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Grand China Air, Yunnan govt to set up new airline

SHANGHAI, June 10 (Reuters) - Grand China Air, partly owned by financier George Soros, has agreed to set up an airline jointly with the Yunnan provincial government to seek a share of southwest China’s lucrative tourism market, a company executive said on Tuesday.

Grand China Air, the largest shareholder of Hainan Airlines Co 600221.SS, will hold a controlling stake in the new carrier, the executive said, without providing financial details.

The new company, which is pending regulatory approval, will initially be limited to flights within the province but will apply for long-haul domestic and international routes in the future, he said.

The new carrier would be in direct competition with the Yunnan unit of China Eastern Airlines Corp 600115.SS0670.HK, which controls more than 50 percent of the highly profitable market for flights in Yunnan, a popular tourist destination with striking mountain and river vistas.

In April, the Civil Aviation Administration of China (CAAC) suspended China Eastern’s operating licences on certain routes in Yunnan after pilots returned several flights to their departure airports in what local media described as a wildcat strike.

A China Eastern spokesman said that he was aware of plans for forming a new rival and that his company was focusing on improving its services.

Two other major Chinese carriers, Air China Ltd 601111.SS0753.HK and China Southern Airlines 600029.SS1055.HK, also operate in Yunnan. (Reporting by Fang Yan; Editing by Edmund Klamann)

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