Attention On Shanghai Airlines

Shanghai Airlines is a likely focus for further consolidation of Chinese commercial aviation as larger carriers, especially Air China, look for greater access to the country’s biggest city.

An Air China takeover of the second-level carrier would be a big step toward creating the balanced nationwide operator that China still lacks in any of its big-three airlines—China Southern, Air China and China Eastern.

With a domestic network operated by 59 aircraft, Shanghai Airlines has also caught the eye of China Eastern, although that ailing airline may be unable to make a move as it tries to fix its own broken business.

A spokesman for Shanghai Airlines says it has no plans to join with another carrier.

Analysts say it wants to grow as a major independent rivaling the big three. That would mean turning itself into something like Hainan Airlines, a former small-time operator from a far-flung island province that has emerged as the country’s fourth-ranked carrier, partly by buying others.

But Shanghai, the national business capital, is no far-flung province, which is why Shanghai Airlines is seen not as a predator but as prey.

China Eastern, also Shanghai-based, serves nearly 40% of travelers passing through the city’s airports.

Shanghai Airlines comes second, with 18%, while Air China trails badly with a mere 12%.