(Xinhua)
Updated: 2008-03-29 00:07

BEIJING  -- China Aviation Industry Corp. I (AVIC I), the nation's leading aircraft maker, on Friday set up a regional carrier with China Eastern Airlines as part of an effort to support the indigenous aircraft industry.

AVIC I holds 60 percent of the joint venture, Xingfu Airlines, or Happiness Airlines, while China Eastern, the nation's third largest carrier, owns 40 percent.

The venture has a registered capital of 1 billion yuan (140.8 million US dollars).

The new carrier, based in the northwestern city of Xi'an, will use the AVIC I's Xinzhou 60 and ARJ 21 and its fleet will increase to 100 aircraft in eight years, AVIC I Vice General Manager Hu Wenming said. The Xi'an Xianyang International Airport is its main hub.

The Xinzhou 60 aircraft, produced by AVIC I's Xi'an subsidiary, carries up to 60 passengers. The ARJ 21 is China's first indigenous turbofan regional airliner with 70 to 110 seats.

AVIC Commercial Aircraft Co. received orders for 10 ARJ 21 aircraft from Xingfu Airlines, bringing the total number to 181, the Shanghai company said in a statement.

Hu, the Xingfu Airlines chairman, said the carrier would mainly target the fast-growing market in the western areas. It would boost China's aircraft industry and ease the imbalance between eastern and western areas in transport capacity, he added.

Xingfu Airlines was also expected to help China Eastern Airlines extend it network to small- and medium-sized cities in the western areas.

West China currently has 49 civil airports and at least another 20 will be built through 2010, according to government figures.

China will also invest 7.6 billion yuan in expansion construction of the Xi'an Xianyang International Airport before 2010, strengthening its role as an aviation hub in the northwestern area.