Chinese aerospace giant, AVIC I, establishes regional carrier in partnership with China Eastern Airlines

Leading aircraft maker, China Aviation Industry Corp. I (AVIC I), announced Friday that it was setting up a regional carrier in partnership with China Eastern Airlines, the country's third largest carrier. It said the move was intended to support the indigenous aircraft industry. The new carrier has been dubbed  Xingfu Airlines (Happiness Airlines).

AVIC I will hold 60 per cent of the joint venture, while China Eastern owns 40 per cent.

The venture has a registered capital of 1 billion yuan ($140.8 million).

The carrier will be based in the north-western city of Xi'an, with the Xianyang International Airport as its main hub.

According to AVIC I vice general manager, Hu Wenming, the carrier's fleet will be equipped with the AVIC I-produced Xinzhou 60 and ARJ 21 aircraft. The carrier's fleet is expected to grow to a strength of 100 aircraft over eight years.

The Xinzhou 60 aircraft, produced at AVIC I's Xi'an subsidiary, carries up to 60 passengers, while the ARJ 21, China's first indigenous turbofan regional airliner, can seat between 70 to 110.

The new carrier has placed an order for 10 ARJ aircraft, which brings the total number of orders of this airliner to 181.

Hu, who will also double as chairman, Xingfu Airlines, said Xingfu Airlines is expected to help China Eastern Airlines extend its network to small- and medium-sized cities in the western areas. But the carrier, according to Hu, would mainly target fast-growing markets in the western region.

Apart from providing a boost to China's aircraft industry, the carrier is expected to ease the imbalance in transportation capacities existing between the eastern and western regions of the country.

China will invest 7.6 billion yuan in the expansion of the Xianyang International Airport before 2010, turning it into a major aviation hub for the north-western region.

Currently, western China has 49 civil airports, and the government has announced plans to construct at least another 20 airports through 2010.

China Aviation Industry Corporation I, (AVIC I) is a state-owned industrial group that develops and manufactures fighter, bomber, transport, trainer and reconnaissance aircraft, along with turbojet and turbo fan engines as well as various kinds of missiles.

AVIC is now developing tanker as well as early-warning aircraft, UAVs and new-generation space vehicles. It is developing the ARJ21 regional jet whose first flight is scheduled for sometime in 2008.