Travel Weekly's Asia-Pacific E-letter: Jan. 4, 2007

MESA AIR GROUP signed a joint venture agreement with Shenzhen Airlines to create a Chinese regional airline, provisionally called Beijing Airlines. China Daily, the official newspaper of China's ruling Communist Party, reported a $64 million investment in the new airline: 51% from Shenzhen, 25% from Mesa and 24% from Wilmington Trust in Delaware. Mesa won't confirm how much it invested. But it did talk about the companies' plans for the regional carrier and what it will mean to Mesa's business. The plans call for the new regional carrier to begin domestic service within 12 months with 50-seat regional jets. Routes will primarily serve cities in the western and southern regions of China that don't get much, if any, air service today, said Mesa spokesman Paul Skellon.


SHENZHEN AND MESA expect the new carrier to have 20 of the 50-seat regional jets in service prior to the 2008 Olympic Games in Beijing. They expect to operate more than 100 50-, 70- and 90-seat aircraft within five years. Shenzhen Airlines, founded in 1992, currently operates a fleet of 45 A320 and 737 airplanes, flying 100 routes within mainland China and Southeast Asia. It carried nearly 5.3 million passengers in 2006. The airline's headquarters are in Shenzhen, in southern China's Guangdong Province. Mesa said it believed China was wide open for regional service because the country currently has just 70 regional jets in operation, flying for seven carriers. The plan calls for the new carrier to feed traffic to Shenzhen's hubs, like the hub-and-spoke systems that developed in the U.S.

IN OTHER AIRLINE NEWS, the Qantas board of directors unanimously endorsed a buyout offer of $8.7 billion from a private equity group that includes Texas Pacific. The board recommended that Qantas shareholders approve the offer from Airline Partners Australia, which would acquire 100% of Australia's dominant airline. Airline Partners Australia includes Onex Partners, Allco Equity Partners, Allco Finance Group, Macquarie Bank, TPG and others. In the Qantas deal, TPG, based in Fort Worth, Texas, would have a 25% economic stake and control of 15% of the voting rights. Qantas, which is profitable, limits any foreign shareholder's investment to 25%. The buyout of the airline is subject to regulatory and shareholder approvals.

HILTON HOTELS' QASR AL SHARQ, or Palace of the Orient, will join the Waldorf-Astoria Collection, Hilton's new luxury hotel brand. The hotel will become the first international property in the collection. Qasr Al Sharq, a 46-suite hotel in Jeddah, Saudi Arabia, opened on June 1 as Hilton's fourth hotel in the kingdom. The Waldorf-Astoria Collection currently has four properties in the U.S.: the Waldorf-Astoria in New York, the Grand Wailea Resort Hotel & Spa in Hawaii, the Arizona Biltmore Resort & Spa in Phoenix and La Quinta Resort & Club in La Quinta, Calif., near Palm Springs.


" W Hotels Worldwide plans to open its second hotel in Dubai, United Arab Emirates, its third property in the Middle East. W Dubai-The Palm is scheduled to open in late 2009. W already has the W Dubai-Festival City and the W Doha in Qatar. Starwood Hotels, W's parent company, entered into an agreement with Al Sharq Investment to manage the hotel. W Dubai-The Palm will have approximately 400 rooms, multiple restaurants and a bar and spa.

" InterContinental Hotels Group is due to open the InterContinental Dubai Festival City in the summer. The hotel will have 501 rooms; all rooms will have a choice of views, including the Dubai Creek, the Festival Marina or the shopping center. The InterContinental Dubai Festival City will feature a Japanese restaurant with an open kitchen and a Lebanese eatery.

Asia-Pacific Editor: Jorge Sidron

Phone: (973) 898-0011

[email protected]

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