A cargo joint venture agreed last week between Hong Kong flag-carrier Cathay Pacific Airways and Air China will likely trigger a wave of consolidation in China's highly fragmented air cargo sector, operators say.
A tie-up between China Southern's cargo operation and China Cargo Airlines, the cargo unit of China Eastern Airlines, could be next, a China Cargo Airlines official said.
'I would say a merger between China Cargo Airlines and the cargo division of China Southern is possible,' the official said.
'Both parties realise they cannot stand alone in the face of tougher competition. The joint venture between Air China and Cathay is a signal that domestic players will need to strengthen their competitiveness through consolidation.'
China Cargo Airlines operates 11 freighters, six of which are smaller MD-11s, while China Southern operates six Boeing 747Fs in Shanghai.
Last week, Cathay Pacific said it would pay 1.67 billion yuan (HK$1.90 billion) for a 49 per cent stake in Shanghai-based Air China Cargo.