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Okay Airways, China's first private airline, yesterday signed a lease-to-buy contract for 10 MA60 turboprop aircraft produced by China Aviation Industry Corp I's subsidiary in Xi'an.

 

The Tianjin-based airline will lease the 60-seat regional aircraft from AVIC I International Leasing Co Ltd. The contract, worth 1.33 billion yuan, is the company's first commercial aircraft leasing deal since it was launched at the beginning of this year.

 

It is also the first time that the MA60 has entered the Chinese aviation market in one batch.

 

AVIC I Xi'an Aircraft Industry (Group) Co Ltd, the aircraft's producer, will deliver the first two leased MA60s to Okay at the end of this year, with the rest coming in the following two years.

 

Okay will use the aircraft to explore feeder-line service markets in Northeast, Northwest, North and Central China.

 

"This is the first time the MA60 entered the domestic market through financial leasing and it will lay a good foundation for the aircraft to serve the Chinese market in large numbers in the future," Lin Zuoming, general manager of AVIC I, said at the signing ceremony.

 

"We believe leasing is a very good way to promote the sales of domestically produced commercial aircraft," Lin said.

 

He added that leasing will also be an important means for AVIC I to market its ARJ 21 regional jet. The 70-100 seat ARJ21, developed with China's own technology, will have its first flight in 2008 and enter service in 2009.

 

AVIC I International Leasing, in which AVIC I holds a controlling stake, was established at the end of January. The remaining stakes are shared by 13 domestic aviation-related enterprises and research institutes.

 

Leasing is an economical way for airlines to expand their fleet quicker with less money. China's aircraft leasing market is now almost 90 percent controlled by international companies.

 

Okay President Liu Jieyin said the Ministry of Finance and the General Administration of Civil Aviation are likely to design subsidy programs for the use of the MA60.

 

To encourage the growth of regional aviation, the government would also offer airlines new incentives, including reduced landing fees, Liu said.

 

Okay launched its first flight in March 2005 and operates three B737 passenger jets, three B737 freighters and two Y-8 general-purpose aircraft. It signed a framework agreement during the Zhuhai Air Show last year to buy 30 MA60s, the largest single order for the aircraft in China.

 

(China Daily July 19, 2007)