China United Network Communications Ltd unveiled a joint venture with local partners on Tuesday, as the country's second-largest telecom carrier by subscribers scrambles to offer in-flight Wi-Fi services.
The State-owned company said UnicomAirNet, with a registered capital of 200 million yuan ($29.06 million), will develop communication systems and offer technological support to enable passengers to surf the internet onboard planes.
The new venture is set up by China Unicom's broadband network unit, Chinese on-train Wi-Fi service provider Hangmei Online, and a unit of Sichuan Haite High-Tech Co Ltd, which repairs aircraft equipment.
Jiang Zhengxin, deputy general manager of China Unicom, said the company has been approved by the Ministry of Industry and Information Technology, the country's top telecom industry regulator, to experiment with in-flight Wi-Fi services.
An official license is expected to be granted at the end of this year, another senior executive at China Unicom said.
Guo Man, chairman of Hangmei Online, said while China Unicom has a sprawling satellite and on-the-ground network and operation services, Hangmei Online has an abundance of experience in running on-train and in-bus Wi-Fi services, and Sichuan Haite excels in upgrading planes with new communications systems.
"We are highly complementary in skills and resources, enabling us to establish a beachhead in the in-flight connectivity sector which will soon take off," he added.
Currently, onboard Wi-Fi services are only available in some planes of Chinese airlines. A report by research firm Routehappy shows that 78 percent of airlines in the United States provide some sort of connectivity.
The number in China is 23 percent, according to a local aviation statistics company VariFlight.
But as about 1.2 million Chinese travel by plane every day, an increasing number of consumers requiring internet services.
The move is also part of China Unicom's broad efforts to seek new growth drivers as its core businesses have stumbled in recent years.
Xiang Ligang, a telecoms expert and CEO of telecom industry website cctime.com, said it is investment-intensive to offer Wi-Fi services on flights, but it will be hard to ask Chinese consumers to pay for connectivity.
