"Read-my-lips", PRC's way

[Alain Durand]

They recently stated : "No New Set Up Airline Until 2010"

However, part 1

CAAC to encourage regional market growth with new subsidies
Tuesday October 16, 2007
CAAC is aiming to boost China's long-neglected domestic regional market further with the distribution of new subsidies even as the recent trend of companies investing in regional startups appears to be accelerating.

According to a new regulation scheduled to be implemented by year end, all regional routes measuring 600 km. or shorter will be eligible for the subsidies, with preference given to those opened in central, western or northeastern China. "Though government subsidies can alleviate some temporary difficulties for the regional carriers, it is much more important for these carriers to improve their profitability," China Securities Co. analyst Li Lei noted.

Last year, CAAC's administrative branch in the northwest was chosen on a trial basis to distribute subsidies to regional carriers operating in the region. Industry insiders credit the program with helping push Kunpeng Airlines, the Mesa Air Group/Shenzhen Airlines joint venture that launched last month, to choose Xi'an as its base. Kunpeng started with three CRJ200s and intends to add 20 50/90-seat aircraft annually until it reaches a fleet of 160-200.

Other signs the regional market is heating up can be found at HNA Group's Grand Xinhua Express--which currently operates 29 Do-328s but may take some of the 50 ERJ-145s and 50 E-190s ordered by the parent company, according to Chairman Cheng Feng--and China Eastern Airlines, which has confirmed its plan to launch its own regional in partnership with AVIC I (ATWOnline, Sept. 20).

In July, Okay Airways said it is nearing an order for 30 MA60 turboprops as part of its preparations to launch its regional carrier, which Okay President Liu Jieyin noted will operate principally in central and western China.

Embraer China Chief Representative Guan Dongyuan said the country will need 630 30/120-seat regional aircraft in the next 20 years. The combined regional fleet currently numbers 72, accounting for 7% of the total commercial fleet of 1,024.


by Katie Cantle

http://www.atwonline.com/news/story.html?storyID=10524