HONG KONG: Hong Kong Airlines To Seize Hong Kong-San Francisco Flights October 5

Hong Kong Airlines will stop its Hong Kong-San Francisco service from October 5 this year, less than two years after first launching the service.

The decision comes following a review of its network and a change in business plan for USA market, the airline said in a statement published on its website.

The final flights between Hong Kong and San Francisco (HX60 and HX61) will be operated on October 4 this year. Passengers who have bought tickets for Hong Kong-San Francisco flights beyond that date will be offered alternative arrangements.

They can change the departure date for flights between the two cities for free before October 5, while those who decide to cancel their flights will get a full refund.

Passengers are also eligible for a free change to any destination that Hong Kong Airlines flies to though applicable fare and tax differences may apply, or a free transfer to other partner carriers which will be arranged by Hong Kong Airlines but subject to availability.

Hong Kong Airlines first launched this route in March 2018 and it currently flies this route four times a week.

The carrier will reduce the frequency of the service to three times weekly (Monday, Wednesday and Friday) starting from August 31, with its Sunday service cancelled.

Affected passengers can find contact details for Hong Kong Airlines’ customer assistance.

Hong Kong Airlines is not the only carrier that flies non-stop between Hong Kong and San Francisco: Cathay Pacific operates this route three times daily; United Airlines has recently announced that it will add a second non-stop service between the two cities from October.

Singapore Airlines also flies daily between Hong Kong and San Francisco, though it should be noted that the flight (SQ2) is actually a direct service between Singapore and San Francisco, with a stopover in Hong Kong.

In addition to San Francisco, in the North American market Hong Kong Airlines also operates long-haul flights to Vancouver and Los Angeles.

Hong Kong Airlines is a subsidiary of HNA Group, a Chinese conglomerate which is facing huge debts and a financial crisis. HK Express, once a subsidiary carrier of HNA Group, was fully acquired by Hong Kong flag carrier Cathay Pacific this month.

Ricky Chong Wai-ki, director of corporate governance and development of Hong Kong Airlines, said the airline had not ruled out a complete cut of long-haul flights in an interview with Hong Kong-based newspaper the South China Morning Post in June.

For North American flights, even airlines like Cathay face a lot of pressure so we keep reviewing. Our North American flights will be our short-term focus that we need to consolidate, said Chong.

Meanwhile, Hong Kong Airlines has also announced that it will discontinue its Hong Kong-Fuzhou service from September 2, while it will boost flights to three short-haul destinations.

The carrier will add a daily flight between Hong Kong and Haikou from September 2, four additional weekly flights between Hong Kong and Hangzhou from September 8 and two additional weekly flights between Hong Kong and Sapporo from September 28.

The arrangements will bring the total number of its Haikou, Hangzhou and Sapporo services to three daily flights, 14 weekly flights, and 11 weekly flights, respectively.

Last month, the carrier rolled out a series of new amenity kits for its business class passengers travelling on long-haul flights to North America.


Tourism Observer

CHINA: Hainan Airlines To Surrender Its Stake In Urumqi Air

Hainan Airlines, a carrier affiliated with conglomerate HNA Group, is planning to withdraw its holdings from low-cost airline Urumqi Air but retain management rights.

Hainan Airlines has reached an agreement with the Urumqi municipal government, that it will transfer its holdings of Urumqi Air to the latter.

After the transaction, the government or its designated subsidiaries will hold 70% of Urumqi Air’s shares, while HNA Holdings will hold 30%.

According to the agreement, the board of directors of Urumqi Airlines will be adjusted based on the shareholding ratio.

The chairman of the board of directors will be recommended by the government or its designated subsidiaries, while the general manager will be recommended by Hainan Airlines.

Under the leadership of the board of directors, the professional team of Haihang Holdings is responsible for the safety, production and operation management of Urumqi Air.

Urumqi Air is a low-cost airline headquartered in Urumqi, Xinjiang, People's Republic of China. It operates scheduled passenger services. Its main hub is Urumqi Diwopu International Airport in Urumqi.

The airline is one of the four founding members of the U-FLY Alliance.

Urumqi Air fleet consists of the following aircraft:

- Boeing 737-800: 16 Aircraft

- Embraer 190: 1 Aircraft

- Total: 17 Aircraft


Tourism Observer

CHINA: Hainan Airlines Sells Its Building For US$190M

Hainan Airlines, the largest civilian-run air transport company in China, says it has sold its wholly-owned subsidiary, Beijing Guosheng Property Management Co. Ltd., in a deal worth 1.299 billion yuan (US$190 million).

