China Eastern Airlines and AVIC I launched their Joy Air joint venture in Beijing Friday with an eye on supporting the development of domestically produced aircraft and tapping the regional market in western China.

The new regional carrier celebrated its launch by signing a letter of intent to purchase 10 ARJ21s. Joy is based in Xi'an, which is becoming a key hub in the west, and has registered capital of CNY1 billion ($142.4 million). AVIC I is Joy's controlling shareholder with a 60% stake and an investment of CNY600 million, while CEA will contribute CNY400 million and hold the remaining 40%.

AVIC I MD Lin Zuoming noted that the Chinese manufacturer intends to boost Chinese-made aircraft sales through the launch of Joy, which originally was designated "Happy Air." AVIC I Vice MD and Joy Air Chairman Hu Wenming said at Friday's ceremony that the "MA60 and ARJ21 will be our fleet type and we plan to increase the fleet number to 100 in the next eight years." The first 90-seat ARJ21-700 is expected to be delivered to Shandong Airlines in September 2009, so Joy will operate MA60s initially.

CEA Chairman Li Fenghua noted that the new venture will prioritize "cost control" in order to attract more passengers with lower fares. "Joy will establish a broad regional route network in West China, which will be connected with CEA's trunk route network so that passengers can enjoy a more convenient and efficient trip," he said. He expressed confidence that the airline will be a financial success, although so far China's three main regional carriers--China Express Air, Grand Xinhua Express and Kunpeng Airlines--operate at a loss.

"Currently there are more than 100 regional airports in China and the Chinese government is going to construct 45 more regional airports by 2010, which will provide a broad development space for Joy," he explained.