China Eastern Airlines created a Beijing Branch Company in order to establish itself further in the capital, where its passenger traffic has increased 15% over the past two years but its market share is just 11%. The Shanghai-based carrier noted that Beijing offers greater opportunities due to its location and next summer's Olympic Games. "We can take advantage of our Beijing Branch Company to expand our network in the Beijing-centered northern region," MD Cao Jianxiong said.

Expanding in Beijing is becoming an attractive option for Chinese airlines based outside the capital. Guangzhou-based China Southern Airlines set up a Beijing Branch Company in late 2005 in order to extend its international network. Hainan Airlines parent HNA Group will base its Grand China Air in Beijing, and Air China is attempting to hold off the competition with a 2.27 billion yuan (US$299.6 million) investment in an expansion of its Beijing operation this year.

Separately, CEA President Li Fenghua revealed that the relevant government bodies are supportive of its 25% stake sale to Singapore Airlines and that approval should come very soon.