A joint venture to invest in mainland airports has been formed by Swire Pacific and China Eastern Airlines, taking advantage of the central government's recent moves to open the sector to private participation. Swire said in an announcement yesterday that it had signed a formal agreement with Shanghai-based China Eastern to form a new investment company called Shanghai Eastern Airlines Swire Investment (Eastern Swire) that will focus on airport sector opportunities in China. Company sources said no limit had been set on the amount to be invested in the new venture as that would depend on business opportunities ultimately identified by its yet-to-be-formed management team. While the initial investment focus of the new venture would be on airport management and related services, the sources said it would not preclude equity investment in mainland airports now being opened up to private sector participation. The venture will have a registered share capital of US$30 million to be funded equally by the two partners, the minimum needed to secure regulatory approval for the new company. The news could also represent a big step forward for the mainland ambitions of Swire-controlled Cathay Pacific Airways, which has said repeatedly in the past several years that it is interested in taking an equity stake in China Eastern. The two carriers already share deep operational ties, including the AsiaMiles frequent flyer programme and a 'quick transfer service' partnership launched in September to shuttle passenger traffic between Taipei and Shanghai through Singapore. Cathay has also applied to Hong Kong authorities to resume operations to some mainland cities. It is widely believed within the industry that Singapore Airlines' airport management arm had also been interested in a similar arrangement with China Eastern. It has expressed official interest in purchasing several airports in China. Swire's group general manager for public affairs, Andrew Herdman, said no specific airports had been identified for investment. 'First we will form the company, which will take at least several months to gain regulatory approval, and then we will form a management team from both sides,' he said. 'It is general interest at this point, focusing on airport services, ownership and management. But we will keep an open mind.' Mr Herdman said the amount of capital to be invested would depend on the potential of the investment targets identified by the team, meaning that total investment could be much higher or lower than Eastern Swire's registered share capital. However, Mr Herdman played down expectations that the deal meant Cathay was now closer to its goal of being allowed to take a stake in China Eastern. 'This deal was driven by the regulatory changes in China. There have been reforms to the ownership and management of China's airports,' he said. 'There are a large number of airports potentially to be privatised.' Earlier in the week, the General Administration of Civil Aviation in China (CAAC) tentatively approved the sale of Yichang airport in Hubei province to a private investment company called Junyao Group, ahead of regulations now being drafted that would allow private companies to own airports. This follows reforms last year that raised the level of foreign ownership allowed in China's aviation sector.