Air China launches Inner Mongolia subsidiary

Air China (CA) has launched a new subsidiary in Inner Mongolia as it expands in the North China market (ATW Daily News, July 26). Operations will begin at the end of the year.

The new venture, Air China Inner Mongolia Limited, has a registered capital of CNY1 billion ($159 million), in which CA holds an 80% stake while the local government of Inner Mongolia holds a 20% stake.

The Hohhot-based carrier will operate a fleet of four aircraft, comprising two Boeing 737-300s and two Boeing 737-700s, initially on domestic routes to Beijing, Shanghai, Guangzhou, Chengdu, Hangzhou and other Chinese cities. It plans to open more regional routes inside the Inner Mongolia region, which industry analysts predict will compete with Hainan Airlines’ (HU) subsidiary Tianjin Airlines, which is expanding its regional route network in Inner Mongolia region.

CA has seven subsidiaries, comprising Shandong Airlines, Shenzhen Airlines, Tibet Air, Kunming Airlines, Beijing Airlines, Dalian Airlines and Henan Airlines. China Eastern Airlines also has a Yunnan subsidiary while China Southern Airlines has a Chongqing subsidiary. HU has a Yunnan subsidiary and Beijing-based Capital Airlines.

Industry analysts point out that subsidiaries enable China’s domestic carriers to receive cash support and enjoy favorable policies from different local governments.