January 3, 2008 -- Kunpeng Air, a regional airline joint venture between Shenzhen Airlines and U.S.-based Mesa Air Group, ordered 100 ARJ21 regional jets, the company announced in late December.
Kunpeng only began operations in late October in Xian, a city in northwestern China's Shanxi province, with just two aircraft, and it took the company only nine months to get going after Mesa and Shenzhen Airlines first entered into the joint-venture, Mesa CEO Jonathan Ornstein said in a press release.
The impact of the joint venture is expected to be far-reaching. As the first passenger joint venture carrier in China, Kunpeng is expected to "create more investment interest in the aviation industry in China ," Sun Wei, an aviation analyst with global industry consulting firm Oliver Wyman, told Emerging China.
Kunpeng Air is looking to provide passengers from secondary airports or cities direct or convenient service to hubs or other secondary airports. The airline's first two Xian-based aircraft will each fly six scheduled flights per day serving Taiyuan, Tianjin, Yichang, Hohot, Nanchang, Hefei and Zengzhou. As the first "dedicated regional carrier," says Sun, "it will have significant impacts on airports and regional economies, especially in underdeveloped areas."
Industry analysts view joint venture regional carriers as creating more opportunity rather than competition with China's state airlines. Regional carriers such as Kunpeng Air will complement state carriers' network, similar to the role played by regional carriers in the US airline industry – United Eagle for United Airlines or Mesa Air for Delta and US Airways. The establishment of new joint ventures is also a sign of deregulation from the Chinese government side. As Sun noted, "China's government is taking continuous efforts to liberalize the aviation industry. [We] saw this trend around ten years ago, and will witness further steps in the future. The establishment of the new joint venture is under the process and background of liberalization."
Kunpeng Air may be one of the few joint ventures in China for a while. Last August, the Civil Aviation Administration of China passed a moratorium on new airlines through 2010 citing limited capacity of airspace and domestic airports, according to the state-owned Xinhua newswire.