Richard Liu’s JD.com to become China’s first e-commerce company with its own airline

  • The authority in charge of civil flights has given preliminary approval for the establishment of Jiangsu Jingdong, a JV between JD.com and Nantong Airport Group
  • JD.com will contribute 75 per cent of the joint venture’s starting capital

Chinese e-commerce giant JD.com, owned by billionaire Richard Liu Qiangdong, is on track to become the country’s first e-commerce player with its own air cargo fleet.

The East China bureau of the Civil Aviation Administration of China (CAAC), the authority in charge of civil flights, has given preliminary approval for the establishment of Jiangsu Jingdong, according to an announcement by the authority on Tuesday.

The air cargo unit will be a joint venture between the e-commerce giant and Nantong Airport Group, with the e-commerce giant contributing 75 per cent of the starting capital. Nantong is located in eastern China’s Jiangsu province, also the home province of JD.com founder Liu, who was born and raised in Suqian, a city in the northern part of the province.

The joint venture will become the first cargo airline in China funded by an e-commerce platform and the country’s third private cargo airline after SF Express and YTO Express.

JD Logistics, JD.com’s logistics arm which raised HK$24.6 billion (US$3.2 billion) in May when it went public in Hong Kong, has yet to announce a detailed investment plan for the fleet. The company’s share price gained 3 per cent on Wednesday.

Richard Liu, CEO and founder of China’s e-commerce company JD.com, speaks before ringing the opening bell at the NASDAQ

As of June, JD Logistics had air delivery services in 300 cities with 100,000 air routes throughout the country, all through various partnerships with the country’s bevy of airlines, including Zhejiang Loong Airlines and Zhongyuan Longhao Airlines. The company has also bought freight services from China Southern Airlines, China Eastern Airlines and Hainan Airlines.

Alibaba Group Holding, China’s largest e-commerce player, has taken a different approach by cooperating with various airlines. Its logistics arm Cainiao works with over 3,000 partners globally. Alibaba is the parent company of the South China Morning Post.

The National Development and Reform Commission (NDRC), China’s state planner, said last year that it will support cargo airlines to expand their fleets and build one or two hub airports for cargo carriers by 2035.

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Shenzhen-based SF Holding, which operates SF Express and is also known as the FedEx of China, is building a new air cargo hub in the central province of Hubei. The company hopes the 2.3 billion yuan (US$355 million) project can rival FedEx’s Memphis base.

In the first half of 2021, the country’s cargo freighter fleet delivered 3 million tonnes of cargo, down 15 per cent from the same period last year, according to the CAAC.

Author: Minghe Hu, SCMP

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