China Eastern Cargo : MU : CES ?

China Eastern Airlines said its new subsidiary cargo carrier, comprised of the assets of China Cargo Airlines, Great Wall Airlines and Shanghai Airlines Cargo, will commence operations Jan. 1, 2011 from its base in Shanghai.

CEA General Manager Ma Xulun noted that CEA will be the controlling stakeholder in the new entity. CEA acquired Shanghai Airlines last year and signaled it would combine the two carriers' cargo subsidiaries.

Earlier this year it took a 51% stake in Great Wall, which operates three 747-400 freighters based at Shanghai Pudong (ATW Daily News, March 12).

Ma said other shareholders in China Cargo, Great Wall and Shanghai Airlines Cargo will also hold minority stakes in the new cargo carrier, though he didn't reveal the share proportion breakdown.

Great Wall's stakeholders include Singapore Airlines while China Ocean Shipping Group and Taipei-based Eva Airways hold stakes in China Cargo and Shanghai Airlines Cargo, respectively.

Shanghai is China's largest domestic air cargo market, but it is dominated by FedEx, UPS and DHL rather than domestic operators. In addition to the new CEA carrier, Air China is expected to launch a joint venture cargo airline based in Shanghai in conjunction with Cathay Pacific Airways; the JV must still gain regulatory approval.

Separately, CEA signed a strategic cooperation framework agreement with Shanghai Airport Group, which controls both Hongqiao and Pudong. The parties said they intend to build Shanghai as an international aviation hub. Under terms of the agreement, CEA will allocate more capacity to Pudong to open more international routes and boost flight frequencies on existing international and domestic trunk routes.

CEA Chairman Liu Shaoyong has told ATW that the carrier will embark on an ambitious international expansion plan starting next year. It hopes to change the ratio of international to domestic routes in its system from 3:7 currently to 4:6 by 2015.