According to the report, 100% of the equity will be transferred to the Beijing Houpu Yunde Investment Management Partnership, which is 99.99% held by Beijing Vanke Enterprise Limited Company, a wholly-owned subsidiary of real estate giant Vanke Group.

The target company, Beijing Guosheng, was newly established by Hainan Airlines in July this year, having an estimated value of 1.739 billion yuan. Its main asset is the Beijing Hainan Airlines Building.

Hainan Airlines is part of HNA Group’s Aviation & Tourism arm. It is not unusual for HNA Group to sell off assets. The Chinese conglomerate sold its original headquarters, Wanghai Science and Technology Plaza, to Sunac China in August.

Meanwhile, Jinjiang International confirmed that it would acquire a 100% stake in the Radisson Hotel Group from HNA Group.

Hainan Airlines Co., Ltd. is an airline headquartered in Haikou, Hainan, People's Republic of China. It is the largest civilian-run air transport company, the fourth-largest airline in terms of fleet size in the People's Republic of China, and tenth-largest airline in Asia in terms of passengers carried.

It operates scheduled domestic and international services on 500 routes from Hainan and nine locations on the mainland, as well as charter services. Its main base is Haikou Meilan International Airport, with a hub at Beijing Capital International Airport and several focus cities.

Hainan Airlines was established in October 1989 as Hainan Province Airlines in Hainan, the largest special economic zone in China. Hainan Province Airlines became China's first joint-stock air-transport company following a restructuring in January 1993 and began scheduled services on 2 May 1993.

The initial 250 million yuan (US$31.25 million) was financed by the Hainan government (5.33%) and the corporate staff (20%). The rest came from institutional shareholders. In 1996, the provincial airline was renamed Hainan Airlines.

American Aviation LLC, controlled by George Soros, had been a major shareholder of the airline since 1995.

Executive-jet operations with a Bombardier Learjet 55 were added in April 1995. In 1998, Hainan Airlines became the first Chinese carrier to own shares in an airport after it purchased 25% stake of Haikou Meilan International Airport.

In 2000, HNA Group was established and became the third largest shareholder (7.31%) of Hainan Airlines. It also controlled Shanxi Airlines, Chang An Airlines and China Xinhua Airlines. By 2003 Hainan, the main airline, overtook Chang'an as the fourth largest airline in China.

In 2007 Grand China Air was established as the new holding company, when American Aviation became its subsidiary.

On 29 September 2005, HNA Group ordered 42 Boeing 787-8s, 10 of which were earmarked for the Hainan Airlines fleet. In January 2006, China Aviation Supplies Import and Export Group Corporation ordered 10 Boeing 737–800s for Hainan Airlines.

In September 2006, Hainan Airlines ordered another 15 Boeing 737-800s.

On 4 December 2007, Hainan Airlines acquired three Airbus A340-600s on lease from International Lease Finance Corporation. On 14 November 2007, Hainan Airlines received its first Airbus A330-200.

In June 2007, Hainan Airlines ordered 13 Airbus A320-200 aircraft. In late 2007, Hainan Airlines ordered 50 Embraer ERJ-145s and 50 Embraer 190s, with a total value at list price of $2.7 billion USD.

The 50-seat ERJ-145s were produced by the Harbin Embraer Aircraft Industry (HEAI) joint venture, located in Harbin. E-190 deliveries began in December 2007. Due to the global financial crisis and huge losses incurred in 2008, the ERJ-145 order was reduced to 25. The E-190 order remained unchanged.

On 25 March 2015, Hainan Airlines announced its intention to acquire 30 Boeing 787-9s, which are all to join the Hainan Airlines Fleet. The delivery of the aircraft is scheduled to be completed by 2021.

Two leased Boeing 787-9 aircraft were delivered in Spring 2016. Hainan Airlines will also be among the first operators of the COMAC C919, with deliveries beginning in the 2020s.

Hainan Airlines and the HNA Group have their headquarters in the HNA Building in Haikou, Hainan with other office premises HNA Tower in focused cities including Beijing, Chongqing, Guangzhou and Shanghai.

