Urumqi Air set to take off with New Silk Road

Urumqi Air, the first local carrier in the Xinjiang Uygur autonomous region, will make its maiden flight on Friday from Urumqi to Yining in the autonomous region.

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The carrier, which is expected to play a major role in the New Silk Road, got its operation certificate on Thursday. Urumqi Air, with three Boeing 737 aircraft, will fly four regional routes within Xinjiang and two routes to cities elsewhere in China.

Cen Jianjun, president of Urumqi Air, said the carrier was considering trunk routes between Urumqi and destinations like Beijing, Shanghai and Guangzhou, as well as international flights.

"Urumqi has significant geographical advantages to connect China and Central Asia. We will develop international routes to Central Asia, and even Europe, in the near future," Cen said.

The carrier has registered capital of 3 billion yuan ($492 million), with Hainan Airlines Co Ltd, the country's fourth-largest carrier, accounting for 70 percent of the investment.

Ruan Chengjiang, general manager of Urumqi Urban Construction Investment Co, which is a local government-owned investment company, said his firm holds the balance, or a 30 percent stake, of the carrier.

The new airline is expected to gain from the government's efforts to develop the Silk Road economic belt, and Urumqi will become an important aviation hub, analysts said.

The annual passenger volume of Urumqi International Airport is expected to reach 30 million by 2020 from 13.35 million in 2012, according to experts.

Jin Jiaxin, an analyst with Xiangcai Securities Co Ltd, said Urumqi Air is expected to get good slots and routes in the region as it is the only carrier in which the local government is investing.

According to Jin, Hainan Airlines will hold a 15 percent market share in Xinjiang during the early stages of Urumqi Air, and the figure could reach 25 percent over the long term.

Xin Di, chairman of Hainan Airlines, said besides Xinjiang, Hainan Airlines is also building up its subsidiaries in other areas. Its other two subsidiaries－Fuzhou Airlines in Fujian province and Beibu Gulf Airlines in the Guangxi Zhuang autonomous region－are expected to become operational later this year and early next year, he said.

Most of the Chinese carriers are taking steps to tap markets within the country more aggressively to offset pressures from rising costs and dwindling income, experts said.

Air China Ltd invested 800 million yuan to establish Inner Mongolia Airlines in January, as China's aviation authorities began accepting applications for new airlines in 2013, after a six-year suspension.

Xiamen Airlines Co Ltd signed a cooperation agreement with the local government in Jiangxi province to start Jiangxi Airlines.

China's air traffic is increasing and the domestic market, especially the regional market, has huge untapped potential, experts said.

Li Xiaojin, a professor at the Tianjin-based Civil Aviation University of China, said that most of the carriers are charting plans to tap the niche market in smaller cities.