China Airlines' purchase of a stake in the freight unit of Hainan Airlines is more than a move by a Taiwanese company to buy into a mainland China cargo carrier.
It's a sign of how China's growing economic clout is attracting transport firms that hope to tap the huge and fast-growing China cargo market and then leverage those connections into other air cargo lanes around the world.
The Reuters news agency said the investment by China Airlines is worth an estimated $68.8 million. It's the latest attempt by Taiwanese transport companies to tap into China's massive air freight market - although they have to do it indirectly. China does not permit direct air links with the island.
China Airlines said its 25 percent stake in Hainan's Yangtze River Express Airlines was part of a 49 percent ownership transfer to four Taiwanese firms, making it Yangtze's largest overseas shareholder. "The investment is aiming at the air cargo market expansion in China," said a China Airlines statement.
Yangtze River Express provides regional and domestic cargo service originating out of Shanghai with six Boeing 737-300 freighters. China Airlines said that besides regional service to several Asian nations, Yangtze has secured traffic rights to Los Angeles and Frankfurt, Germany, and "will introduce one or two Boeing 747 freighters in 2006."
Authorities in Taiwan and China approved the agreement, said the Taiwanese carrier, and China Airlines Chairman Philip Wei attended a share transfer ceremony Jan. 12 in Beijing.
Other investors in Yangtze, it said, were Yang Ming Marine with a 12 percent stake, plus Wan Hai Lines and China Container Express Lines with 6 percent each.
The Associated Press separately reported that officials in Boston said Hainan Airlines and the Massachusetts Port Authority reached an agreement for the first nonstop service between China and the United States.
That accord calls for Hainan to begin cargo service this summer between Boston and Beijing, with passenger service to follow later in the year. AP said. It must be approved by the Federal Aviation Administration.
These are just part of the air traffic developments involving either the China air freight market, or Chinese freight companies extending their reach to other markets.
Mainland China's largest airline, the state-owned Air China, reportedly asked that country's General Administration of Civil Aviation for permission to start hauling freight to the United States on an expanded route.
If approved, Air China would launch a twice-weekly service on a Beijing-Anchorage-Dallas-Chicago-Anchorage-Beijing route. Reports said it could begin operating in April with two 747 freighters.
Aircraft maker Boeing said it delivered to Air China Cargo in mid-December the first of two new 747-400 freighters that company had ordered. The freighter, said Boeing, would be used on routes between China and North America and Europe.
Boeing said China's air freight market was expected to grow 10.6 percent a year for the next 20 years, the highest growth rate in the world. And cargo traffic on Asian routes generally is projected to grow by more than 7 percent, also the highest rates worldwide, Boeing said.
This month, Precision Conversions of Portland, Ore., said it delivered to Shanghai Airlines an ILFC-owned 757-200 passenger plane that it converted to freighter configuration, and said it would be converting another for that airline to operate.
Among the U.S. carriers involved in the China freight market, World Airways supplies MD-11 cargo planes and crews to China EVA Air, and to Air Canada for its China service. World and its pilots were set to hold a final round of mediated talks this week to try to agree on a contract before a cooling-off period expires at the weekend.
The Canadian carrier is also building more ties across the Pacific, announcing that it will offer three nonstop passenger flights a week between Toronto and Shanghai, the largest commercial centers of Canada and China. Air Canada plans to start the service June 16, using A340-300 planes, and had made clear that it is targeting the freight market as well as passengers.
The company already offers some nonstop flights to major cities in China. But with a nonstop between Shanghai and the airline's main hub at Toronto, "Air Canada continues to expand its services to meet the needs of travelers and freight forwarders in the fast-growing China market," said Ben Smith, vice president for network planning.