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Name: HEBEI AIRLINES
7JetSet7 Code: NTE
Status: Operational
Region: CHINA
City: SHIJIAZHUANG
Country: CHINA
Employees 77
Web: hbhk.com.cn
Email: info@hbhk.com.cn
Telephone: +86 311 96 699
Fax:
Sita: CTUUFSC
Background
(definitions)

Click below for data links:
NTE-2011-12 - E190 DELIVERY
NTE-2014-11 - BEIJING CAPITAL AIRPORT CAPACITY
NTE-2014-11 - LOCAL AIRPORT ASKS YEAR
NTE-LOGO

Formed in 2007 and started operations in 2010. Formerly "Dongbei Air" and "Northeast Airlines." Domestic & regional, scheduled & charter, passenger & cargo jet airplane services.

Address:
Shijiazhuang Zhengding International Airport
Shijiazhuang 050800, China

China (People's Republic of China) was established in 1949, it covers an area of 9,560,980 sq km, its population is 1,265 million, its capital city is Beijing, and its official language is Chinese.

October 2007: Dongbei Air, the new regional that Sichuan Airlines (SIC) plans to launch in the 1st half of next year, is expected to receive (CAAC) (CAC) approval soon. According to a (CAAC) (CAC) statement, Sichuan (SIC) will hold a 33.5% stake in the start-up with an investment of CNY53.6 million/$7.1 million, while Shenyang Zhongrui Investment Company puts in CNY54.4 million for a 34% stake. Other investors are the Shenyang municipal government's state-owned Assets Supervision & Administration, and Liaoning Huanjiang Industrial Company, each of which will hold 16.25% with separate CNY26 million investments. Sichuan (SIC) will support the new venture with 30 pilots (FC), 20 flight attendants (CA), 6 Maintenance Repair & Overhaul (MRO) professionals (MT), and 2 dispatch employees. Dongbei initially will lease 1 A319 and 2 ERJ-145s to operate regional routes in northeast China. It will have bases in Shenyang and Chaoyang, and also serve Dalian, Dandong, and Jinzhou. With "Resurrection of Traditional Industrial Bases in Northeast China" adopted as official national policy, there is growing potential for economic development in the region, which industry analysts have predicted will support increased air service. Dongbei will be eligible for subsidies that the (CAAC) (CAC) intends to distribute at year end to promote regional development. The (CAAC) (CAC) also will waive its prohibition against new entries prior to 2010, because Dongbei will operate in the less-congested Northeast. - see later December 2007 with "Dongbei Air" launched as "NorthEast Airlines (NTE)."

December 2007: New Chinese passenger carrier "NorthEast Airlines (NTE)" has launched services from its Shenyang base. Part-owned by Sichuan Airlines (SIC), (NTE) launched operations with services to Chengdu and Tianjin. It plans to add more domestic services in the coming months. The new airline has begun with 1 A319 and 2 Embraer ERJ-145s.

December 2008: NorthEast Airlines (NTE) is a jet airplane passenger carrier operating from Shenyang with initial services to Chaoyang, Chengdu, Dalian, Dandong, Guilin, Hohhot; Jinzhou, Qinhuangdao, and Shanghai..

(IATA) Code: NS - 836. (ICAO) Code: HBH - (Callsign - DONGBEI AIR).

Parent organization/shareholders: Sichuan Airlines (SIC) 33.5%); Shenyang Zhongrui Investment Company (33.5%); Shenyang government (16.5%); & Liaoning Huanjiang Corporation (16.5%).

Main Base: Shenyang Taoxian International airport (SHE).

