China Express bets on subsidised routes, home-grown jets as path to profits

China Express Airlines, a regional carrier based in the southwestern city of Chongqing, is betting that its business model of flying heavily subsidised routes using an increasingly Chinese-made fleet will give it an edge over rivals. The airline reported a 22% rise in annual profit last year - a near-impossible feat in the pandemic-ravaged aviation industry - thanks to subsidies of more than 625m yuan ($97.14m) that accounted for 87% of its total profits before tax. Routes in third and fourth-tier cities, 90% of which are monopolies, helped fuel growth and made it the only listed Chinese airline to make a profit in 2020. That put the previously obscure carrier on the radar of investors seeking faster-growing, domestic-focused alternatives to China's three biggest airlines. "The company has very few direct competitors nationwide, but only faces localised competition on their shared routes," said Wu Yifan, transportation analyst at Huachuang Securities. It is benefiting from Beijing's drive to develop new airports in regional areas, as well as a push for locally built jets to challenge the dominance of Airbus, Boeing and Brazil's Embraer.<br/>