China Southern Airlines (CSA) plans to establish a new carrier in Hebei province next year in response to the government’s call to build and develop the Xiongan New Area (XNA). Expected to start flying from the new Beijing Daxing International Airport (BDIA) once it opens next October, the wholly owned subsidiary will operate under the name Xiongan Airlines.
Xiongan Airlines has submitted its application to the Civil Aviation Administration of China (CAAC) for its air operator certificate. It will hold registered capital of $1.48 billion, $378 million in operating cash, and $1.1 billion in assets.
The new airline will offer domestic, regional, and international flights. Plans also call for the establishment of a maintenance, repair, and overhaul facility at BDIA to support Xiongan.
According to Hebei provincial official Zu Lian, BDIA provides Xiongan an ideal location to feed China Southern with passengers from other domestic points. BDIA will also serve as China Southern’s hub.
The government has undertaken an aggressive development of the Xiongan New Area, a new city in Hebei province. China Southern represents the first of China’s big-three carriers to commit to establishing an airline to serve the new city.
CSA officials didn’t say whether or not Xiongan Airlines will operate as a low-cost carrier (LCC).
Recently China Southern president Tan Wangeng said the carrier had considered teaming with privately owned Shanghai Airlines to help explore the LCC business model. Shanghai Airlines recently committed to acquiring 1.63 percent of China Southern’s A-share non-public offering for $123 million, making it the fifth largest shareholder. Shanghai Airlines ranks as the biggest LCC in China.
Another 10 LCCs now operate in China: Juneyao Airlines, Beijing Capital Airlines, West Air, 9 Air, Lucky Air, Colourful Guizhou Airlines, Jianxi Air, Ruili Airlines, Urumqi Air, and Joy Air.
State-owned airlines establishing subsidiary carriers reap financial benefits and enjoy better traffic rights under the current regulatory terms. China Southern’s decision to start Xiongan Airlines reflects plans to implement a dual-hub Guangzhou-BDIA strategy.
China Southern plans to raise $1.42 billion to acquire 41 jetliners and lightweight seats for its Airbus A320 fleet. It has not revealed details about its choice of aircraft type or delivery schedule.
BDIA lies some 35 miles from XNA and some 60 miles southwest of Beijing.