July 2010: Hebei Airlines (NTE) was launched successfully on June 29 using the assets of Dongbei Air (Northeast Airlines). The airline operates 1 A319 and 2 ERJ-145s on domestic routes from the capital of Hebei Province, Shijiazhuang, to Qinhuangdao, Guilin, Shanghai, Chengdu, and Hohhot. Hebei Chairman, Wang Sheping noted (NTE) will expand the fleet to 10 airplanes by year end and to 20 by 2015. Sichuan Airlines (SIC) took over troubled Dongbei (NTE) by investing CNY400 million/$58.7 million to raise its holding to 97% from 33.5% in June. Shenyang Zhongrui Investment Company has the remaining 3%. A share restructuring is planned over the next year, with Hebei Aviation Group acquiring a 62% stake, while Sichuan (SIC) would hold 35%. Shenyang will retain its 3% investment. Hebei Airlines (NTE) is expected to incur operating losses initially, an insider said, but financial help from the Hebei local government is expected to improve its fortunes.

(NTE) provides a scheduled jet airplane, passenger service from Shenyang to Dalian, Dandong, Harbin, Jinzhou, Chaoyang, and others.

April 2011: Two Chinese airlines ordered a total of 30 Embraer E190s, plus 5 options, during Brazilian President Dilma Rousseff’s visit to China.

Shijiazhuang-based, Hebei Airlines (NTE), which launched in June 2010, committed to 10 E190s, plus options for +5 units. Deliveries will begin from September 2012.

Embraer (EMB) also confirmed that (CDB) Leasing Company ordered a “2nd batch of 10 E190s as a follow-on order to an agreement concluded earlier this year” to be operated by China Southern Airlines (GUN). In addition, (CDB) and (GUN) signed a letter of intent (LOI) for a 3rd group of 10 E190s, which, if confirmed, will bring the total (CDB) order to 30 airplanes, valued at $1.25 billion at list prices, (EMB) said. (GUN) is expected to begin taking delivery of the airplanes during the 2nd half of this year.

Embraer (EMB) noted that with this new order, it has 135 airplanes firm orders in the Chinese market.

(EMB) signed an agreement with (AVIC) (CCC), in which both sides will use their Harbin Embraer Aircraft Industry Company joint venture (JV) as the final assembly line for the Legacy 600 and 650 executive airplanes. Harbin, which was established in January 2003, has produced and delivered only 39 ERJ-145s and has been idle since 2009 after Hainan Airlines (HNA) canceled its order for 25 ERJ-145s.

June 2011: Sichuan Airlines (SIC) plans to launch Hebei Airlines (NTE) on June 29 using the assets of subsidiary Dongbei Air. (SIC) this month took over troubled Dongbei by investing CNY400 million/$58.7 million to increase its ownership stake to 97% from 33.5%. The launch of Hebei (NTE) will be done in conjunction with the Hebei provincial government represented by Hebei Jizhong Energy Group. The airline's launch is waiting for approval from the (CAAC).

September 2011: Hebei Airlines (NTE) has taken over stakeholder Sichuan Airlines (NTE)'s Embraer (EMB) fleet, comprising 5 ERJ-145s, as it explores China’s regional air transport market.

(NTE) has leased 2 ERJ-145s since 2010 for use on domestic routes from Shijiazhuang to Tanshan and Qinhuangdao. It purchased the other 3 airplanes in a recent deal for an undisclosed sum.

(NTE) was launched last year using assets of Dongbei Air, which was taken over by (NTE) in June 2010. This year, (NTE) went through a share restructuring as Hebei Aviation Group acquired a 62% stake in the carrier; (NTE) holds 35%. Shenyang Zhongrui Investment Company still retains its 3% investment.

(NTE) placed a firm order for 10 Embraer E190s in April. It operates a fleet of 8 airplanes, comprising 5 ERJ-145s and 3 737s, under a lease contract with Xiamen Airlines (XIA) that will soon expire.

November 2011: Hebei Airlines (NTE) has placed a firm order for 10 ARJ-21s, according to the Commercial Aircraft Corporation of China (COMAC) (CCC). Earlier reports place the value of the order at $30 million at list prices.

This year, (NTE) went through a share restructuring when Hebei Aviation Group, the Hebei provincial government-controlled company, acquired a 62% stake in (NTE). The acting Governor of Hebei, Zhang Qingwei was formerly the (COMAC) (CCC) Chairman.

