Air cargo transport firms in China face fierce competition with the creation of new joint venture Air China Cargo Co.

The new company was unveiled over the weekend by Air China, Beijing Capital International Airport and Hong Kong CITIC Pacific.

The new company has pooled 3.5 billion yuan (US$421 million), with Air China holding a 51 percent stake, CITIC Pacific 25 percent and Capital Airport 24 percent.

The three parties signed a cooperation agreement in March.

Supported by five all-cargo Boeing 747 freighters, eight Boeing 747-400 passenger-cargo planes and 115 passenger aircraft with plenty of cargo space, Air China Cargo's service network covers most Chinese provincial capitals and major cities, as well as 36 cities in another 27 countries and regions, said Kong Dong, board chairman of the new company.

"The air cargo industry has been growing at a double-digit rate in past years, which is a result of China's entry into the World Trade Organization and its development as a key manufacturing base for an increasing number of multinational corporations," Kong said.

Air China Cargo's major competitors are China Southern Airline, which has two Boeing 747-400F cargo planes, and China Cargo Airlines, which were formed by Shanghai-based China Eastern and China Ocean Shipping Company in 1998.

The booming Chinese air market also attracted many overseas carriers - more than 60 overseas airlines has already entered China, Kong said.

Germany's Lufthansa Cargo, the world's largest international air freight carrier, said in late November that it plans to increase capacity in Asia-Pacific to take advantage of an export boom led by China.

Also in November, another overseas airline expressed confidence in the Chinese mainland's air cargo sector.

Cathay Pacific Airways announced that it would apply to fly cargo planes to Beijing, as part of an effort to tap into one of the world's fastest-growing aviation markets.

The Chinese mainland's airfreight market is relatively under-developed, although Boeing predicts air cargo traffic should grow by 10.3 percent annually in the next 20 years.

The mainland's carriers operate only 20 freighters compared with Cathay's 11.

(China Daily December 15, 2003)