Spring Air Considers Hong Kong Hub in Cathay Pacific Challenge

Spring Airlines Co, China's biggest privately-owned carrier, is considering a venture in Hong Kong as it joins operators trying to break Cathay Pacific Airways Ltd's grip on the city's aviation market.

The carrier has drawn up a plan as part of an overseas expansion push that may also include operations in Japan, South Korea and Taiwan, Chairman Wang Zhenghua said in an interview yWednesday in Hong Kong. He did not give a time-frame for when a Hong Kong carrier may start flying.

"We want to go out and tap international markets," Wang said. "A road for expanding overseas starting from Hong Kong will be the shortest one for us."

Spring Air, based in Shanghai, will add four new routes to Hong Kong from mainland China next month, competing against Cathay Pacific's Hong Kong Dragon Airlines Ltd services. Cathay is also facing rivalry from Hong Kong Airlines, Asia's fastest growing carrier, and a planned Jetstar venture that is due to start flying next year.

The new Hong Kong routes linking Chongqing, Hangzhou, Nanjing and Xiamen will add to Spring Air's thrice-daily service from Shanghai. The expansion means Spring will serve four of the 10 busiest routes between Hong Kong and the mainland, according to CAPA - Centre for Aviation, a research company. All four of the new destinations are popular tourist markets, it said.

Spring Air, which has moved away from its traditional low- cost operations by adding some business-class seats, was also working on plans for a venture in Japan. This has been delayed because of a territorial dispute between the two countries, Wang said.

The carrier, which flies 33 Airbus SAS A320s, is working on holding a Shanghai initial public offering that may raise more than 1 billion yuan (US$160 million) to help fund expansion. The airline has filed its listing application with the securities regulator and may win approval for it early next year, Wang said. The company has been predicting an IPO date since at least 2011.

The carrier's parent Shanghai Spring International Travel Service Co. is expected to post a 30% growth in profit this year to 700 million yuan, Wang said.

The new competition for Cathay comes as it looks to regional travel to help offset waning demand on intercontinental routes. The airline on Wednesday said it will cut capacity 1.6% next year, predominately through long-haul cuts.

Jetstar Hong Kong is confident of winning approval from the city's government to begin operations, Jetstar Group Executive Officer Jayne Hrdlicka said in the city on Wednesday. The carrier is a venture between Jetstar, Qantas Airways Ltd's budget arm, and China Eastern Airlines Corp. The partners said in March that they will invest as much as $198 million in the airline.

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