(COMAC) (CCC) has received 340 orders for the ARJ21, which is in the test-flight phase to gain (CAAC) certification. (COMAC) (CCC), which was scheduled to deliver its 1st ARJ21 to Chengdu Airlines on November 28, has pushed back delivery into next year owing to the inability of some key parts to pass flight tests.

December 2011: Hebei Airlines (NTE) took delivery of 2 Embraer E190s.

Embraer (EMB) said the sale of the 2 E190s was confirmed this month, and the purchase of another 8 jets is still subject to Chinese government approval.

The Shijiazhuang-based (NTE) will deploy the E190s to support establishing a hub network within the Hebei Province, and on routes from Shijiazhuang to other provincial capitals.

(NTE) Chairman Luo Zhanling said the introduction of these E190 jets “matches (NTE)’s marketing strategy, and is 1 of our important initiatives in response to the state’s call to build China as a civil aviation powerhouse by improving the country’s regional aviation sector.”

He said (NTE) will “fully leverage the jets’ advantages in seat capacity and range performance to build a hub network.”

Embraer (EMB) said it has 153 firm orders for commercial and executive jets from China, including 85 E190s.

March 2012: Hebei Airlines (NTE) has put its 1st 2 E190s into scheduled service on routes from its base at Shijiazhuang Zhengding International airport (SJW) to Hangzhou Xiaoshan International airport (HGH), Shenzhen Bao'an International airport (SZX) and via Xi'an Xianyang International airport (XIY) to Changsha Datuopu airport (CSX).

July 2012: Embraer (EMB) announced an order from China’s Hebei Airlines (NTE) for 5 E190s, a deal valued at $226 million at list prices.

The E190s will be delivered by the end of 2013 and will join 2 E190s in service with (NTE) since January. (EMB) said these airplanes are operating around 70 flights per week with an average reliability of 99.5% and a 100% completion rate.

2 Embraer E190-100LRs (0561, B-3207; 0566, B-3208), ex-(PT-TDQ & PT-TDV) deliveries.

November 2012: Hebei Airlines (NTE) was formerly known as Northeast Airlines. It re-branded to its present name in 2010. (NTE) operates domestic services from Hebei's provincial capital, Shijiazhuang, to Chengdu, Guilin, Hohhot, Qinhuangdao, and Shanghai.

(NTE) is an airline with its corporate headquarters in the Shijiazhuang World Trade Plaza Hotel in the Chang'an District, Shijiazhuang, Hebei Province, China.

Parent/shareholders: Sichuan Airlines (SIC), and Jizhong Energy Group Co Ltd.

(IATA) Code: NS. (ICAO) Code: HBH - (Callsign - HEBEI AIR).

Main Base: Shijiazhuang Zhengding International Airport (SJW).

Domestic destinations: Chengdu, Chongqing, Fuzhou, Guangzhou, Guilin, Haihou, Hangzhou, Ningbo, Shanghai, Shenzhen, and other cities.

New routes planned include: Shijiazhuang - Tangshan - Harbin; Shijiazhuang - Changsha - Sanya, and Shijiazhuang - Kunming.

On October 25, (NTE) started a daily flight Shijiazhuang - Wenzhou - Haikou flight.

The Commercial Aircraft Corporation of China (COMAC) (CCC) has won 50 orders for the 150-seat C919 at the Zhuhai Air Show. The orders comprise 20 from Hebei Airlines (NTE), 20 from Joy Air (JOY) and 10 from (GECAS) (GEF).

In addition, (COMAC) (CCC) also signed a memorandum of understanding (MOU) with USA-based defunct Eastern Air Lines (EAL) for future sales of the airplanes to the USA. "Reuters" is reporting “sporadic reports of efforts to relaunch the airline, whose forked logo was seen on display as a backdrop to the signing ceremony.”

The International Airlines Group (IAG) and Ryanair (RYR) have also signed (MOU)s for the C919.

To date, (COMAC) (CCC) has received 380 orders for the C919. The C919 entered the final design definition phase last year. Detailed design will be completed this year and the 1st flight is scheduled for 2014. Type certification is expected by 2016, followed by 1st delivery. By 2020, (COMAC) expects to produce 150 C919s annually.

