Shanghai-based privately owned carriers Spring Airlines and Juneyao Airlines have recently announced plans to raise funds for new aircraft and expansion into online-to-offline (O2O) businesses, Guangzhou's Time Weekly reported.
Juneyao announced a plan on July 14 to raise 2.7 billion yuan ($435 million) from private investors for the purchase of four Airbus A320 jets and three spare engines, as well as a plan to enter in a joint venture with travel site 117go.
China budget carrier Spring also bared plans to raise 4.5 billion yuan ($725 million) via private placement for 21 A320 jets, information system and e-commerce projects, the report said.
According to the report, the plans of the two carriers, which went public this year, indicate that airlines are trying to build new revenue sources by expanding into the O2O business.
Spring also plans to pour in 800 million yuan ($129 million) for the upgrade of its information system and to equip its aircraft with WiFi equipment, as well as develop an e-commerce platform. The company said that they are hoping to complete the WiFi installation across its fleet by 2018. The company added that passengers can have access to cross-border e-commerce through their cargo services, network and logistics operations, while their in-flight WiFi service will provide a portal for e-commerce activities.
On the other hand, Juneyao, a full-service carrier that serves mainly business and leisure travelers, also plans to set up an e-commerce platform in collaboration with 117go.
"117go has a wide range of travel products and a massive user base. It covers several popular domestic and overseas destinations and has a professional online product development team," Xu Junmin, secretary of Juneyao's board of directors, said.
Xu said that they also plan to create an online travel service that will offer visa application services, tours and transportation, accommodation, and airport pickup services.
The report said that three major state-owned carriers--Air China, China Eastern Airlines and China Southern Airlines--and Hainan Airlines are all trying to establish their positions in e-commerce and WiFi service, which is seen as a key for their expansion into e-commerce or O2O businesses, the report added.