China Eastern Airlines to launch new airline despite COVID-19
China Eastern Airlines (CIAH) (CEA) is moving ahead with plans to launch a brand new Chinese subsidiary in cooperation with various partners including the likes of Juneyao Airlines. The airline will be named Sanya International Airlines and will be based in Hainan, a growing Island hotspot for Chinese tourists.
China Eastern Airlines (CIAH) (CEA) , which will hold a 51% stake in the new airline, is looking to capitalize on a market destined for significant growth over the next couple of years as Chinese President Xi Jinping looks to make Hainan a free trade hub.
In an announcement, China Eastern Airlines (CIAH) (CEA) said: "To grasp the opportunities from Hainan developing into a free trade port with Chinese characteristics, and from its development into an international tourism and consumption hub the company has worked with multiple parties to establish Sanya International Air."
These parties include Juneyao Airlines which will own a 15% stake in the newly formed carrier and Trip.com Group with a 14% stake. Furthermore, Hainan Province Transport Investment Holding Co will hold 10% and similarly, Sanya Development Holdings will also have a 10% stake.
The launch of a new airline comes at a time of crisis for the travel industry, which has felt the effects of the coronavirus since the beginning of this year as the passenger operations gradually came to a halt. The International Air Transport Association expects airlines to see a 50% reduction in revenues for 2020, with the industry as a whole predicted to lose approximately $84 billion this year alone. The IATA doesn't expect economic activity to return to 2019 levels until at least 2022 - although for many airlines, that seems unlikely.
Nevertheless, the aviation industry in China is slowly starting to recover. As we've seen in Europe, the crisis has brought about several opportunities for airlines that have the possibility to grow despite the drastic decrease in travel demand and subsequently revenue. AirBaltic and Wizz Air have both announced plans to grow their networks further.
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