According to the most recent market forecast released by (COMAC) (CCC) at the Zhuhai Air Show, China will need 4,960 airplanes by 2031 in which 3,405 will be narrow body airplanes.

June 2013: Hebei Airlines ((IATA) Code: NS, based at Shijiazhuang) (NTE) in conjunction with its parent, the Hebei Aviation Investment Group Company is in the process of formulating a strategy to establish a hub at Beijing's Daxing International Airport, due to open in 2018. Reports claim that as part of its long term business plan, (NTE) intends to develop operations out of the Chinese capital's newest airport, while consolidating its current hub of Shijiazhuang. (NTE) is an exclusively domestic carrier whose operations include both passenger and freight.

(NTE) serves one country (domestic operations), 27 destinations, and 37 routes.

May 2014: Xiamen Airlines (XIA) is reportedly in negotiations with Hebei Airlines (NTE) stakeholders to take over the loss-making Shijiazhuang-based carrier.

July 2014: With the purchasing deal that Xiamen Airlines (XIA) bought a 99.23% stake of Hebei Airlines (NTE) signed on July 16, state-owned coal enterprise (Jizhong Energy Group Compant Ltd) has resold its aviation shares in Hebei Airlines (NTE), which has suffered continuous losses since it was established in 2010, "China Business News" reported.

Founded by the Jizhong Energy Group, Hebei Airlines (NTE) has been running at a loss for the last 3 years. It reported annual losses of -200 million yuan, -500 million yuan and -300 million yuan for 2011, 2012, and 2013, respectively. Its shareholder, the Jizhong Energy Group could hardly survive from the downturn in the coal market.

Given the financial troubles, Hebei Airlines (NTE) took the initiative to contact Xiamen Airlines (XIA), a regional airline headquartered in Xiamen. It now has an all-Boeing type fleet of >100 planes and is thought of highly for its sophisticated management and cost control, which made it become the unique domestic profitable airline in the past 27 years. In October 2010, (XIA) leased 3 Boeing 737 airplanes to Hebei Airlines (NTE). Later, Jizhong Energy Resources bought a 15% stake of (XIA) for 1.46 billion yuan.

Headquartered in Xiamen, Xiamen Airlines (XIA) has set up branches in Hangzhou, Tianjin, Nanchang, Beijing, and Hunan in recent years, acquiring an opportunity to enter the air transport hub market. However, it is difficult to get superior slots in Beijing and the market competition of Hebei in the vicinity of Beijing was also fierce. (XIA) interests included its desire to participate in the reconstruction and expansion of its market share in Northern China with the help from Heibei Airlines (NTE).

The deal was reportedly concluded on July 16. The move comes after previous majority shareholder, state-owned coal enterprise Jizhong Energy Group Company decided to withdraw from (NTE), which has racked up over -USD161million in losses over the last 3 years.

As it stands, it is uncertain as to whether Hebei (NTE) will be absorbed into Xiamen (XIA) or will remain a separate entity.

The resources of Beijing Capital International Airport (PEK) are all saturated. However, the new Beijing airport gives hope to airlines that plan to expand in the Beijing market.

Hebei (NTE) operates 2 737-700s, 4 737-800s and 5 E190s on scheduled passenger services throughout China. Hebei's key bases are Shijiazhuang and Wenzhou.

October 2014: China Southern Airlines (GUN) has approved the takeover of Hebei Airlines (NTE) by its subsidiary, Xiamen Airlines (XIA). (XIA) will purchase 99.2% stakes in the loss-making carrier for CNY749 million/$122 million, according to a statement released through the Hong Kong Stock Exchange.

Hebei Airlines (NTE) parent, the Hebei Aviation Group, which is controlled by the Hebei Jizhong Energy Group, holds a 62% stake. Sichuan Airlines (sic) and the Shenyang Zhongrui Company hold a 35% and 3% stake, respectively.

China Southern (GUN) also approved the (XIA)’s purchase of the remaining 0.77% stake held by the Shenyang Zhongrui Company.

