China Eastern, one of the leading air carriers in China, Tuesday confirmed to the Global Times that the company has opened a branch in Chengdu, capital of Southwest China's Sichuan Province, a move that promises to bring fierce competition to the region.
China Eastern is the fourth carrier to establish a base in Chengdu in the last 20 years, following Air China, Sichuan Airlines and Chengdu Airlines.
With an investment of 5 billion yuan ($732.47 million), the branch is expected to offer air shuttle service from Chengdu to Shanghai this year, increase direct flights to main cities, and open flights from Chengdu to other tourism destinations in Sichuan Province as well, according to the company's plan.
"The flights put into operation in Chengdu will increase to 30 by 2015," said Ma Xulun, general manager of China Eastern.
Shuangliu Airport in Chengdu ranked sixth among 166 airports in terms of passenger turnover in 2009, figures from the China Aviation Administration show.
"It is rare to see such a quick move for the company with only two years of preparation," said a China Eastern employee with the company's engineering and technical maintenance base in Xi'an, Northwest China's Shaanxi Province, who refused to give his name.
China Eastern had an agency in Chengdu for years, but it was sparsely staffed and hard pressed to compete with Air China, the market leader, the China Eastern employee said.
In 2009, Air China held 33 percent of the Chengdu air market share, and China Eastern ranked fourth in terms of transport capacity from Chengdu to Beijing, according to a report by China Merchants Securities.
"The move can be regarded as the carriers' interpenetrating strategy," said Yao Jun, an analyst with China Merchants Securities.
Yao said Air China's takeover of Shenzhen Airlines last month will give Air China further reach in southern cities where China Southern holds large market share.
"China Eastern will also use the new branch to penetrate the territory of Air China," Yao added.
"The move reflects the need for development in China's western regions, and local geography means the airlines' networks will be less impacted by high-speed railway," Liu Shaoyong, chairman of China Eastern, was quoted as saying by China Business News Tuesday.
China Eastern saw a windfall profit of 769.9 million yuan ($112.79 million), in the first quarter of 2010, up 18 times year-on-year.
