The strategy is the first essential step towards the listing of Beijing-based China National Aviation Holding Company, which is widely considered to have the most advantages of the country's three key domestic air carriers.

The three airline groups were reorganized earlier this month, taking in two smaller carriers to increase their strength.

The other two are Shanghai-based China Eastern Airlines and Guangzhou-based China Southern Airlines. The three firms now control more than 80 percent of China's aviation market with a total market value of 150 billion yuan (US$18 billion).

The newly established company will continue to use the name Air China and will remain the only domestic airline allowed to carry the national flag.

But integrating the transportation sectors and related supporting facilities of China Southwest Airlines and China Aviation Corporation will enable the new company to greatly expand its share of the domestic market.

"This integration will greatly increase our market share to one-10th of the total of domestic air transportation. "Air China will reach the remote southwestern corner of the country -- Tibet -- for the first time with China Southwest Airlines, and provide better services in Hong Kong, Macao and Taiwan with the China Aviation Corporation," said Li Jiaxiang, president of new Air China.

(China Daily October 29, 2002)