In 2010, Hebei Airlines (NTE) had planned to attain an operating revenue of >CNY10 billion and expand its fleet to >20 airplanes by 2015. However, (NTE) has posted consecutive losses since it was launched 3 years ago. It reported a net loss of -CNY200 million and nearly -CNY500 million in 2011 and 2012, respectively. It posted a net loss of >-CNY300 million in 2013.

In order to save Hebei Airlines (NTE), (GUN) also approved a CNY1 billion short-term loan by (XIA) to Hebei (NTE). It also approved a capital injection of CNY800 million to the Shijiazhuang-based carrier over the next 3 years.

(XIA) has maintained a consecutive profit for 27 years. It operates 106 Boeing airplanes on 244 domestic and international routes.

November 2014: News Item A-1: At 1st blush, there are few implications from the sale of Hebei Airlines (NTE), a domestic-only airline with a dozen-odd narrow body airplanes, to Xiamen Airlines (XIA). But the transaction in many ways is a reversal of one of China's main aviation trends: a proliferation of start-up carriers. There is a flurry of airline launches as eager and aspirational local governments recognize the value, aviation can bring to an economy, plus the prestige.

But the start-ups face a difficult entry environment. Their small size starves them of scale, and the existing shortage of management talent is exacerbated by new start-ups. Hebei Airlines (NTE) was backed by its local provincial government, but the support waned as the government learned it could get a far greater return by supporting a local base of low cost carrier (LCC) Spring Airlines (CQH), rather than attempt to have its own airline.

Hebei Airlines (NTE) now moves under the wing of Xiamen Airlines (XIA), a large and respected carrier. This could presage similar fates for today's start-ups as they feel they need a closer relationship with a larger airline.

News Item A-1-A: "Xiamen Airlines (XIA) Buys 99% of "Hot Potato" Hebei Airlines."

Even the saccharine Chinese media could not hold back criticism of Hebei Airlines (NTE), which they termed a "hot potato." It has a short but colorful and transient history dating back to its origins in 2006 as Northeast Airlines based in Shenyang. It was a subsidiary of Shenyang Aircraft Corporation, itself a subsidiary of heavyweight Chinese airframer (AVIC). After difficulties in that market, the base was moved in 2009 to Guilin in China's south.

Barely a half-year later, Sichuan Airlines (SIC) (from China's west) announced it would increase its stake from 33.5% to 97%. The carrier would be re-branded as Hebei Airlines (NTE) and move back to China's north with a base in Shijiazhuang, the capital of Hebei province.

Hebei was projected to have a fleet of 20 airplanes by 2015 and be profitable. Instead, Hebei lost approximately -1 billion yuan/- US$160 million) between 2011 and 2013, and in November 2014 has 11 airplanes. China Southern (GUN) said the audited results of Hebei Airlines (NTE) show a negative -38% operating margin in 2012, and a negative -18% operating margin in 2013.

A shareholder re-structure resulted in Sichuan Airlines (SIC) reducing its stake as Hebei province, via locally owned Jizhong Energy Group (a coal company owned by the province), bought into Hebei Airlines (NTE).

Now enters Xiamen Airlines (XIA) from China's SE, but seeking a larger role across China (Sichuan Airlines (SIC) had a similar objective when it purchased Hebei (NTE)). (XIA) took a 99.23% stake of Hebei (NTE) via a typically convoluted shareholding process. (XIA)'s purchase is valued at 749 million yuan/US$122 million). Xiamen (XIA) is owned 51% by China Southern (GUN) and 15% by Jizhong Energy, the company selling Hebei Airlines (NTE). China Southern (GUN) said Xiamen (XIA) will inject 800 yuan/US$131 million into Hebei (NTE) >3 years and provide a loan guarantee of up to 1 billion yuan/US$160 million.

Hebei's home market found it more effective to support Spring (CQH) than a local carrier. Hebei Airlines (NTE) in November 2014 has about a 21% share of seat capacity at its home market of Shijiazhuang.