It was previously headquartered in the HNA Development Building a.k.a. the Haihang Development Building along Haixiu Road in Haikou.

As of 31 December 2016, Grand China Air is the direct parent company of Hainan Airlines (24.33% shares directly; an additional 1.29% shares via a subsidiary American Aviation LDC), which was partially owned by Hainan Development Holdings (24.97%), HNA Group (23.11%), Starstep (9.57%), Haikou Meilan International Airport (8.30%), Shenhua Group (5.56%) and other shareholders.

HNA Group owned 3.53% shares directly and via Changjiang Leasing, owned an additional 3.08% shares as the second largest shareholder. Haikou Meilan International Airport was the third largest shareholder for 5.13% shares.

Moreover, HNA Group also owned Haikou Meilan International Airport partially, as well as Hainan Airlines as cross ownership. A private equity fund that was managed by Shanghai Pudong Development Bank, owned 4.91% shares as the fourth largest shareholder.

Hainan Airlines operates several self-owned airport lounges at its main hub and focus cities including Beijing (T1 HNA Exclusive Terminal), Haikou, Xi'an, Guangzhou and Urumqi.

In addition, the airline will soon open its exclusive international departure lounge at its main international hub Beijing International Airport Terminal 2. The airline also operates an exclusive Transit Lounge for transferring HNA Group passengers at Beijing Airport Non-restricted area.

Hainan Airlines's frequent-flyer program is called Fortune Wings Club. The airlines's subsidiaries Hong Kong Airlines, Lucky Air, Tianjin Airlines, Beijing Capital Airlines, Fuzhou Airlines and parent company Grand China Air are also parts of the program.

It is also possible for passengers to collect miles on Alaska Airlines, Etihad Airways and the airlines which have codeshares with Hainan Airlines.

Members can earn miles on flights as well as through consumption with Hainan Airlines's credit card. When enough miles are collected, members can be upgraded to Elite members which are divided into four tiers: Fortune Wings Platinum membership, Gold membership, Silver membership, and Flying Card membership. Elite membership get extra services.

Hainan Airlines is one of eleven airlines worldwide rated as five-star by Skytrax, along with All Nippon Airways, Asiana Airlines, Cathay Pacific, Etihad Airways, EVA Air, Garuda Indonesia, Japan Airlines, Lufthansa, Qatar Airways, and Singapore Airlines.

Hainan Airlines operates seven bases across China: Beijing–Capital, Guangzhou, Haikou, Hangzhou, Sanya, Shenzhen and Xi'an. It operates an extensive network across the People's Republic of China, connecting Asia, Europe, North America and Oceania.

It serves nearly 500 domestic and international routes and flies to more than 90 cities.

Hainan operates international regular flights and offers charter flights to 41 various destinations in 21 countries such as flights from Beijing to Almaty, Toronto, Berlin, Brussels, Seattle/Tacoma, St. Petersburg, Moscow, Tel Aviv, Chicago, Las Vegas, San Jose/Silicon Valley and Boston; Beijing, Xi'an, Dalian, Guangzhou, Haikou to Taipei; Beijing, Haikou, Nanning to Bangkok; Hefei via Haikou to Singapore and others.

Hainan also received official approval from the US DOT to begin nonstop flights between Beijing and Chicago. As of June 2014, Hainan began servicing Boston directly with a four-times-weekly 787 flight from Beijing Capital International Airport.

It was the first direct flight between Boston and China. The airline began service in the second quarter of 2013 with the Boeing 787 Dreamliner aircraft. It was the first Chinese carrier to offer flights between the two cities. Flights from Beijing-Capital to Chicago-O'Hare began on 3 September 2013.

On 23 October 2015, Hainan announced flights to Manchester, United Kingdom, starting in summer 2016. Hainan announced the launch of a direct route between Beijing and Calgary, Canada, as of 30 June 2016.

During the second half of 2017, Hainan Airlines began flights from Shanghai to Tel Aviv and restarted flights from Shanghai to Brussels. In late September 2017 Hainan Airlines commenced direct flights to and from Brisbane, Australia, several times per week, and also to Belgrade, Serbia, via Prague, every Monday and Friday.

