Japan.
To boost cargo sales, ANA will add Okinawa in southern Japan to its existing base of Narita on Honshu. As the cargo demand between the mainland and Japan rises, so does the need for a cargo hub in Shanghai.
'We are in talks with Shanghai Airlines for further co-operation in the cargo sector,' Mr Yamamoto said, adding that his company might sub-let warehouse premises from the Shanghai partner.
With five cargo flights a week from Osaka's Kansai International Airport to Shanghai and four return flights to Narita, ANA can provide a next-day delivery service.
Shanghai Airlines, meanwhile, sees a rosy outlook for its home base as a cargo centre.
'Shanghai Pudong Airport will become an air cargo hub before becoming a passenger hub,' chairman Zhou Chi said.
With annual compound growth in cargo volume of between 20 and 30 per cent in recent years, Mr Zhou predicted that before long, Shanghai would become the second-largest air cargo hub in the world.
Shanghai Airlines will expand its ground-handling service for cargo by investing one billion yuan to develop a cargo terminal.
The airline is one of three ground-handling service providers in Pudong, alongside China Eastern Airlines and the Shanghai Airport Authority.
'I think the cargo throughput volume in Shanghai will increase at least to four million tonnes by 2010 from the current one million tonnes,' Mr Zhou said.
Hong Kong, one of Japan's major trading partners, saw a 10 per cent drop in exports and imports to and from Japan last year.
An industry veteran attributed the decline to a shift of air freight from Hong Kong to the mainland.