September 12, 2007 -- China's airline industry is taking off; orders have been placed for record numbers of aircraft and airports are being built at a break-neck pace. Xiamen Airlines' announcement on August 30, for an order of 25 new Boeing 737-800s is just one sign of airline growth outside of first-tier cities.

Fujian-based Xiamen Airlines in a joint announcement with Boeing revealed the airline's firm order for 25 Boeing 737-800s along with 10 purchase rights. The order, worth US$1.9 billion at 2007 average list prices, has been listed as unidentified on Boeing's website since August.

"This order of 25 737-800s plus 10 purchase rights allows us to simplify our fleet with the most cost-efficient and superior-performance airplane in its class," said Xiamen Airlines president Yang Guanghua in a statement. "The Boeing 737 will help us meet our goal of reducing operating costs and increasing return on investment for our shareholders." As of deadline, the airline could not be reached for comment.

"Today marks another great milestone in our [Boeing's] partnership with Xiamen Airlines as it embarks on its strategic fleet expansion plan," said Rob Laird, vice president of sales for Boeing Commercial Airplanes in Greater China, in a statement. "Our commitment to the Chinese aviation industry dates back 35 years."

The B737-800, with a 162-passenger capacity in two classes and 3,060 nautical mile range, gives Xiamen Airlines the flexibility to continue its network expansion throughout China. In June, the airline identified Tianjin as the location of its fourth base after Xiamen, Fuzhou and Hangzhou. The move positions Xiamen Airlines to benefit from the strong economic growth in northern China.

Airbus China has reacted cautiously to the announcement. "Regarding the matter of Xiamen Airlines' Boeing aircraft order, it's really a natural business issue," Amelia Xu, senior communications officer for Airbus China, told Emerging China. "China is a very promising aviation market and Airbus has encouraging future prospects here... Just last October, we signed an agreementwith CASGC for 150 A320 family aircraft."

Airbus and Boeing continue to vie for dominance in the Chinese aircraft market. Boeing currently leads Airbus with a 60 percent market share. But high tariffs on foreign-manufactured aircraft and Airbus' new Tianjin final assembly line, set to open in 2008, will give Airbus a major boost.

Boeing's new B737-900ER, an extended range and larger version of its B737-800, is being marketed as a replacement for the venerable B757-200. When asked if Xiamen or any other Chinese airline has shown interest in the 900ER, Boeing stated that it do not disclose sales orders before they become firm orders. China Southern recently announced its own order for 55 Boeing 737-700 and 800s, further boosting Boeing's Chinese orders.

Xiamen Airlines began service in 1984 and operates hubs in Xiamen and Fuzhou. A subsidiary of China Southern Airlines, China's largest airline, Xiamen is similar to many smaller airlines within China which operate under the partial control of one of China's major airlines - Air China, China Eastern and China Southern.