This is <29% captured by China's leading (LCC) Spring Airlines (CQH), and that is no coincidence. (CQH) in July 2009 established a base at Shijiazhuang. The Hebei government and Shijiazhuang were initially cautious about Spring (CQH) but then saw (CQH) could deliver greater benefits on more modest subsidies than were being given to Hebei Airlines (NTE).

News Item A-1-B: "China Suffers a Lack of Management Bandwidth to Support a Rapid Growth of Carriers."

Hebei (NTE) suffered from lack of staff and management quality. Local reports about (NTE) included descriptions such as "poor management," "virtually every aspect of technical personnel are lacking" and "talent is fundamental, but it is clear that Hebei Airlines (NTE) talent is short."

There were also questions about whether Hebei could be managed with its major shareholder lacking an aviation background (since it was a coal company, and a state-owned one at that). The relationship was termed "ground-sky" to provide a playful comparison, but ultimately the contrast may have been too large.

China's regulator, the (CAAC) is encouraging start-ups to partner with existing airlines. The start-ups are doing lining up, but the partnerships can be limited, focusing on one aspect (of training, for example). In addition, since the relationships become contrived without an equity stake, the incentive to partner effectively is small. Even when Sichuan Airlines (SIC) was involved with (NTE), it only held a small stake.

Replicating a management team for a small airline that is not piggybacking on a larger one becomes inefficient. It is also impractical when there is a shortage of management. This is a recognized problem, even at the larger carriers. The rapidity of China's airline growth means that this will continue to be a problem for a considerable period.

News Item A-1-C: "Shijiazhuang Airport Sees Advantage by Being a Rail Hub."

It takes a number of factors to achieve disastrous results like negative -18% and -38% operating margins, as in Hebei (NTE)'s case. One factor probably working against (NTE) was that Shijiazhuang is connected to Beijing by high speed rail, and also to other destinations. Shijiazhuang is one of the stops on the high-speed rail line between Guangzhou and Beijing. If Hebei did not perform its best, passengers could simply go elsewhere on high speed rail.

While high speed rail may be a challenge, it is not a fatal flaw at Shijiazhuang. Indeed, Spring (CQH) is working to turn high speed rail into an advantage by using rail to feed passengers to Shijiazhuang airport from outside the immediate area. High-speed rail brings a larger catchment area than what could be achieved with regular rail or other land transport. Shijiazhuang can even be an alternative to some parts of outer Beijing: Shijiazhuang is to Beijing's SW, while Beijing's main airport is to the NE and without a high speed direct link from the city's south or western areas. Further, Beijing Capital's slots are congested, limiting opportunity for passenger growth.

Spring Airlines (CQH) and Shijiazhuang airport partnered for an air-rail service in which (CQH)'s Shijiazhuang passengers (individual travelers only; not groups or charters) receive a free ticket on the high speed rail line. The ticket can be used all the way to Beijing in the north, Zhengzhou in the city or cities in between. The service was introduced in January 2013. Statistics are limited, but some published figures are that >150,000 passengers used the service in all of 2013 and that >20,000 passengers used the service in March 2014 alone. The cheapest tickets on the train are 75 - 111 yuan/US$12 - 18 one-way for the 1 to 2 hour trip.

Unlike at Shanghai Hongqiao, or a number of European cities, Shijiazhuang's high-speed rail link is not directly at the airport but rather about 4 km away (at Zhengding station) with a shuttle service provided. However, this is a better connection than at many Chinese cities, where the rail station and airport station are further away with no dedicated connection service. There are 14 daily trains from Zhengding station to Beijing (about once an hour during the day) but the airport and Spring Airlines (CQH) hope to increase service.

News Item A-1-D: "Hebei Airlines (NTE) Expected to Establish a Presence at New Beijing Airport Later This Decade."

Xiamen Airlines (XIA) has been growing outside its home market of Xiamen and Fujian province. It has set up branches in Hangzhou, Tianjin, Nanchang, Beijing, and Hunan, but the acquisition of Hebei (NTE) could help (XIA) develop its northern China (and Beijing) presence significantly beyond what it can achieve with a branch in Beijing. Xiamen Airlines (XIA) is the 6th-largest carrier at Beijing Capital based on seats, but this amounts only to about a 2% share.

