China Southern Airlines plans to partner with Chongqing Investment Corp. to create Chongqing Airlines, which is expected to launch operations in June with three A320s.

The new carrier is expected to be approved by CAAC next week. China Southern holds 60% with an investment of 720 million yuan (US$93 million) while Chongqing Investment has put in 480 million yuan for the remaining stake. Chongqing Airlines aims to challenge Air China and China Eastern Airlines, the two dominant players in western China, for both passenger and cargo traffic.

China Southern cited its wish to "explore the western China air transport market" as the main reason for the venture, saying the region's market potential "is really big now."

In December 2005, HNA Group signed a framework agreement with Chongqing Real Estate Group to start a Chongqing Airlines. HNA planned to hold 75% with an investment of 60 million yuan with CREG investing 20 million yuan for the remainder. That airline has not been approved by CAAC.

CAAC regulations prohibit two carriers operating under the same name. On April 4, HNA said it would cede the name to China Southern and call its new carrier Western Airlines instead.