YTO Express plans major airline expansion, and a new hub

Yu Weijiao, the Chairman of Shanghai-based YTO Express, has been widely quoted as saying his company’s air arm, YTO Express Airlines, will expand from its current fleet of five freighters, to fifty by 2020. And further, that this massive new fleet would have a new base at an as-yet-unbuilt airport in Jiaxing.

On the surface, this sounds like business as usual for China’s rapidly expanding express market. But just how realistic are the claims? Let’s start with the fleet…

Even if “by 2020” means “by the end of 2020,” it seems wildly unlikely that YTO could add forty-five freighters in four years. Other sources at YTO tell Cargo Facts that thirty freighters by 2020 is a more realistic goal.

YTO has firm-ordered ten 737-800BCF conversions from Boeing, and may have options for another five, but entry into service for the 737-800BCF is not likely until sometime in 2018. And even if Boeing can ramp up its conversion lines quickly, it has a total of thirty-six firm orders and twenty-four commitments for -800BCF conversions, and will hardly be putting its other customers on hold just to complete YTO’s order.

Of course, YTO will likely continue to add 737 Classic conversions, and possibly some 757s, and if it takes, say, four or five per year for the next four years, and also takes redelivery of most of the ten -800BCFs from Boeing, then a thirty-unit fleet by the end of 2020 is well within reach. For example, in 2012, SF Express was in a similar position. At that time, Its airline had seven freighters, and today, just four years later, it has thirty-five.

Turning to the new hub, China’s Civil Aviation Authority (CAAC) has already granted approval for a new airport in Jiaxing – which lies halfway between Shanghai and YTO Airlines’ current hub at Xiaoshan Airport (HGH) in Hangzhou. Cargo Facts does not believe the new airport would be financed or built by YTO, but rather will be a government-backed airport, open to all, with construction scheduled to start next year. The advantage to YTO in moving the 70 kilometers from Hangzhou to Jiaxing is that, as a major customer from day one, it would have the opportunity to design its own facility, with plenty of room for expansion.

Staying on the subject of airports, but returning to SF Express, the CAAC earlier this year granted approval for the company to build its own airport on a greenfield site about 75 kilometers east of Wuhan, the capital of Hubei province in Central China. For more on that story, see our earlier coverage of SF’s plan for a new hub.

YTO’s hub in Jiaxing is not as centrally located as Wuhan, but YTO also plans to have smaller hubs in Beijing, Chengdu, and Guanghzhou, giving it good coverage of most of China’s population.