Hebei (NTE) has previously mooted establishing a base at the new Beijing airport at Daixing, which will border the Hebei province and is expected to open later this decade. The potential benefit comes with added complexity at Xiamen Airlines (XIA), which calls itself the world's most consistently profitable carrier. This is difficult to verify, but there is no doubt (XIA) is one of the better run airlines in China's difficult market.

(XIA) is complicating its business as it moves away from its own narrow body, mostly domestic, operation to needing to incorporate (NTE) as well as (XIA)'s 787s, which are few in number but bring large costs (and potentially losses as Xiamen explores long-haul markets for the 1st time).

News Item A-1-E: "For China's New Entrants, Hebei Airlines (NTE) Suggests an Uncertain Future."

Establishment of an airline and its survival, are 2 very different matters. Many in China are celebrating the launch of recent airlines, while others are working to start. Hebei (NTE) strikes a note of warning, albeit 1 that people may prefer to ignore. But its lessons are that small, unassociated airlines may struggle to survive. Hebei faced difficulties, even without much interference from China's big airline groups. Others may not be so fortunate.

Many of China's new airlines would benefit from closer ties to existing airlines or even as part of a group, a base rather than a separate carrier. Spring (CQH)'s Shijiazhuang base shows that an airline from outside the region can prosper, given the right strategy and scale.

Spring (CQH) may not carry Hebei (NTE) or Shijiazhuang's name, as the provincial government aspired, but Spring (CQH) has offered a more sustainable and effective alternative. If Hebei Airlines (NTE) does establish itself at the new Beijing Daixing airport, it will be interesting to see if the Shijiazhuang base continues actively or is gradually wound down.

The Hebei Airlines (NTE) case study thus highlights 2 issues for China's regulators to take on board:

* 1st, as new, often government supported, airlines emerge, so the danger grows that unprofitable and unsustainable models will persist in the market, regardless of losses. Subsidised double digit negative operating margins, limited assets and a minor brand are not attractive propositions in a commercial marketplace.

* 2ndly, an expansive airline strategy emphasises the need for experienced management resources. These skills are rare in many fast growing markets, but in China, where typically, airlines have been built around substantial government and poltical involvement (often to the detriment of good governance and management) the issue is acute.

April 2015: Hebei Airlines (NTE) has launched 3 monthly commuter tickets that allow passengers to fly from Shijiazhuang to Tangshan, Zhangjiakou, and Qinhuangdao for as low as 500 yuan per month, effective from April 1 to April 30 in order to meet passengers demand.

The monthly tickets allow passengers to fly between Shijiazhuang and Tangshan, as well as Shijiazhuang and Zhangjiakou, Shijiazhuang and Qinhuangdao up to 5x- within a month as long as the passengers order the tickets.

The monthly tickets are already available now. The price of the monthly ticket for Shijiazhuang - Zhangjiakou route was 500 yuan, 600 yuan for Shijiazhuang - Tangshan route, and 1,000 yuan for the Shijiazhuang - Qinhuangdao route (excluding tax).

September 2015: 737-85C (35057, B-5459), ex-(N1796B), delivery.

August 2016: 737-8LW (42970, B-1561), delivery.

January 2017: 737-8LW (42972, B-6868), delivery.

February 2017: Xiamen Airlines (XIA) has obtained approval to provide a US$5.5 million loan guarantee for Hebei Airlines (NTE) to lease a Boeing 737-800 (B-6868) from the Tianlan (Tianjin) Aircraft Leasing Company.

In a statement on the Shanghai Stock Exchange, China Southern Airlines (GUN), parent of Xiamen (XIA), said that the guarantee will help (NTE) broaden its financing channels and cut its financial and leasing costs. As of now, (XIA) has already provided 800 million yuan in loans to Hebei Airlines (NTE).

(NTE), 99.47% owned by (XIA), now operates a fleet of 12 Boeing 737s and 6 Embraer E190s.

May 2017: 737-8LW (42973, B-1445) delivery.

