AirAsia intends to establish a Chinese joint venture in Zhengzhou, China's civil aviation history "first order" faces approval challenges
China Times (public number: chinatimes) reporter Wang Yuyu reports from Beijing
Since the opening of the Macau route to the Chinese market for the first time in 2004, Malaysia AirAsia Group (hereinafter referred to as AirAsia Group), which can almost be called the Chinese low-cost aviation enlightener, has always been willing to follow the Chinese market while destroying the city. The usual way of market expansion is to establish a joint venture airline in China.
Today, the AirAsia Group is one step closer to this idea. On May 14th, AirAsia Group (Asian Airlines) (hereinafter referred to as AirAsia) and China Everbright Group (hereinafter referred to as China Everbright Group) and Henan Provincial Government Working Group signed a memorandum of understanding in Beijing, plans to establish a provincial capital of Zhengzhou, Henan Province. Base joint venture low cost carrier AirAsia (China) Co., Ltd. (hereinafter referred to as China AirAsia).
If China AirAsia can be approved, it means that a foreign-branded airline will be eligible to operate China's domestic routes and fly from mainland China to overseas cities. This has never happened in the history of Chinese civil aviation. .
Previously, China Civil Aviation had a regional aviation company, Kunpeng Aviation Co., Ltd., which was established by Mesa Aviation Group. The three major state-owned airlines were only introduced overseas by cross-shareholding or selling a small amount of equity to foreign-funded airlines to achieve deep business cooperation. capital.
AirAsia Group CEO Tony Fernandes has been looking for a route network across Asia since he founded the most successful low-cost carrier in Asia, but under the restrictions of navigation rights. This idea must be achieved by establishing local joint ventures in different countries or regions.
At the beginning of April this year, AirAsia Group just announced that it will cooperate with two Vietnamese companies to establish Vietnam AirAsia, which is the seventh country that has been “underwritten†by the Asian Airways Group's brand export strategy after Malaysia, Indonesia, Thailand, India, the Philippines and Japan.
Can China be the eighth market to plug in the “red flag†of AirAsia Group? It is still difficult to predict, but what is certain is that it is not difficult for China to accept a foreign-owned brand of “domestic†aviation companies that have more than 40 local airlines in operation and a high degree of local protection in the aviation market.
Kathleen Tan, president of Asia North Asia, revealed in an interview with the China Times (public time: chinatimes) last August that many local governments, investment groups and airport groups in China have contacted AirAsia and hope to participate in China AirAsia. Established, but AirAsia’s principle is not to consider its peers in the industry, and this is probably the lesson learned from the failure of Japan’s AirAsia joint venture with ANA.
At present, among the joint ventures of AirAsia, the partners are mostly local consortia or trading companies, such as India Tata Group, Japan Lotte Group, etc., and no other airlines are involved. The joint venture party selected by AirAsia can bring a better policy and market environment to the joint venture company by relying on its strong brand, volume or market influence.
It is not difficult to understand that after a long period of brewing, the state-owned China Everbright Group and the Henan Provincial Government have become the local partners of the AirAsia Group in China. After throwing out the “hydrangeaâ€, what the AirAsia Group needs to do is wait for the Chinese cooperation. How the partners persuaded the Chinese government authorities to approve this unprecedented cooperation.
Malaysian Prime Minister Najib, who is attending the “Belt and Road†international cooperation summit in Beijing, attended the cooperation ceremony and seems to have enhanced the official color of this cooperation. Shu Qing, deputy governor of Henan Province, and Gao Yunlong, vice chairman and general manager of Everbright Group, also put forward high expectations on this cooperation at the ceremony, which is obviously a good start for AirAsia Group.
Of course, AirAsia, which is well versed in the Chinese market, has demonstrated its sincerity in the development of the Chinese market through other means, such as promise to invest in aviation infrastructure construction in China, including setting up a low-cost aviation dedicated terminal at Zhengzhou Airport to train pilots. Aviation colleges for crew and engineers, as well as repair, repair and overhaul services for aircraft.
AirAsia’s executive director Datuk Kamaruddin even hinted that he would consider purchasing the C919 passenger aircraft developed by China. Under such a series of demonstrations, the pressure on Chinese partners to apply for operating licenses is not small.
In fact, there are still some problems with China AirAsia's approval. First, the industry management agencies are strictly controlling industry access. The Civil Aviation Administration of China has not approved new passenger airlines since September 2015. At present, there are nearly 10 domestic airlines that are clearly waiting to be approved.
The "Regulations on Foreign Investment in Civil Aviation" (hereinafter referred to as the Regulations), which has been implemented since 2002, clearly states that "foreign-invested public air transport enterprises shall be controlled by the Chinese side, and the proportion of investment by a foreign company (including its affiliated enterprises) shall not exceed 25. %". Such a shareholding ratio limit may be more stringent in the joint venture company currently established by AirAsia Group. AirAsia Group holds 49% of Indonesian Airlines, 40% of AirAsia in Philippine Airlines, and 49% of AirAsia shares. Even AirAsia, Vietnam, accounts for more than 30%.
Too low a shareholding ratio means a certain risk of the right to speak down for the AirAsia Group, which is used to the operation of the leading joint venture company. I am afraid it is also a problem that needs serious consideration.
In the same "regulations", there are also provisions for "foreign-invested public air transport enterprises and general aviation enterprises, which must implement the national price policy". Although the current civil aviation reform has begun to loosen the freight rate reform, the rigid cost of operating in China To be higher than AirAsia's environment in other regions, it is not known whether it can maintain the attraction of passengers in the process of competing with Chinese airlines.
In the competitive environment of China's aviation industry, successful airline operations are also closely related to the support of local governments. Henan Province has always hoped to develop the aviation industry within the province. Previously, he had invested in European Luxembourg Cargo Airlines. This time, he once again attracted AirAsia, which is also a new way to compete in the highly competitive aviation card position in the central region.
Before holding a three-party talks with AirAsia and China Everbright, Shu Qing said: "Henan is very happy that AirAsia has settled here. Zhengzhou is one of the ancient capitals of China. With AirAsia supporting the planning and construction of Zhengzhou's airport - one Five times the industrial, commercial and logistics area of ​​Manhattan, the airport is located in the heart of it, and we firmly believe that the transformation of Zhengzhou into a new transportation and logistics center in the world will be a success."
However, one fact that cannot be ignored is that Zhengzhou, which is located in the geographical center of China's railway network, is more seriously challenged by the high-speed rail during the development of short-haul air transportation. In addition, local governments are also critical to the support of aviation companies interested in local development. China's largest low-cost airline Spring Airlines Co., Ltd. (hereinafter referred to as Spring Airlines) once intended to build a hub in Zhengzhou, but withdrew from the local market after stopping all Zhengzhou routes in 2011. Although at the time, the Spring and Autumn Airlines external statement was that the airline operating losses were severe under the impact of the high-speed rail, but its executives also confessed to the media that Shijiazhuang and other local governments have more support. Now Spring Airlines has established a route in Shijiazhuang. Hub network.
Despite the many uncertainties, the move of the AirAsia Group to the Chinese market will still bring positive significance to the Chinese air transport market. At least in terms of promoting competition, China Airlines will have a real chance to be in an equal market. Faced with first-class competitors in the competition, both airline travelers and the aviation industry will benefit from both competitions.
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