China Aviation Oil Holdings (CAOH) may take on major mainland petrochemical and airline companies as strategic investors ahead of a possible initial public offering as a first step towards liberalising the market, according to mainland media reports.
But mainland aviation industry watchers warned that despite hopes the move to privatise CAOH and liberalise China's aviation fuel market would dramatically lower fuel costs for airlines, real reductions may not be seen for many years until scale is built up in the industry.
CAOH executives told mainland media that Sinopec and PetroChina, the No 1 and No 2 aviation fuel manufacturers in China, were potential investors, along with the three major national airlines - China Southern and China Eastern Airlines, and Air China.
The company was created last month as part of China's sweeping consolidation of the aviation industry to be the ultimate holding company for China Aviation Oil Supply Corp (CAOSC).
CAOSC has a monopoly on aircraft fuel sales in China and owns virtually all of the aircraft refuelling infrastructure in the country.
A spokesperson for China Aviation Oil (Singapore), the Singapore-listed trading arm of CAOH and a sister company of CAOSC, said it was possible its parent company could 'exchange shares with the major mainland carriers'.