Passenger flights to propel Yangtze River Airlines

By Wang Wen | China Daily USA | Updated: 2015-12-15 07:57

Yangtze River Airlines Co Ltd, the Shanghai-based freight subsidiary of HNA Group is entering the passenger traffic segment with its first passenger service set to start on Tuesday.

The airlines' first passenger traffic route is from Shanghai to Sanya, Hainan province, and it will also open another two routes from Shanghai to Zhuhai, Guangdong province, and Guiyang in Guizhou province, said Yang Zhihua, passenger traffic president of Yangtze River Airlines.

"Huge demand is the main reason why Yangtze River Airlines is expanding its business into passenger traffic," Yang added.

The carrier got its second Boeing 737-800 aircraft for passenger traffic on Dec 13 and more Boeing 737 aircraft will be delivered next year. It currently runs 26 air freighters on more than 40 domestic and international routes.

Yangtze River Airlines said it plans to operate about 20 wide-body passenger aircraft on domestic and international routes, Yang said.

But the weak air cargo business may be another reason for the carrier's transformation, some experts said.

Statistics from the International Air Transportation Association showed that global air freight demand increased just 1.9 percent in 2015 compared with 2014, while passenger traffic demand was up 6.7 percent.

"Weak cargo performance reflects sluggish growth in trade," IATA said in its statement and forecast that cargo demand will grow 3 percent in 2016.

The global air cargo industry has been depressed for several years and some freight carriers have gone bankrupt.

Yangtze River Airlines is the third domestic freight carrier moving to passenger traffic. Two privately owned cargo carriers - Loong Air in Hangzhou, Zhejiang province, and Donghai Airlines in Shenzhen, Guangdong province - have already added passenger traffic to their business.

The weakness of the cargo business will continue for a while, and passenger traffic is recovering with strong demand, said Li Xiaojin, a professor at Civil Aviation University of China in Tianjin.

"It is reasonable for freight carriers to look for more profitable businesses," Li said.

As Yangtze River Airlines expands to passenger traffic, HNA, the fourth-largest airline group in China, entered the Shanghai market, an important hub with stiff competition, some industry sources said.

Shanghai-based China Eastern Airlines Corp Ltd, one of China's big three carriers, occupied a market share of around 50 percent in Shanghai and some privately owned carriers are also developing well in Shanghai, such as Spring Airlines and Junyao Airlines.

"The air traffic market in Shanghai will grow further in 2016, as Shanghai Disneyland Park will open in 2016 spring," said Yu Nan, an analyst from Haitong Securities Co.

wangwen@chinadaily.com.cn