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Analysis: China Express bets on subsidised routes, home-grown jets as path to profits
05/12/2021 | 02:13am EDT
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BEIJING/SYDNEY (Reuters) - China Express Airlines, a regional carrier based in the southwestern city of Chongqing, is betting that its business model of flying heavily subsidised routes using an increasingly Chinese-made fleet will give it an edge over rivals.
The airline reported a 22% rise in annual profit last year - a near-impossible feat in the pandemic-ravaged aviation industry - thanks to subsidies of more than 625 million yuan ($97.14 million) that accounted for 87% of its total profits before tax.
Routes in third and fourth-tier cities, 90% of which are monopolies, helped fuel growth and made it the only listed Chinese airline to make a profit in 2020.
Chinese Military-Civil Fusion and Section 1260H: Congress Incorporates Defense Contributors
Members of China’s People’s Liberation Army (PLA) walk past the Tiananmen Gate in Beijing, China. (Photo credit: Tomohiro Ohsumi/Bloomberg, https://flic.kr/p/ehevvw; CC by 2.0 https://creativecommons.org/licenses/by/2.0/)
One provision of the William M. (Mac) Thornberry National Defense Authorization Act (NDAA) for fiscal year 2021 requires the U.S. Department of Defense to publish an annual list of “Chinese military companies” (CMCs). Secretary of Commerce Gina Raimondo referenced the provision, Section 1260H, during her confirmation process as a way to handle the “substantial challenges China’s military-civil fusion policy poses to U.S. national security.” But while the 2021 NDAA required the list to be published starting on April 15, the report has not yet been released.