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China’s 1st Private Airline Suspends Flights Early

Posted in Airline News, Okay AirwaysNo comments

China’s first private airline began a one-month suspension of passenger service because of financial and management woes Saturday, 10 days ahead of schedule, state media reported.

Okay Airways has been locked in a messy dispute with its controlling shareholder. News reports this week said the Civil Aviation Administration of China ordered the flight suspension at the request of the shareholder, Shanghai-based Junyao Group Co.

A Junyao spokesman told the official Xinhua News Agency that Okay Airways suspended passenger service Saturday. An airline spokesman had said Thursday that the one-month suspension would start Dec. 15.

Xinhua did not explain why the suspension started earlier than expected. Officials at the airline could not be reached for comment Saturday.

Several hundred passengers stranded at the airline’s hub in the northeastern city of Tianjin had to be transferred to other flights, Xinhua said.

The economic slowdown has hurt all of China’s airlines, but the country’s handful of private carriers cannot count on the kind of huge government bailouts that several state-run carriers are now seeking.

The loss-making Okay Airways is also caught in a dispute with Junyao about how the airline should be run, Okay Airways spokesman Li Wei said in a phone interview Thursday. Staff at Junyao refused to comment.

Okay Airways became China’s first private carrier in 2005. Its 11 planes fly more than 20 domestic passenger routes, and its cargo operations are a local partner of Fedex Corp. The cargo operations are expected to continue.

The airline and Junyao agreed in March 2006 to share personnel, routes, marketing and managerial expertise as they struggled for a footing in China’s intensively competitive air transport market.

But relations between the two are troubled.

Junyao recently dismissed Okay’s president, Liu Jieyin, Xinhua reported Thursday, citing Wang Junjin, who is chairman of both Junyao and Okay.

It said that Wang had promised not to cut jobs or reduce salaries during the one-month flight suspension.

The report said flights were due to resume in mid-January, just ahead of the Lunar New Year peak travel period.

It wasn’t clear Saturday how the early suspension of flights would affect that plan.

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