Two subsidiaries of HNA Group, China's fourth largest airline group, will receive a 500 million yuan capital injection from Tianjin Port Free Trade Zone as the local government tries to help airlines through the financial crisis.

Tianjin-based Grand China Express, HNA's regional airline, will get 200 million yuan, while Bohai Leasing Co, HNA's leasing arm, will receive 300 million yuan.

The cash injection came after two of the country's three largest airline groups, China Southern Airlines and China Eastern Airlines, each received a 3 billion yuan cash infusion from the government earlier this month.

HNA Group, based in the southern island province of Hainan, is also seeking help from Hainan provincial government in the form of a capital injection, subsidies or a tax cut, HNA's Chairman Chen Feng told Chinese media earlier this month.

Chinese airlines booked a combined net loss of about 4.2 billion yuan in the year's first 10 months due to previously soaring oil prices and falling traffic demand. The airline industry is expected to continue in the red next year as the global economy deteriorates, analysts said.

"The capital injection is part of Tianjin government's determination to improve infrastructure construction and will create jobs and increase tax revenues," Gou Lijun, director of the Tianjin Binhai New Area administrative committee, said yesterday.

Tianjin Port Free Trade Zone, located in the Binhai New Area, is the largest free trade zone in North China.

Tianjin is building an aviation industry chain that includes aircraft manufacturing, aviation leasing and air transport.

European aircraft manufacturer Airbus has built an A320 final assembly line in the northern port city and a number of aeronautical companies have been set up in the city since the A320 project landed.

"Being adjacent to Beijing, it is very difficult for Tianjin to develop trunk line air transport. So regional aviation is an important part of the city's ambition in building an aviation industry chain. It is surprising to see the local government lend a hand at this moment, especially after Okay Airways suspended passenger operation," said Li Lei, an aviation analyst with CITIC China Securities.

Tianjin-based Okay Airways, China's first private airline, suspended passenger service earlier this month due to an internal management dispute. The airline, operating 11 airplanes, has been focusing on regional routes from Tianjin and suffering from rising losses.

Grand China Express was launched in Tianjin in March 2007 by HNA Group and its subsidiary Hainan Airlines Co Ltd. It is the country's largest regional airline and operates 45 airplanes, accounting for over 40 percent of China's total regional aviation fleet.

(China Daily 12/24/2008 page13)