June 2017: XiamenAir (formerly Xiamen Airlines) (XIA) subsidiary Hebei Airlines (NTE) plans to expand its fleet to 50 airplanes by 2020 in an effort to enhance its position in N China.

(NTE), the Shijiazhuang-based carrier currently operates 20 airplanes; it introduced 3 Boeing 737s this year. (XIA) General Manager, Jiang Weidong said Hebei Airlines (NTE) is scheduled to take delivery of 2 airplanes by the end of this year, introduce 6 airplanes in 2018, and aims to expand its fleet to 50 airplanes by 2020 to facilitate its rapid expansion pace.

(NTE) plans to boost flight frequencies on routes to China’s major cities from Shijiazhuang and adopt a “2-core operating base” strategy in the future as it is expected to move to Beijing New Airport, which is scheduled to open in 2019. (NTE) also plans to open new route to Taipei, international routes to Osaka and Singapore, and intercontinental routes.

In 2014, XiamenAir (XIA) took over loss-making Hebei Airlines (NTE), which made a turnaround, earning a profit of +CNY10 million/+$1.54 million in 2015 and +CNY135 million in 2016, according to China Business News.

(XIA) makes airplane purchases for (NTE) (and also provides ground handling service to (NTE) on the routes operated by both carriers (Xiamen and Hebei). In addition, Hebei (NTE) also code shares with XiamenAir (XIA) and (XIA)'s parent, China Southern (GUN) on >100 domestic routes from Shijiazhuang and the neighboring cities of Beijing and Tianjin.

Fleet:
(definitions)

Click below for photos:
NTE-737-800 - 2017-02.jpg
NTE-ARJ21 - 2011-11

September 2017:

2 737-75C (CFM56-7B-22) (73-29042, /98 B-2998; 637-30512, /00 B-2658), 2011-12. 8F, 120Y.

2 737-75C (CFM56-7B-22) (1703-34024, /05 B-5212; 1724-34025, /05 B-5215), BANK OF COMMERCIAL FINANCE LSD 2011-12. 8F, 120Y; & 138Y.

4 737-800 (CFM56-7B-22) (B-5660, 2012-10), 8F, 162Y.

1 737-8LW (CFM56-7B) (42970, B-1561, 2016-08; 42972, B-6868, 2017-01). 8F, 162Y.

1 737-85C (CFM56-7B-24) (2105-35046, /06 B-5161), (XIA) WET-LSD 2006-11. WITH WINGLETS. 8F, 162Y.

1 737-85C (CFM56-7B-24) (35057, B-5459), EX-(N1796B), 2015-09. WITH WINGLETS. 8F, 162Y.

2 737-85CF (CFM56-7B24) (2914-35054, /09 B-5456; 4215-38397, /12 B-5660), WITH WINGLETS. 8F, 162Y.

0 A319-132 (V2524-A5) (2396, /05 B-6170), (ILF) LSD 2007-11, (SIC) WET-LSD 2007-12. RTND. 8C, 132Y.

2 EMBRAER ERJ-145 (AE3007A1-2) (317, /00 B-3040; 349, /00 B-3041), (SIC) WET-LSD 2007-12. 50Y.

3 EMBRAER ERJ-145 (AE3007A1-2) (352, /00B-3042; 377, /01 B-3043; 470, /01 B-3045), 50Y.

6 +2/5 ORDERS EMBRAER E190LR (CF34-10E5) (0497, /11 B-3187; 0502, /11 B-3188 - - SEE PHOTO - - "NTE-2011-12 - E190 DELIVERY;" 0561, B-3207, 2012-07; 0566, B-3208, 2012-07). 110Y.

10 ORDERS COMAC ARJ21-700 (CF34-10A), 90Y:

20 ORDERS COMAC C919, 168 PAX:

1 GULFSTREAM G450 (TAY 611-8) (4180, /10 B-8158), 2011-05. EXEC.

Management:
(definitions)

LUO ZHANLING, CHAIRMAN HEBEI AIRLINES (NTE).

GONG DEGUI, CHIEF EXECUTIVE OFFICER (CEO).

ZU YI SHI, PRESIDENT.

 
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