China Eastern Airlines (MU, Shanghai Hongqiao) has signed a new cooperation agreement with the Sanya Municipal Government, and announced the opening of a Hainan branch company.

According to the agreement, the newly established China Eastern subsidiary will be headquartered in Yazhou Bay Science and Technology City in the west of Sanya, located in south China's Hainan Province. However, the newly deployed capacity of up to 50 aircraft will be spread around the province's various airports - Sanya, Haikou, and Qionghai on Hainan Island as well as the future Danzhou Airport.

China Eastern will grow the province's domestic and international connectivity while at the same time develop a premium express service between Haikou and Sanya. The airline will also help develop the province's passenger handling abilities as well as cargo and logistics infrastructure and connectivity.

Though it has no direct presence at Haikou, China Eastern operates 21 (out of 82 total) flights per week out of Qionghai and 78 (out of 1,259 total) out of Sanya. According to Sanya municipality, the Hainan market is mainly controlled by Hainan Airlines (HU, Haikou) and China Southern Airlines (CZ, Guangzhou). In the first half of this year, Hainan Airlines' market share by passenger throughput in Haikou was 27.3%, followed by China Southern Airlines (20.5%), and Capital Airlines (China) (JD, Beijing Daxing Int'l) (9.7%). In Sanya, China Southern ranked first with a market share of 25.3%, followed by Hainan Airlines and Capital Airlines (17% and 11.2%).

Last year, China Eastern partnered privately-owned Juneyao Air (HO, Shanghai Hongqiao) in the establishment of Sanya International Airlines, a new carrier which will use Sanya Phoenix International Airport and the upcoming Sanya Hongtangwan International Airport as bases. However, to date the Civil Aviation Administration of China (CAAC) has yet to consent to the project.