Chinese and international investors have teamed up to create a new express cargo airline under the name United Star Express to fly domestic and regional routes from next year onwards to support the country’s fast-growing e-commerce market.
The investors in the joint venture are private Chinese carrier Okay Airlines, US-based ATSG West, Chinese e-retailer Vipshop and five other companies, who signed the joint venture agreement at the Fourth Annual China Air Finance Development Summit in Tianjin last Thursday (September 24).
United Star Express will be registered in Tianjin’s free trade zone (Dongjiang Free Trade Port Zone), with registered capital of RMB 400 million (US$63 million). It will be established pending approval by related government parties and plans to commence flight operations in mid-2016.
The new express airline will initially fly within China and to Hong Kong and Taiwan, and plans to gradually add routes to destinations in Asia, Europe and the Americas, according to its financial backers.
“The new airline will principally serve rapidly growing express air cargo demand driven by e-commerce growth in China and surrounding countries,” the investors announced. From 2010 through 2014, the express market has been growing at an average of 30% per year.
However, express air services in China now rely mostly on excess capacity in the belly of passenger aircraft. Fewer than 120 all-cargo freighters operate within China, and only a small portion of those serve express markets. Yet the growth rate of China’s e-commerce markets exceeds that of the air express market.
Therefore, United Star Express will provide third-party express and charter aircraft services that cover the country and surrounding Asia regions to domestic and international express companies, they said. “Gradually, the company will also add medium- and long-distance cross-border express and cargo charter services that cover Europe and the America regions.”
United Star Express will be a new company that possesses its own airline operating certificate and will operate independently in accordance with international standards, with its own independent airline insignia, fleet, routes and organization.
Within the first year of its flight operations, United Star Express expects to have six small and midsize freighter aircraft, including Boeing 737, Boeing 757 and Boeing 767 aircraft, to provide safe, high quality, reliable domestic and international air cargo services.
Okay Airlines and the other Sino-foreign parties will also contribute to the joint venture their individual strengths and resources in airline operational management, international management, market development, government resources, and financial support.
Wang Shusheng, chairman of Okay Airlines, which is the largest investor, will be chairman of the new express airline, while vice chairman will be Richard Corrado, Chief Commercial Officer of Air Transport Services Group and President of its aircraft leasing subsidiary Cargo Aircraft Management, Inc.
Okay Airlines, established in 2005 as China’s first private-sector airline, operates more than 100 routes from its operating bases at Tianjin Binhai International Airport and Changsha Huanghua International Airport. ATSG West Limited, a subsidiary of Air Transport Services Group Inc., is a turn-key provider of mid-range Boeing freighter aircraft, along with leasing and operating solutions. Vipshop Holdings, founded in 2008 in Guangzhou, is a leading online discount retailer for brands in China.
