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Chinese Internet search leader Baidu ‘s ( BIDU ) online travel service Qunar Cayman Islands ( QUNR ) has reportedly confirmed that its travel operation is preparing to launch an airline, in conjunction with two other China-based companies. The airline startup, to be operated by Qunar and a pair of Shenzhen-based firms, will mainly operate domestic and short-haul international flights to nearby countries, with Qunar leading online sales efforts, said reports by Marbridge Consulting and Travel Daily Media . Competition sparked the move, with nine airlines indicating that they would be temporarily suspending their cooperation with Qunar since the end of 2015 due to a dispute over passenger charges, according to reports by Marbridge and Reuters . “Airlines are also shifting their strategy toward selling tickets directly to consumers in an effort to reduce marketing costs,” said Marbridge. “For example, China Southern Airlines ( ZNH ) announced on Feb. 23 that it was cutting the price of domestic flights bought through its own website by 60%. These actions by Chinese airlines were a key catalyst in Qunar’s decision to set up its own airline, according to Chinese news media reports.” Qunar — nicknamed the “Kayak.com of China” — operates in a rapidly growing travel search market, but price wars and competition have dented its profits and profit margins. The number of Chinese leisure travelers going overseas topped 100 million in 2014, Reuters reported, saying foreign travel is expected to grow 10% this year despite China’s slowing economic growth. Qunar posted Q3 revenue of $208.5 million, up 164% from the year-earlier quarter, but its adjusted net loss more than doubled, to $98 million, as it invests in marketing, product sourcing and product development. But both the top and bottom lines beat the consensus view of analysts polled by Thomson Reuters by about 11%. Qunar reported a net loss of 87 cents per American Depositary Share. In October, Baidu-backed Qunar announced a share swap with Ctrip.com ( CTRP ), another leading Chinese online travel agency. Baidu stock was down 2% in afternoon trading in the stock market today , near 176, while Ctrip.com was down 3%, and Qunar was down a fraction. Scalper1 News
Scalper1 News