By Lu Haoting (China Daily)
Updated: 2008-03-06 11:06

A regional joint venture airline between China Aviation Industry Corp I (AVIC I) and China Eastern Airlines will be launched at the end of this month or in early April, a senior executive from AVIC I said yesterday.

The new company, Xingfu Airline, will be based in Xi'an, Shaanxi province. It will be 60 percent controlled by AVIC I, China's largest aviation manufacturer, and fly the company's 50-seat MA60 and 70-100-seat ARJ21, said Lin Zuoming, AVIC I's president and CPPCC member.

The airline, with registered capital of 1 billion yuan, is the first in China to be set up by an aircraft manufacturer, a rarity in the aviation industry worldwide. The joint venture between the two enterprises underlines the government's effort to promote Chinese aircraft.

Shanghai-based China Eastern, one of China's three largest airline groups, also hopes to attract more passengers by combining its mature trunk line network with the new feeder line service.

"China has huge potential in developing regional aviation. We cannot just rely on trunk routes. So the partnership is also part of our growth strategies for the future," said Li Fenghua, China Eastern president and chairman and CPPCC member.

The MA60 turboprop has received 116 orders, of which 86 are from overseas. The planes have been delivered to Zimbabwe, Laos, Zambia and the Republic of Congo.

The ARJ21 regional jet rolled off the production line in Shanghai at the end of last year. It has received 171 orders from domestic carriers. AVIC I plans to begin deliveries in the third quarter of 2009.

Large aircraft

Lin also said AVIC I would invest both in cash and with its commercial aircraft manufacturing assets in Shanghai to become a shareholder in a new joint venture company that will take charge of China's large passenger aircraft project.

But he declined to elaborate, saying the share structure of the joint venture would not be finalized during the ongoing first session of the 11th NPC, to end on March 18.

China is forging ahead with its ambitious plan to develop a homegrown passenger airline with at least 150 seats to challenge the domination of Boeing and Airbus in the country's fast-growing aviation market. The aircraft is expected to take off by 2020.

A joint venture responsible for this project is widely expected to be set up in Shanghai in March.

Shareholders are expected to include the State Council, local governments, AVIC I, AVIC II and other large State-owned industrial groups such as Baosteel and Chinalco.

The aircraft will be assembled in Shanghai, with the nose, fuselage and tail sections manufactured in other provinces, Liang Zhenhe, AVIC II's vice-president, had said earlier.