Identifier
Created
Classification
Origin
06GUANGZHOU8841
2006-03-29 05:35:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Consulate Guangzhou
Cable title:  

HAINAN AIRLINES APATHETIC ABOUT UPCOMING U.S.-CHINA

Tags:  EAIR ECON KTIA CH 
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R 290535Z MAR 06
FM AMCONSUL GUANGZHOU
TO RUEHC/SECSTATE WASHDC 2255
INFO RUEHOO/CHINA POSTS COLLECTIVE
RULSDMK/DEPT OF TRANSPORTATION WASHDC
RUCPDOC/USDOC WASHDC
RUEAIIA/CIA WASHDC
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RHHMUNA/HQ USPACOM HONOLULU HI
UNCLAS SECTION 01 OF 02 GUANGZHOU 008841 

SIPDIS

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: EAIR ECON KTIA CH
SUBJECT: HAINAN AIRLINES APATHETIC ABOUT UPCOMING U.S.-CHINA
AVIATION TALKS

REF: A. BEIJING 2773, B. GUANGZHOU 32752, C. GUANGHZOU 24010

(U) THIS DOCUMENT IS SENSITIVE BUT UNCLASSIFIED. PLEASE
PROTECT ACCORDINGLY. NOT FOR RELEASE OUTSIDE U.S.
GOVERNMENT CHANNELS. NOT FOR INTERNET PUBLICATION.

UNCLAS SECTION 01 OF 02 GUANGZHOU 008841

SIPDIS

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: EAIR ECON KTIA CH
SUBJECT: HAINAN AIRLINES APATHETIC ABOUT UPCOMING U.S.-CHINA
AVIATION TALKS

REF: A. BEIJING 2773, B. GUANGZHOU 32752, C. GUANGHZOU 24010

(U) THIS DOCUMENT IS SENSITIVE BUT UNCLASSIFIED. PLEASE
PROTECT ACCORDINGLY. NOT FOR RELEASE OUTSIDE U.S.
GOVERNMENT CHANNELS. NOT FOR INTERNET PUBLICATION.


1. (U) Summary. Hainan Airlines expressed little interest
in the upcoming April 19-20 U.S.-China aviation talks,
citing its inability to operate flights to the United States
at this point. This inability stems from three reasons: the
airline is not a designated carrier; it does not have the
necessary long-range aircraft; and it is still conducting
market research on the American market. Still, the airline
is interested in the possibility of future flights to the
United States. End summary.


2. (SBU) On March 24, Consulate and Embassy officers called
on Hainan Airlines (HNA) at its Haikou headquarters, to
gather the company's views on the upcoming U.S.-China
aviation services talks, to be held in Beijing on April 19-
20 (REF A). HNA officials said that, although the airline
is interested in eventually flying to the United States, at
present, "conditions do not permit [HNA]" to do so. For
this reason, the airline will "just take" the results of the
negotiations.


3. (U) HNA cited three reasons for their inability to
operate flights to the United States at this point: (1) HNA
is not a designated carrier to the United States under the
terms of prior U.S.-China agreements; (2) HNA only has two
long-range aircraft on its fleet (two 767-300s, which in any
case do not have the necessary range to fly nonstop from
China to America; and (3) The airline is still conducting
market analysis to determine which American markets would be
most promising.


4. (SBU) Explaining to HNA that we understood these
limitations, we noted that the lifting of one of them, i.e.,
the fact that HNA is not a designated carrier, might be
affected by the upcoming negotiations. Moreover, HNA is
part of a group of six Chinese state-owned airlines that in
January agreed to buy 60 Boeing 787s, which means HNA could
have the requisite aircraft in its fleet to fly to America
by as early as 2008. Therefore, we posited, the upcoming
talks were of more than passing importance to HNA. In
response, however, we received a reiteration of the three
reasons previously stated. (Note: China already has
available designations that it could award to HNA, but its
aviation authorities have chosen not to do so. Nonetheless,
if more designations are made available to China after the
April talks, the airline's odds of becoming a designated
carrier would presumably improve. HNA would still have to
overcome its own operational deficiencies before it could
begin flights to the United States. End note)


5. (SBU) Despite the current limitations, HNA is clearly
interested in at least exploring the possibility of flying
to the United States in the future. As one of its
representatives stated, "all [Chinese] airlines know [the
American market] is profitable." (Note: This conflicts
somewhat with an assertion made in November by a China
Southern Airlines (CSA) representative, to the effect that
Chinese airlines are hesitant to enter the American market
because they feel unable to compete against the local
carriers. In fact, its Guangzhou-Los Angeles route is a
money-loser for them, although that might have to do less
with the market than with CSA's own operational constraints
(see REF B). End note)

It's different on the cargo front
--------------


6. (SBU) HNA confirmed that Yangtze River Express, HNA
Group's all-cargo airline, had been in talks with the
Massachusetts Port Authority (Massport) regarding the
possibility of starting flights between China and Boston.
The airline's base is in Shanghai, and presumably the
flights to Boston would be from there as well.

Comment: We'll get there when we get there
--------------


7. (SBU) HNA officials conveyed a sense of apathy regarding
the upcoming talks, which in turn probably belies the
airline's perceived impotence to influence the process.
This, of course, does not mean that HNA is not interested in

GUANGZHOU 00008841 002 OF 002


flying to the United States, as their comments indicate.
However, knowing full well that its designation will occur
only when and if Beijing deems it appropriate, the airline
is probably adopting a "wait and see" attitude.


8. (U) For more information about HNA, please read REF C.

DONG