Mesa Air Group Inks Deal to Operate Domestic Airline within China

Mesa Air Group signed a joint venture agreement with Shenzhen Airlines to create a Chinese regional airline, provisionally called Beijing Airlines.

China Daily, the official newspaper of China’s ruling Communist Party, reported a $64 million investment in the new airline: 51 percent from Shenzhen, 25 percent from Mesa and 24 percent from Wilmington Trust in Delaware.

Mesa won’t confirm how much it invested. But it did talk about the companies’ plans for the regional carrier and what it will mean to Mesa’s business.

The plans call for the new regional carrier to begin domestic service within 12 months with 50-seat regional jets. Routes will primarily serve cities in the western and southern regions of China that don’t get much, if any, air service today, said Mesa spokesman Paul Skellon.

Shenzhen and Mesa expect the new carrier to have 20 of the 50-seat regional jets in service prior to the 2008 Olympic Games in Beijing. They expect to operate more than 100 50-, 70- and 90-seat aircraft within five years.

Shenzhen Airlines, founded in 1992, currently operates a fleet of 45 A320 and 737 airplanes, flying 100 routes within mainland China and Southeast Asia. It carried nearly 5.3 million passengers in 2006. The airline’s headquarters are in Shenzhen, in southern China’s Guangdong Province.

Mesa said it believed China was wide open for regional service because the country currently has just 70 regional jets in operation, flying for seven carriers. The plan calls for the new carrier to feed traffic to Shenzhen’s hubs, like the hub-and-spoke systems that developed in the U.S.