China's new budget carrier Jiangxi Airlines ready for take-off

China Southern start-up awaits licence for take-off into mainland skies

PUBLISHED : Wednesday, 22 July, 2015, 12:29am
UPDATED : Wednesday, 22 July, 2015, 12:29am

A new subsidiary of China Southern Airlines is poised to start flying this year as the latest addition to China's burgeoning low-cost carrier network.

Jiangxi Airlines, a start-up by China Southern-controlled Xiamen Airlines, was waiting for operational permits, a spokesman for Xiamen Air told the South China Morning Post.

"We hope to start flying this year," he said.

He declined to confirm or deny reports by a WeChat-based aviation media platform that Jiangxi Air planned to launch as a no-frills carrier.

"We have not published such news," he said. "We have yet to receive our air operator's certificate, so we do not have a business model to announce at this time."

The spokesman also said Jiangxi Air's initial fleet and crew would come from Xiamen Air, which has 119 Boeing planes, mostly narrowbody B737s.

Jiangxi Air, set up as a joint venture 60 per cent owned by Xiamen Air and 40 per cent by Jiangxi Airlines Investment, would be based in the Jiangxi provincial capital of Nanchang and fly domestic routes using Boeing B737 planes, the Civil Aviation Administration of China had said when it approved the airline in March.

With a no-frills Jiangxi Air, China Southern - China's biggest airline - would join China Eastern Airlines Corp in having a low-cost subsidiary to cater to the mass market of new flyers.

China Southern owns 55 per cent of Xiamen Air, having increased its stake from 51 per cent last week.

Shanghai-based China Eastern, which last year announced it would convert Beijing-based subsidiary China United Airlines into a low-cost airline, said in May it had completed the 10-month transformation plan, leaving flag carrier Air China as the only Big Three airline without a budget unit.

Jiangxi Air would also become the second new low-cost carrier after Juneyao Airlines launched 9 Air, which offers fares as low as nine yuan.

Budget carriers are common in Southeast Asia but are still new to China, having received the official go-ahead only after the aviation regulator explicitly encouraged the development of the low-cost business model in view of the country's enormous air transport needs in February last year.

A number of airlines have since emerged in secondary cities, including Kunming-based Ruili Airlines and HNA Group affiliates Fuzhou Air, Urumqi Air and Guangxi Airlines, although they have not branded themselves as budget carriers.

Spring Airlines, the mainland's leading budget carrier, overtook AirAsia as Asia's largest budget carrier by market value when it listed on the Shanghai stock exchange in January.

Juneyao, which listed four months later, attracted similar investor interest and has risen more than 400 per cent in the past two months.