On 8 March 2018, Hainan Airlines announced flights between Changsha and London Heathrow, commencing 23 March 2018 and on 15 March 2018, they announced round trip flights between Beijing–Capital, Dublin, and Edinburgh commencing 12 June 2018

Hainan Airlines codeshares with the following airlines:

- Aegean Airlines

- Aigle Azur

- Air Serbia

- Alitalia

- Alaska Airlines

- American Airlines

- Azul Brazilian Airlines

- Beijing Capital Airlines

- Brussels Airlines

- Czech Airlines

- Etihad Airways

- EVA Air

- Grand China Air

- GX Airlines

- Hong Kong Airlines

- Korean Air

- S7 Airlines

- Suparna Airlines

- Tianjin Airlines

- Uni Air

- WestJet

- Virgin Australia

Hainan Airlines fleet consists of the following aircraft:

- Airbus A330-200: 09 Aircrafts

- Airbus A330-300: 20 Aircrafts

- Airbus A350-900: 02 Aircrafts

- Boeing 737-700: 02 Aircrafts

- Boeing 737-800: 155 Aircrafts

- Boeing 737 MAX 8: 10 Aircrafts

- Boeing 787-8: 10 Aircrafts

- Boeing 787-9: 25 Aircrafts

- Total: 233: Aircrafts


Tourism Observer

CHINA: Hainan Airlines Looking For US$1.8 bn In Bank Loans

Hainan Airlines, a carrier affiliated with the conglomerate HNA Group, is planning to borrow 7.5 billion yuan (US$1.08 billion) from banks, according to a company statement.

The National Development Bank is the lead and agent bank, which will provide the company with 1.5 billion yuan.

Six other banks including, Exim Bank of China, Industrial and Commercial Bank of China, Agricultural Bank of China, China Construction Bank, Bank of China and Postal Savings Bank of China will each offer the company 1 billion yuan.

The loan period is three years, while the grace period is one year.

Hainan Airlines said the funds will be used for operational expenses such as buying aviation fuel, aviation materials as well as maintenance and landing fees.

Last summer, Airbus refused delivery of a number of Airbus A330 aircraft to Hainan Airlines because the carrier was not able to pay for them. Parent company HNA is also in turmoil due to a shortage of capital and the sudden death of its chairman, who fell to his death in France.


Tourism Observer

CHINA: Hainan Airlines Orders 19 Boeing Jets Worth US$4.2b

Hainan Airlines, which has spent billions of dollars into overseas acquisitions, announced plans on Monday to buy 19 Boeing aircraft for US$4.2 billion to help meet skyrocketing travel demand by Chinese consumers.

The company said in a statement to Shanghai’s stock exchange that it would buy 13 Boeing 787-9 passenger jets and six 737-8s, citing the continued rapid growth in China’s travel market as incomes rise.

It plans to issue 15 billion yuan (US$2.18 billion) in bonds to help fund the deal.

Chinese airlines have seen booming business in recent years, rushing to expand their fleets and route networks amid growth that the International Air Transport Association (IATA) predicts will take China past the United States to become the world’s largest air-travel market by 2024.

Hainan Airlines and its parent HNA Group have been among the most acquisitive players in a wave of overseas investments by Chinese companies in recent years.

HNA is a sprawling conglomerate with interests in aviation and tourism.

Last year alone, HNA purchased Brazil’s third largest airline Azul, Swiss airline catering company gategroup, and stakes in airline Virgin Australia and Portuguese national airline TAP.

A unit of privately held HNA announced in October plans to buy the aircraft leasing business of US-based CIT Group Inc for US$10 billion.

The Chinese government has encouraged companies to invest overseas to open up new markets.

Many companies obliged, pouring billions into overseas purchases to such an extent that Chinese authorities became worried over capital flight and the impact on the slumping yuan currency.

The government has since reversed course, denouncing “irrational” investment abroad and putting restrictions on fund outflows.

HNA Group A Chinese Travel Corporation To Buy Cruise Line

According to a report by Cruise Industry News, Chinese travel conglomerate HNA Group is eyeing the acquisition of an unnamed “major” cruise line.

The rumors of HNA’s potential acquisition of a cruise line sent cruise line stocks soaring, including industry giants such as Royal Caribbean, Norwegian Cruise Line, and Carnival Corp.

The potential move follows a busy last week for HNA Group, when it acquired a 16.79 percent stake in travel retail giant Dufry, as well as acquired a substantial stake in Rio de Janeiro’s Galeo airport. HNA Group previously had an unsuccessful foray into the cruise industry with the HNA Cruises brand and its MS Henna, which was sold for scrap in 2016. HNA cruise operations were suspended in 2015.

