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JV seeks to build air hub in Kunming

CHINA Eastern Airlines will form a joint venture with the Yunnan provincial government to develop a regional air hub in Kunming, the provincial capital.

China Eastern, the country's third-largest carrier by fleet size, will hold 65 percent of the new venture and the Yunnan government will take the balance, according to an agreement the two partners signed on Sunday.

They haven't worked out financial details in the agreement but an official of the Yunnan venture said that China Eastern will provide it with aircraft and pilots while the provincial government will offer land and cash.

The venture is expected to be launched this year. China Eastern aims to raise its market share in Yunnan from 42 percent to 50 percent via this venture by the end of this year, said Chen Xin, general manager of the airline's planning and development department.

Three Boeing 737-700 jets will be added to the venture's fleet of 37 jets, provided by China Eastern, this year, and by 2010, it will have 50 aircraft in its fleet. It will fly 8 million passengers annually in 2010.

"Yunnan is a key region which connects Vietnam, Laos and Myanmar, the Pacific Ocean and Indian Ocean, Chinese mainland, Southeast Asia and South Asia," said Li Yunfeng, party secretary of the venture. He added this region "will offer huge potential for the aviation industry."

The venture is part of China Eastern's measures to battle the economic crisis as the carrier lost nearly 14 billion yuan (US$2.05 billion) last year. It plans to build Kunming, and Xi'an, capital of Shaanxi Province, as regional hubs in five years.

Liu Shaoyong, chairman of the Shanghai-based carrier, said the company will tap overseas equity markets in the near future.


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