China’s Juneyao Airlines reported a 2019 first-half net profit of CNY578.7 million ($84.3 million), down 6.4% compared to the year-ago half.

The Shanghai-based carrier earned CNY8.1 billion in revenue, a 16.3% year-over-year (YOY) improvement, while costs outpaced income growth at 19.9% YOY to CNY6.9 billion.

Costs were attributed to expanded network and operational expenses such as landing fees. Juneyao added the larger Boeing 787 fleet added to the landing fees, which are significantly more than the Airbus A320.

Some other notable expenses were new research and development costs of CNY17 million for information processing systems, and expanded borrowings of 73% YOY.

In the reporting period, Juneyao carried 10.8 million passengers, up 19.3%, with all markets showing growth in excess of 18%. International carriage was the strongest at 25.8% YOY growth.

Total RPKs and ASKs grew at 15.5% and 16.1%, respectively, resulting in a 0.4-point decline in load factor to 85.3% YOY. RPKs experienced double-digit growth in all markets. 

With hubs in Shanghai and Nanjing, Juneyao hopes to strengthen the development of its Guangzhou base under the banner of subsidiary LCC Jiuyuan Airlines. Jiuyuan currently operates from Guangzhou Baiyun International Airport and is the only LCC based there.

Juneyao hopes to attract the price-sensitive market and is targeting growth of the Pearl River Delta region.

Juneyao said tourism between China, Japan and South Korea is warming up and—following the first intercontinental Shanghai-Helsinki service that launched June 28—its international network entered a “new stage of development” and is participating in international exchanges and working toward the opening routes to Britain and Greece.

Chen Chuanren,