It’s been a while in the planning but is now authorized to go ahead properly: JD Airlines has been given the green light by the Civil Aviation Administration of China (CAAC) to start flying its own aircraft. The Air Carrier Certificate starts the ball rolling for some big plans, though the 01SEP22 press release holds back on previous announcements.
31AUG22 was the big day. The CAAC finally awarded an air carrier certificate to Jiangsu Jingdong Cargo Airlines, alias JD airlines – an affiliate of JD Logistics Inc., which, itself, is the
logistics subsidiary of the Chinese e-commerce megacompany, JD.com. And thus, plans that were first publicized in 2017, can start to come to fruition.
Once upon a time in 2017
Back in 2017, JD.com’s Head of Logistics Planning and Development, Bill Fu Bing, announced at a Beijing global logistics forum: “Aviation will be important [for logistics] in the future. Do
we need to buy our own planes or build our own airports? This is something we are looking at.” The trigger had been China’s leading courier company and competitor, SF Express, buying two
Boeing 747-400 freighters. In April that year, JD.com founded a separate logistics unit, JD Logistics, after having done logistics for the past 10 years already.
An airport and an airline
The following year, in 2018, the decision was made to develop an air cargo hub for its logistics subsidiary, and a strategic partnership was signed by JD.com with Nantong’s local government to
create this hub at Nantong Xingdong International Airport. The preliminary approval to set up an airline came in AUG21, leading the South China Morning Post to declare “Richard Liu’s JD.com
to become China’s first e-commerce company with its own airline,” in a headline. In fact, Jiangsu Jingdong [Cargo Airlines] is a joint venture between JD.com (75%) and Nantong Airport Group
(25%), and currently has a fleet of two converted B737-800 (at least one of which sourced from Xiamen Airlines), each capable of transporting 23 tons. Initial cargo charter flights began on
28MAY21 between China and Thailand, followed by China-U.S. on 07JUN21. In MAR22, two further charters took place: from China to Brazil and Germany.
Cargo-plane shopping
In a Bloomberg interview in OCT21, JD Logistics Inc.’s Chief Executive Officer Yui Yu, revealed that the company was aiming for a fleet of “no fewer than 100 planes” by the year 2030 – a
mix of owned and leased. This led Bloomberg to publish an article entitled: “JD Logistics Goes Plane Shopping to Tap Air Freight Demand.” In the same interview, plans were outlined to
build warehouses across North America and Europe, as the company sought to build up cross-border logistics and to bridge the capacity gap created by the pandemic.
Have approval, will fly
Now, with the official approval, JD Logistics is ready to get JD Airlines started. The airline already employs over a hundred technical personnel and will mainly operate out of Nantong Xingdong
International Airport. “On top of meeting the needs of JD Logistics’ integrated supply chain service’s clients, JD Airlines is also opening up its capacity to the market. It now serves
industries including high-end consumption, high-end manufacturing, medical, fresh produce and more,” the release details, going on to say: “JD Airlines will first develop its domestic
air cargo around China’s three major economic circles of the Yangtze River Delta, the Bohai Sea and the Pearl River Delta, with a focus on the cities of Nantong, Beijing, Shenzhen, and Wuxi. It
will soon extend its reach to cities in the middle reaches of the Yangtze River, then Chengdu and Chongqing, and will gradually cover nationwide major cities and Southeast Asia, Japan, and Korea
and later in Europe, Middle East, and North America by the end of 2025.”
Amazon of the East
The 100-fleet plans echo Amazon’s strategy which it may already fulfil this year. How quickly JD Airlines will expand, remains to be seen. JD is up against a number of competitors in the shape of
local courier companies such as SF Express, YTO Express, and Cainiao Network, all of which are growing their air cargo capacities. SF Express’ subsidiary SF Airlines, which started with two
freighters in 2017, meanwhile totals a fleet of 73 (and growing), for example, whilst YTO Express is expecting to operate a 20-strong fleet by the end of 2023. Speaking to China Daily recently,
Han Tao, a researcher at the China Air Transport Association, commented: “The operation of cargo aircraft will be a vital supplement to JD's current supply chain and logistics system, as air
freight transportation could forge greater synergy with the company's Asia No 1 intelligent logistics park, warehousing and sorting centers to build an integrated logistics and delivery network,”
adding that the official start of JD Airlines will “also propel other air cargo carriers to continuously expand more cargo routes, optimize freight capacity and improve service quality.”
Healthy air cargo competition, therefore.
Back to normal, back to stress
China Daily's article points out that “air cargo traffic returned to normal recently after posting a V-shaped recovery in the first half of this year.” Yet Bloomberg news just in on
02SEP22, warns “China’s Economy Faces More Damage as Megacity Chengdu Locks Down.” Though not predicted to be as severe as the Shanghai lockdown, disruption in the country’s
sixth-largest city will again retard production and growth in the country, and possible further lockdowns may – in turn – delay JD Airlines’ expansion plans, too, since a report published by
Nomura Holdings Inc. reveals: “Covid hotspots are shifting away from several remote regions and cities - with seemingly less economic significance to the country - to provinces that matter
much more to China’s national economy.”
Brigitte Gledhill
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