Tianjin Air Cargo outlines plans to become a major integrator

Last week, Shanghai-based Suparna Airlines announced it was selling two 737-400Fs to its sister carrier, Tianjin Air Cargo (previously translated from Chinese into English as Tianjin Cargo Airlines) in a transaction valued at US $14.5 million [FATs 004302 – 4303]. Once the aircraft transfer is complete, Tianjin Air Cargo will have the three aircraft it needs to commence commercial operations – the first step in what ambitious airline planners hope is a journey towards becoming a global express integrator.

Just last November, the carrier received certification from the Civil Aviation Administration of China (CAAC). The start-up is a joint venture between three consortia (Tianjin Aviation Logistics Development Co., Ltd., Sky Holdings Co., Ltd., and Yang Hang Investment) that are controlled by heavy-hitting players in the industry, such as the HNA Group, China Post, Beijing-based Capital Airport Group, and Tianjin Airlines.

In recent months, HNA executives have been widely quoted describing their grandiose plans to augment Tianjin Air Cargo’s freighter fleet to somewhere between 50-100 aircraft within a matter of years, a goal which has left many questioning just how the freighters would be deployed.  According to a social media release from HNA Modern Logistics, the parent entity of Tianjin Air Cargo, HNA’s newest carrier seeks to rapidly scale-up its freighter fleet and enter the global express logistics business. “With the help of HNA Group, Tianjin Cargo will be built into the Chinese version of FedEx to achieve long-distance and medium-range operations.”

Five years out, the plan envisions a 100-freighter strong airline with 1,000,000 tonnes of annual cargo capacity. Its network meanwhile, would serve more than 50 cities worldwide. Such a business model would represent a radical divergence from those of HNA’s other scheduled cargo airline affiliates, which include Shanghai-based Suparna Airlines, Hong Kong Air Cargo and Turkey-based MyCargo Airlines. Although HNA’s existing cargo carriers regularly operate charters, and in some cases ACMI-lease aircraft to express operators, there has been no attempt to enter the business independently.

Given that HNA’s air freight logistics portfolio includes essentially every component required for a functioning air cargo supply chain, entrance into the express business would not be all that surprising. In fact, Cargo Facts has previously considered the feasibility of HNA entering the integrated express business. What is still missing from the equation, are firm orders for conversions or new-build freighters.

Still, adding two aircraft to Tianjin Air Cargo’s AOC is start. That deal, including units 29914 and 29915, was announced in a release on the Shanghai Stock Exchange by the carrier’s parent, Hainan Airlines Holdings Co., Ltd. Tianjin Air Cargo’ first 737-300F (27362, ex-Suparna) has already been repainted (as can be seen in the photo).

Having met the three-aircraft threshold required for the launching a cargo airline in China, Tianjin Air Cargo says it is on track to commence commercial operations in May or June of this year. According to HNA Modern Logistics, initial scheduled destinations from Tianjin include Urumqi, Shenzhen, Guangzhou, and Nanning, Chongqing, Xi’an, Shanghai, and Hangzhou. Gradually, as the carrier’s fleet expands, it will add additional flights to East and Southeast Asia.  “Within one year of operation, the airline will add 10 freighters which will contribute 15,000 tonnes of new cargo capacity to Tianjin Binhai International Airport.”

We note however, that even were Tianjin Air Cargo able to acquire seven additional freighters within a year, the addition of ten freighters in one year would be an unprecedented feat for a China-based operator. Existing domestic express operators including Shenzhen-based SF Airlines, and Beijing-based China Postal Airlines have managed to add at most, five aircraft per year. This quota is not however, a fixed rule, but seems to exist as more of an unwritten guideline. Given the desire of the Tianjin Municipality to develop a global logistics hub, and HNA’s previous experience with freighter operations, it is possible that Tianjin Air Cargo could grow at a faster clip.

For now, those interested in learning more about the Tianjin Air Cargo’s plans are invited to join us in Shanghai 23-25 April for Cargo Facts Asia 2018, where James Yu, Chairman, Tianjin Air Cargo Co. Ltd., will speak on a roundtable panel dedicated to Asia’s Growing Express Networks. For more information, or to register, visit www.cargofactsasia.com.