China Planning to Merge Air China, China Southern & China Eastern? US/China Flight Limit Talks Stall

Bloomberg is reporting that China is considering merging the operations of its three state owned airlines – China Southern, Air China, and China Eastern. The plan primarily focuses on the cargo operations of the three carriers, but supposedly includes statements on combining the passenger businesses as well. China Southern is already Asia’s biggest airline by passengers and fleet size.

Combining the three would create Asia’s only airline with more than 1,000 planes, lagging behind only the three big U.S. carriers. The three Chinese airlines have expanded along with the world’s fastest growing aviation market, and a combination would give them a virtual monopoly in what is set to become the world’s biggest air travel market within the next two decades.

If the airlines were to merge, we’d have two SkyTeam carriers (China Southern & China Eastern) and one Star Alliance carrier (Air China) combining operations. Check out full specifics on the rumors here.

In other China related news, Reuters reports that there’s been no update on the stalled talks between the US and China which intended to relax limits on flights between the two countries. The US continues to have concerns that US airlines will receive poor take-off and landing slots compared to the big 3 state-owned carriers.

In exploratory talks held in May in Washington, details of which have not previously been reported, China offered to permit more flights to and from Beijing, Shanghai and Guangzhou while lowering caps for other domestic cities, U.S. officials said. The talks, the first in four years, ended with the U.S. side refusing to pursue formal negotiations until China presents plans to reform what the United States calls an opaque allocation system that tends to give big Chinese state carriers the best time slots.

Read the full standoff details here.

Chinese Airlines

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