Genghis Khan Airlines: what do we know about the new start-up?

In late Aug-2018 the Commercial Aircraft Corporation of China (Comac) signed an order for 50 Comac ARJ21 aircraft, including 25 firm orders and 25 options. The order, however, was not from a well known airline – instead, it was with a company known as Genghis Khan Airlines.


Summary:

  • Genghis Khan Airlines has ordered up to 50 aircraft from Comac, shelving initial plans to operate with Bombardier CRJ900s.
  • The new start-up aims to launch in early 2019 and is a rebrand from Tianjiao Airlines.
  • Genghis Khan Airlines agreed with Comac to establish a flight school and other infrastructure to begin operations.

Situated in Inner Mongolia, an autonomous region of northern China, the new start-up airline referencing the historical figure Genghis Khan is actually a rebrand from the formerly known Tianjiao Airlines. Even before, when the company was Tianjiao Airlines, not much was known about it, which makes a 50 aircraft order even more curious.

Earlier in 2018 the Civil Aviation Administration of China (CAAC) had awarded Tianjiao preliminary approval to operate at a base at Mongolia’s Hohhot Baita International Airport. Tianjiao Airlines had planned to operate domestic, regional and cargo services with Bombardier CRJ900 aircraft, but it looks like these plans have been shelved in favour of ARJ21s. Tianjiao Airlines was also considering Embraer 190s and A320s before its ARJ21 decision.

Image – Genghis Khan Airlines logo

Source: Genghis Khan Airlines

Genghis Khan Airlines may have opted for Comac aircraft due to the potential for quick expansion of operations with that equipment. The start-up’s plans are ambitious, to say the least – aiming for a fleet of 25 aircraft and 40 operated destinations in five years, and a fleet of 50 aircraft and 80 destinations in eight years.

The order would mean that Comac is to deliver the first two aircraft in Dec-2018, and then deliver the remainder over the next five years. This would make Genghis Khan Airlines the second airline to operate the ARJ21 after the Comac-owned Chengdu Airlines.

However, the one factor that potentially moved the start-up’s plans from a CRJ900 to an ARJ21 operator is China’s ‘Rule 96’ policy.

Introduced in 2016, the rule introduced a regulation requiring start-up airlines to operate at least 25 regional aircraft before being permitted into the international market. The only aircraft that meet Rule 96’s regional aircraft seat limits of 100 or less – and are certified to be sold in China – are Comac’s ARJ21, AVIC Aircraft’s MA60 turboprop and Bombardier’s Q400 and CRJ 900 variants. A lack of supply of CRJ 900s could have pushed Genghis Khan Airlines towards the ARJ21.

Investors and technical personnel

In its early 2018 filing with the CAAC Genghis Khan Airlines identified its investor as Inner Mongolia Aviation Tourism Investment Group, with a registered capital of CNY3 billion (USD438.4 million). The start-up is expected to launch in early 2019.

According to the filing, the company is also backed by former personnel from various airlines, including Yunnan Hongtu Airlines, Air China, 9 Air, Qingdao Airlines, Hebei Airlines, China Southern Airlines and Ruili Airlines. In fact, former Qingdao Airlines chairman Tang Huanguang is in charge of preparing the airline for commercial services.

As part of establishing regular operations, Genghis Khan Airlines has also agreed with Comac to establish a flight school, a centre for maintenance, repair and overhaul (MRO) and the Genghis Khan Airlines training centre in Inner Mongolia, according to the airline’s chairman Hao Yutao. Two tranches of pilots have already started training on the ARJ21. This is potentially another factor leading Genghis Khan Airlines to select the ARJ21, with Comac supporting the airline where Bombardier potentially could not.

The Mongolian Statistical Information Service has said that 202,600 inbound tourists visited Mongolia in 1H2018 – an increase of 12% year-on-year. Despite the growth, this includes rail and road transport.

A start-up with 50 regional aircraft operating in such a small inbound tourism market will be interesting, to say the least.