Even though HNA’s unsuccessful attempt to penetrate China’s domestic cruise market may be cause for skepticism about the rumored acquisition of an international cruise line, it wouldn’t be the first time HNA makes a substantial investment in a tourism industry giant.

In October last year, HNA Group acquired a 25 percent stake in Hilton Worldwide for $6.5 billion, only a few months after acquiring Carlson Hotels—owner of Radisson hotels. The company holds substantial investments in airlines, airports, airport services providers, duty-free operators, and even owns the third-largest stake in Deutsche Bank.

After withdrawing from China’s cruise market in 2015, it is currently left without a stake in China’s growing cruise market.

According to the Cruise Lines International Association (CLIA), China’s cruise industry grew at an annual compounded rate of 66 percent between 2012 and 2015, making it the fastest growing cruise tourism market in the world.

Market leaders in the cruise industry have reacted accordingly, repurposing ships for the Chinese market, building new ships designed with the Chinese market in mind, as well as entering joint ventures with Chinese partners to boost growth and domestic ship construction in China.

The Chinese government is also one of the biggest cruise industry stakeholders with various state-owned enterprises owning stakes in domestic cruise brands and shipbuilding plants.

Among the major players in the market is a domestic cruise brand owned by Carnival Corp, state-owned China State Shipbuilding Corporation (CSSC), and China Investment Corporation.

For HNA Group, it wouldn’t be the first time it goes into a market where the Chinese state has significant interests. HNA Group’s Hainan Airlines is the largest privately-owned airline in China, trailing only state-owned Air China, China Eastern Airlines, and China Southern Airlines, and has enjoyed substantial growth as a result of the booming popularity of international tourism in China.

With the growth of cruise tourism outpacing overall tourism growth in China, buying a significant stake in one the Chinese cruise market’s many suitors could present an exciting prospect for HNA Group in its search for future growth through acquisition.

With competition in the Chinese cruise market heating up, HNA Group and its strong foothold in China’s tourism industry could also present an ideal partner for cruise lines looking to China and Asia for future growth.

CHINA: China's HNA Group Acquires 23.7% Stake In Brazil's Azul

Hainan Airlines
Type: Scheduled Carrier
Base: Haikou
Aircraft: 162
Destinations: 85
Routes: 299
Daily Flights: 605

Azul Linhas Aéreas Brasileiras (AD, Campinas Viracopos) and HNA Group have announced a strategic partnership wherein the Chinese conglomerate will acquire a 23.7% stake in the Brazilian carrier for USD450 million. As Azul's single largest shareholder, HNA will be able to appoint new members to the board of directors.

“HNA Group sees in Azul a solid investment with high growth potential. The USD450 million investment, considering Brazil’s current macroeconomic situation, demonstrates that we have a winning business model and that the HNA Group, as a large investor, has absolute confidence in Azul’s team," David Neeleman, CEO of Azul, said. "Moreover, this investment makes Azul the airline with the highest valuation in the Brazilian market, at more than BRL7.0 billion (USD1.87 billion).”

As part of the deal, the two firms will cooperate in the development of code sharing and new routes while expanding cooperation across their respective loyalty programs.

The partnership brings together two of the largest players in two of the fastest-growing aviation markets in the world - China and Brazil. With a fleet of 145 aircraft, Azul is the largest airline in Brazil by network-size, offering more than 900 daily flights to more than 100 destinations. For its part, HNA Group owns China's fourth largest airline group in terms of fleet size with a total of 561 aircraft on the books of Hainan Airlines, Grand China Air, Tianjin Airlines, Lucky Air (China), West Air (China), and Yangtze River Express. It operates scheduled domestic and international service on more than 630 routes from locations throughout China as well as internationally. HNA Group's international portfolio includes stakes in myCargo Airlines (Turkey), Africa World Airlines (Ghana), Aigle Azur (France), and Comair (South Africa).

Bravia Capital and UBS Investment Bank served as financial advisor to HNA Group while Seabury Securities LLC, Seabury Group's investment banking unit, served as financial advisor to Azul.

Earlier this year, United Airlines (UA, Chicago O'Hare) acquired a 5% shareholding in Azul for USD100 million in a deal that also gave United Continental Holdings Inc a representative on Azul's board.