China Eastern Spins Off A Low-Cost Subsidiary

China Eastern Airlines has launched a budget airline to tap into the country’s low-cost travel segment. The firm intends to use its Beijing-based domestic carrier, China United, as its low-cost ancillary arm, the airline will become the first state-run airline to enter the budget market.

China United operates 26 737s over a network of around 70 destinations across the country. China Eastern intends to allocate the 80 737s it has on order to China United and for the budget airline to have a 100 aircraft by 2019.

Led by the Shanghai-based, Spring Airlines, China’s low-cost, short-haul market reportedly accounts for less than 10 per cent of the county’s total air travel – a stark contrast to Europe where the figure is closer to 50 per cent. The airline’s chairman, Liu Shaoyong, told local media that he expects to see “explosive growth of LCCs, especially in China” and that elsewhere in Asia. Some have suggested that China Eastern's actions could prompt similar ventures from its state-run competitors, Air China and China Southern Airlines.

TAGS: Asia Pacific
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