Express giants see value in new Chinese Guangzhou base

The new airport in Guangzhou has made the city more attractive for air express companies to make it their hub, although none has done so yet.

Air express company FedEx Express signed a Framework Agreement with the Guangzhou Baiyun International Airport Company in December with the intention of making it its Asia Pacific hub, but the plan was changed when the Philippines made concessions to keep FedEx in the country, including giving the American company “seventh freedom” rights, which allows a carrier to fly to other destinations from a hub without first passing its home base.

FedEx Express president, Asia Pacific, David Cunningham said the company was still considering how best to expand its hub operations in Asia.

“We are very impressed with the new Baiyun’s excellent facilities, strong management and well-structured plans for future growth,” he said, without expanding on FedEx plans for Guangzhou.

Rival air express company DHL said it would also invest heavily in Baiyun, and aimed to make its network there comparable to its US$100 million hub in Hong Kong.

DHL chief executive, Asia-Pacific, John Mullen said: “Baiyun will grow in importance, and we will be part of that.”

The recently sealed Sino-US air services agreement includes a key concession in providing “seventh freedom”, which allows carriers to ship cargo from the mainland to other Asian destinations without touching down in the United States.

Beijing was willing to grant this clause on condition that American carriers establish cargo hubs on the mainland that will serve other Asian cities.

” The air pact marks a big step for China in liberalising the aviation regime,” Mr Cunningham said.

“China is making the right moves to become one of the premier places in the world to engage in international commerce and trade.

“The new aviation accord between the governments of China and the United States allows American companies to establish hub operations inside mainland China for the first time.

“The investment in this new, state-of-the-art airport is also proof positive … FedEx firmly believes that the new Baiyun International Airport in Guangzhou will be crucial in the economic development of the burgeoning Pearl River Delta for many years to come.”

American cargo and express carriers began to vie for additional air rights to China after the air pact was finalised late last month, but none has yet taken on the offer of making Guangzhou its hub.

FedEx at present has 11 flights per week through three major gateways – Beijing, Shanghai and Shenzhen – and is “looking to add new flights to new destinations thanks to the new air pact”, Mr Cunningham said.