Mesa Air CEO Jonathan Ornstein revealed an interest in forming a joint-venture operation with one or more Chinese airlines that could see a boost of regional jets within the country connecting mid-sized cities.
Moving across the Pacific into a significantly different regulatory and operating environment would be a huge jump for Mesa, but Ornstein said, "Nothing is on the table" in the short term, and some sort of Chinese venture is a more long-term project. The carrier is serious about the opportunity, however, as Mesa CFO Peter Murnane recently made a trip to China and met with as many as seven Chinese airlines to share ideas and discuss potential cooperation.
"This could be a growth area for us," Ornstein said. "If there is an opportunity, Mesa could be involved." Ornstein characterized the project as a "serious marketing effort."
He noted that there are only 40 regional jets in China, as most of the focus is on connecting the larger population centers with larger aircraft. There is a "significant number of cities" in the middle of the country that could be connected with smaller jets. "It's not like there isn't enough traffic," Ornstein said. He is not sure yet how a possible joint venture would be structured, as there are strict foreign investment and labor rules in China.
Ornstein has had conversations with several large aircraft lessors, including GE Commercial Aviation Services (GECAS), which is growing business in China. "Every time you talk to lessors, they talk about Asia," Orstein said. Last month, GECAS CEO Henry Hubschman told an industry conference that he has started to lease aircraft to the "second tier" of Chinese airlines, which have significant growth plans.
International Lease Finance Corp. CEO Steven Udvar-Hazy went as far as to suggest that he would rather deal with Chinese carriers than those in the U.S., as the Chinese airlines "have been more loyal and faithful in making their lease payments than U.S. carriers" (DAILY, March 30). ILFC has placed more than 150 aircraft in China, Hong Kong and Macao, Hazy said.
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