WUHAN-East Star Airlines, China's fourth registered private airline, on Sunday signed a letter of intent with Airbus to buy 10 A320s and a lease deal with GE Commercial Aviation Service (GECAS) for another 10 A320s.
The deals are the largest single orders Airbus and GECAS have signed with a Chinese private airline.
The new airline company is owned by China East Star Group, one of the largest private enterprises in Hubei Province.
East Star Airlines, based in Wuhan, Hubei Province, received approval for the operation of its service from the General Administration of Civil Aviation in June this year and plans to start its flight service in May next year.
The leased A320s will be delivered from the second quarter of next year.
"The A320 family aircraft is undoubtedly the best choice for our new airline company. Its unmatched low operating costs combined with the high level of passenger comfort will help the company take off smoothly and successfully," said Lan Shili, president of China East Star Group, which is parent of the airline.
Lan declined to comment on the value of the deals. A320s are priced at 60 million yuan (US$7.4 million) each in the catalogue. He said that the 20 A320s will be delivered over the next five years.
"The private airline business is a new sector in China and we have been paying close attention to this," said Laurence Barron, president of Airbus China.
Another two Chinese private carriers, Shanghai-based Spring Airlines and Chengdu-based United Eagle, currently have one A320 family aircraft in service each. Spring Airlines leased its second A320 earlier this month. Okay Airways, based in Tianjin and China's first registered private airline, has leased two B737s from Korean Air.
"It is very hard for an airline to make a profit if its fleet is too small." Lan said. "With the fast growth of Wuhan's economy, the city's aviation service demand is expected to soar."
Lan said his confidence in the new company also comes from the fact that flights from and to Wuhan, operated by China Eastern and China Southern, are now flying at almost full capacity.
(Photo:/Laurence Barron (right), chief of Airbus China operations, exchanges contracts with Lan Shili, chairman of East Star Airlines, in Wuhan, Hubei Province, on Sunday. The privately-owned airline ordered 10 A320 planes for its fleet which will start operations in May 2006. )