Zhongyuan Airlines, a regional airline in central China, is seeking foreign investment to double its fleet of five passenger aeroplanes in the next two or three years. It aims to become the second Chinese carrier to sell a stake to foreign investors, following the sale of a 25 per cent stake in Hainan Airlines to United States investment funds controlled by financier George Soros. 'We are talking with several interested parties,' Xu Jianguo , president of Zhongyuan Airlines, said. He declined to give more details. Last November, American Aviation Investment, a fund partly controlled by Mr Soros, paid US$25 million for a 25 per cent stake in Hainan Airlines, marking the first time a Chinese airline had sold an interest to foreign investors. Mr Xu said the Civil Aviation Administration of China (CAAC), the country's aviation regulator, still placed tight controls on foreign investment in Chinese airlines. However, mainland sources said the CAAC had started to appear less stringent. In a soon-to-be-released five-year plan covering the period until 2000, the CAAC said it would 'actively' encourage regional airlines to set up joint ventures with foreign airlines and other foreign investors. They said the CAAC had an internal ruling that foreign investment in any Chinese carrier should be limited to 25 per cent or less of total share capital of the domestic carrier. Mr Xu said the foreign capital was needed to import aircraft and technology to expand and improve services. Zhongyuan has three 140-seat Boeing 737s and two domestically made Yun-7 passenger aircraft. It planned to buy at least five more aircraft, hopefully Boeing 737s, in the next two or three years, Mr Xu said. The airline, based in Zhengzou in Henan province, is controlled by the provincial government. It flies 22 routes to China's main cities and the coastal economic zones in the south including Beijing, Shanghai, Shenzhen and Xiamen. Mr Xu said Henan's renewed enthusiasm for the expansion of economic links with other parts of the country and with foreign investors had pushed up the demand for air travel. In the Zhengzhou airport, passenger traffic rose to 1.4 million people in the first six months of this year, up from 1.1 million people for the whole of last year. Zhongyuan Airlines handled over one third of the passenger traffic coming into or out of the airport, Mr Xu said.
