China to maintain three major airlines

China will continue to have three three major airlines according to an official view reported in the Wall Street Journal.

Yang Yuanyuan, minister of the General Administration of Civil Aviation of China, on the sidelines of the 17th Communist Party Congress said, ‘We believe it would be fine to maintain three major carriers based on the situation of the airline industry.’

The remarks come amid speculation of merger and acquisition activity among the big three — Air China (which gives us our illustration), China Southern Airlines and China Eastern Airlines. The three major airline groups were formed from a restructuring of state-owned carriers in 2002.

In September China National Aviation Holding, which controls Air China, cancelled a joint bid with Cathay Pacific Airways to take a stake in China Eastern Airlines.

However, there are some wild cards. Hainan Airlines is building itself up to be a major airline as Grand China Air with outside China investment and it will be, without a shadow of a doubt, the fourth largest airline in China.

This is not to say that private enterprise always produces a better product than State owned, although not State-run, enterprises. But it could be taken as a working rule. Which may mean the balance of power in the aviation industry may shift. Which will make life for the airline managers very interesting.