China prepares to launch new airliner despite global downturn

China prepares to launch new airliner despite global downturn

China’s aviation industry has ridden against the tide by making plans to launch a new airliner. The launch plans come during the biggest crisis the airline industry has faced as planes are grounded and strict quarantines put in place to curb the spread of the Covid-19.

Along with some other giants in the aviation market, the airliner has partnered with China’s biggest online travel agency, Trip.com. Despite the severe global decline in passengers and travel caused by the coronavirus pandemic, the second-biggest airline is to launch a new carrier.

The new airline will be focused on the island destination of Hainan, which is home to eight million and a free-trade hub and the partners are hoping to capitalize on Hainan's growing significance in China. The island is about 30 times the size of Hong Kong and is a popular holiday destination for Chinese tourists.

In view of this, China’s president Xi Jingping has indicated his plans to turn the island into the nation’s largest free-trade zone and as a result, Beijing has outlined plans to lower the income tax rate on Hainan for selected individuals and companies to 15%, and relax visa requirements for tourists and business travellers.

Also, the airliner which is to be christened Sanya International Airlines will have a majority stakeholder being government-backed China Eastern, which is set to have a 51% majority stakes. Although there have been misgivings about the timing of the launch due to the dire state of the airline industry, other airliners have backed the move such as Shanghai-based Juneyao, according to the Hong Kong Stock Exchange.

A huge risk for China’s Airliner?

Global airline industry have suffered recurring spate of challenges, almost irreparable due to the pandemic which has forced airliners to ground planes and halt activities due to lockdown impositions and travel ban.

According to the International Air Transport Association, the airline industry could suffer losses of more than $84bn (£66bn) this year. Coupled with this a number of high-profile airlines have been struggling to survive during the crisis including Virgin Australia, Thai Airways and Colombia's Avianca. Other airlines have been forced to lay off thousands of workers and downsize operations.

Speaking rather positively on the new airliner, Asia’s managing editor at FlightGlobal magazine, Greg Waldron was of the view that,

"The airline's official launch will likely depend on the continued recovery of Chinese domestic traffic and the Covid-19 situation in both China and regionally. It takes time to build an airline, however, so a great deal of work needs to take place in terms of equipment and personnel before the airline takes to the air."

Founder of the China Research Group, Shaun Rein corroborated by saying it was actually a good time to start a new airline focused on Hainan and that regardless of the China-US rift, there has been a growing level of patriotism with Chinese citizens in enlightening their children on the country’s heritage.

"Even before Covid, 2020 was the year of domestic Chinese tourism as China wants to focus more on seeing their own country, especially hot spots like Hainan, Yunnan and emerging ones like Gansu."

Meanwhile, ongoing pro-democracy protests in Hong Kong have discouraged many Chinese travelers from visiting the former British colony.

"Hainan itself as a destination is hot right now, especially as the government supports duty-free shopping there. Hainan also has no quarantine or other travel restrictions."

In spite of the teething problems, no timeframe has been given for the launch of the new airline, as it will require regulatory approval.