Private airlines rise to State-owned challenge
By Cao Desheng (China Daily)
Updated: 2006-01-05 06:11

The expansion of private airlines has put pressure on their State-owned competitors. Proof of this is not only in a shift in market share, but also several instances of managerial and pilot headhunting.

Planes of flag carrier Air China at Beijing airport. China's fledgling private airline industry could take off in the first half of this year, using busy holiday travel seasons to launch their services, state media said. [AFP]

A latest example is Li Kun, former deputy general manager of State-owned China Southern Airlines. He left his company, where he had worked for 27 years, two weeks ago to become the general manager of Shenzhen Airlines, the biggest private carrier in China.

Although the Guangzhou-based airline company refused to comment on Li's departure, aviation analyst Wang Yongsheng said he would have been attracted by the private airline's capital volume, profit margins and promise of personal development.

Li is the first senior manager to make the switch, and his move has sent ripples through the industry.

Also last month, 10 captains from the Jiangsu Branch of China Eastern Airlines asked to resign, something that had never happened before private airlines took off.

"While helping break the previously-monopolized civil aviation market, private airlines also provide more opportunities for pilots and managers," said a professor from the Civil Aviation Management Institute of China surnamed Liu.

Despite small fleet sizes most of them have just one or two leased or purchased aircraft private investors hold high hopes for profits.

Fourteen private carriers were given approval to operate by the General Administration of Civil Aviation of China (CAAC) last year.

Shanghai-based private carrier Spring Airlines transported more than 75,000 passengers between July and October on 436 flights with just one Airbus320. The occupation rate reached 95 per cent, according to company President Wang Zhenghua.

East Star Airlines, one of the companies established five months ago in Shanghai, has signed an agreement for leasing and buying 20 Airbus aircraft.

Tianjin-based Okay Airways, which made the "maiden voyage" for a private airline, said it would watch for cargo transportation opportunities.

(China Daily 01/05/2006 page2)