The long-awaited plan to create three major airline groups to consolidate the nation's aviation industry finally received approval from the central government, according to a senior official of the Civil Aviation Administration of China.

The State Council has approved the merger plan, the largest ever of its kind in the country's history, said Liu Jianfeng, director of the CAAC, the aviation regulator, who spoke at an industry meeting held in Shanghai last week.

The aviation plan, aimed at preparing the Chinese aviation industry for increasing global competition, involves 10 airlines directly affiliated with CAAC, the Beijing-based national flag-carrier Air China, the Shanghai-based China Eastern Airlines and the Guangzhou-based China Southern Airlines taking the lead.

The plan calls for Air China to merge with China Southwest Airlines and China National Aviation Corp., which holds a controlling stake in Air Macau and Hong Kong's Dragonair. The new Air China Group, with assets worth 56.1 billion yuan (US$6.76 billion), will have a combined fleet of 118 aircraft flying 339 routes, Xinhua news agency reported.

Meanwhile, China Southern, the country's No. 1 carrier in terms of fleet size, will own a combined fleet of 180 aircraft serving 606 routes after taking over China Northern Airlines and China Xinjiang Airlines. Its assets will reach 50.1 billion yuan.

The nation's third-largest carrier, China Eastern, will combine with Yunnan Airlines and China Northwest Airlines, creating an asset base of 47.3 billion yuan, and a fleet of 118 aircraft serving 437 routes.

The Shanghai carrier will also take over the 10th airline under the wings of the CAAC, China Great Wall Airlines of Ningbo, probably in March, according to China Eastern sources.

The plan calls for two other aviation-related groups to be formed.

China Aviation Supplies Imp. & Exp. Corp., which imports aircraft from Boeing Co. and Airbus Industrie, will merge with China Aviation Oil Corp., and China Civil Aviation Computer Information Center will join forces with China Aviation Settlement Center, Xinhua reported.

"The merger will help optimize the nation's existing aviation resources," said Hu Jidong, a China Eastern spokesman. "The consolidation of the industry into three national aviation hubs, based in Beijing, Shanghai and Guangzhou, will also help establish a more reasonable domestic air transport network."

However, domestic air passengers are not likely to benefit from the aggressive actions immediately because it might take years for the mergers to be completed, according to industry officials.

(Eastday.com.cn 04/30/2001)