When China’s civil aviation ministry called a halt to the establishment of new airlines six years ago, it did so with safety in mind. Not surprisingly, the ban was extended after a crash in Yichun killed 42 passengers in 2010 (see WiC76). Accordingly, between 2007 and the end of last year only Air China-affiliated Tibet Airlines was approved for take-off.
But policymakers seem to have had a change of heart. Not one but two new carriers got flight clearance earlier this year: Ruili Airlines and Qingdao Airlines.
Of the two, Ruili’s maiden flight seems the more imminent, having signed agreements last month to take delivery of 14 short-haul 737 aircraft from Boeing, as well as four more from the German operator Air Berlin.
Funded by local conglomerate Yunnan Jingcheng and supposedly without state-owned investors, Ruili says it will start operating in the first quarter of next year from a main base in Yunnan’s provincial capital Kunming. It will focus first on destinations across Yunnan but many of its flights will head west from Kunming to Mangshi, a small airport about two hours’ drive from the town after which the airline is named.
Why is Ruili, with a population of less than 200,000, getting its own airline? Perhaps because it is currently so isolated (it lacks decent highways and railway access). But also because the town is the last stop before the Burmese border and boasts a long history as a trading entrepot, particularly for jade.
Ruili now seems earmarked for bigger things. Despite being 400 miles (as the crow flies) from the coast, the town’s bosses have been styling Ruili as a crucial “land port” for the Indian Ocean. A trading zone has been established and factories have been encouraged to move in. It is also the first stop on Chinese soil for a crucial CNPC pipeline (see WiC199) that opened its taps on a first shipment of gas last month from Myanmar.
Making it easier to get to Ruili will also help Beijing supervise it more closely, which will be useful for a frontier town with a reputation for smuggling and gambling. Dong Lecheng – the founder of Yunnan Jingcheng, the new airline’s backer – lives up to the Wild West ethos. A Jingpo (one of China’s minorities – the Kachin – an ethnic group hailing from Myanmar), Dong narrowly dodged a prison sentence five years ago, reports Yunnan TV, in a case alleging he’d run a casino on Chinese territory.
As a result Dong was demoted from his role with the National People’s Congress.
But his connections seem to have been robust enough to get the airline off the ground, especially as the carrier looks likely to rely on state financing to backstop its aircraft order, with the China Export-Import Bank said to be providing much of the capital.
Nevertheless questions remain over Dong’s plans. How the airline will be funded on an operational basis is one mystery, although a senior employee fended off speculation by telling Time Weekly that “it wasn’t the right time” for further details.
Pressed again on how the upstart plans to compete with well-established rivals, he then turned enigmatic, adding that “a cat behaves like a cat, but a rat has got its own ways too”. (WiC is guessing he didn’t pick this one up at Harvard Business School.)
The man then called a halt to the interview, advising that “only President Dong is able to answer these questions”.
When that happens, we’ll keep WiC readers posted on developments at this intriguing airline.
© ChinTell Ltd. All rights reserved.
Exclusively sponsored by HSBC.
The Week in China website and the weekly magazine publications are owned and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.