Another joint-venture cargo airline is to be established in China aimed at capitalising on the rapid growth in the freight market.
Korean Air (KAL) will join forces with China's largest logistics company. The announcement came as Singapore Airlines (SIA) suffered a setback in its effort to expand its presence in China, with the sudden suspension of services by 25%-owned Great Wall Airlines.
KAL says its still-unnamed new airline will launch services next year with three freighters and it will be set up with $65 million in capital. It will operate domestic and international services.
The South Korean carrier will have management rights and a 25% stake, which is the maximum allowed for a foreign airline under Chinese law. A majority 51% will be held by Chinese state-owned logistics giant Sinotrans. Two other South Korean companies will hold the remaining shares.
China's freight market remains in its relative infancy but it is growing rapidly and several foreign airlines have sought to invest in the sector in recent years, albeit with mixed results.
In May SIA jointly launched new Shanghai-based international cargo carrier Great Wall Airlines but it was forced to halt operations in the second half of August after the Chinese majority owner had sanctions imposed on it by the US government.
A month into the suspension there was no indication when it may be able to reinstate services and some believe the grounding could be permanent. If that proves to be the case it will represent a major blow for SIA in its long-standing efforts to expand further into the fast-growing Chinese market.
SIA's bad news came as another recently launched joint-venture cargo carrier in China, Jade Cargo International, unveiled expansion plans.
A partnership between Shenzhen Airlines, Lufthansa Cargo and a German bank, Jade Cargo launched operations in August using one of six 747-400ERFs that it ordered new from Boeing. The Shenzhen-based carrier started with services to Amsterdam in the Netherlands and Seoul in South Korea and plans to progressively introduce new services, such as to additional points in Europe and Asia, as new aircraft arrive.
Its second 747-400ERF is due for delivery in November and the last of the remaining four on order in January 2008. It has also said it may look to add six more aircraft from 2009 or 2010. ■
Source: Flight International
