China pushes for air cargo carrier merger

China's central government has intensified its pressure on Air China, China Eastern Airlines and China Southern Airlines to merge their cargo operations to compete with foreign carriers who dominate the market, the South China Morning Post reported, citing sources close to the matter. The news comes shortly after Payload Asia reported on an air cargo blueprint unveiled by government officials in Beijing in April aimed at securing a larger share of China's air cargo market by domestic players, including establishing one key Chinese cargo carrier among the top five global players by 2013.

An unspecified senior official at China Southern was quoted by the Hong Kong-based newspaper as saying: "A preparation team has been formed recently to work out the details of the consolidation." The task force is said to have been formed by State-owned Assets Supervision and Administration Commission (Sasac) and comprises government officials and airline executives who have been tasked with working out the form and share holding structure of the new cargo airline.

Another unidentified source was quoted as saying that the proposed new airline would be based in Shanghai, China's most lucrative air cargo market. The combined fleet of freighters would consist of: Four A300-600F, one B747-200F, 11 B747-400F, two B747-400ERF, four B777F, six MD-11F and one Tupolev 204 (with orders for six more).

But such a venture would cast doubts over the viability of Cathay Pacific's cargo tie up with Air China in which Cathay had agreed in February, to take a 49 per cent stake in Air China Cargo. While the deal is still pending final state approval. A Cathay spokesperson said the target of having the joint venture carrier coming into operation in late July or August remained unchanged.