Belgian Airline Company eying Chinese Investment

 

©Belgaimage

For the second time, Chinese investors are swooping in to rescue Air Belgium, a struggling airline based in the Walloon region. This latest lifeline comes from Sichuan Airlines, marking a fascinating turn of events for the beleaguered Belgian carrier. But what's the driving force behind Chinese companies' interest in Air Belgium, and what does it mean for the future of this European airline? Let's delve into the details!

Sichuan Airlines, one of China's regional cargo giants, has extended its helping hand to Air Belgium. The airline, with its fleet of 192 aircraft, dwarfs Air Belgium's modest fleet of just ten planes. While passenger flights may be one part of the equation, the primary focus for Chinese companies appears to be on cargo operations. Why would a massive state-owned Chinese company invest in a struggling Walloon airline that has faced numerous crises and incurred substantial losses since its inception? The answer lies both within China and on the international stage:

In China, the central government employs regional airlines as catalysts for economic development in underprivileged provinces. Instead of direct financial aid, these carriers receive subsidies for cargo flights, particularly those transporting locally manufactured goods. These subsidies can reportedly reach up to $50,000 per flight.

Europe is an attractive market for Chinese exporters, but landing rights are scarce. Belgium, on the other hand, offers a more accessible gateway. "Unlike neighbouring countries, Belgium does not have a national airline with flights to China that need protection," explains Wouter Dewulf, an aviation economist at the University of Antwerp.

Air Belgium boasts a significant advantage – an abundance of well-distributed landing rights across essential Belgian airports. Coupled with Belgium's central location in Northwestern Europe, this makes Air Belgium an appealing prospect for regional Chinese players. 

The focus on cargo was apparent when Hongyuan, a South Chinese logistics group, initially invested in Air Belgium. Shortly after their entry, several Air Belgium cargo planes were repainted in Hongyuan colors, with only a hint of the Belgian tricolor on the tail.

The recent signing of a new aviation agreement between Belgium and China has further amplified the significance of this investment. This agreement grants both countries increased landing rights for routes connecting them. While China can quickly utilize its expanded rights, Belgium has limited options. Beyond Air Belgium and ASL Airlines Belgium, which operates 15 weekly flights from Liège to China, there are few contenders.

By partnering with Air Belgium, Chinese cargo companies can leverage the coveted flight rights between China and Belgium, meeting their ever-growing demand.

 Nevertheless, before Sichuan Airlines can officially step in as the saviour, a solution must be found to ensure that Belgian shareholders retain at least 50 percent plus one vote. The commercial court will also need to approve Air Belgium's proposed restructuring plan, a decision expected in the coming week.

 

In conclusion, the benevolent hand of the East, represented by Chinese airlines like Sichuan Airlines, is extending a lifeline to Air Belgium. As the Belgian airline grapples with its financial challenges, these investments underscore the strategic importance of cargo operations and landing rights between China and Belgium. While the Belgian carrier's future remains uncertain, the influence of Chinese investors on its trajectory is a compelling development in the global aviation landscape.

Source: De Tijd.

Editor: Jonathan Xu