China Southern Airlines is considering placing an order for up to 12 Boeing 777 freighters, costing US$2.88 billion, according to comments made by deputy general manager Liu Xiaoxiao in a Bloomberg report.

This is in keeping with the company's plans to operate a fleet of 20 freighters, all Boeings, within five years. The mainland's largest airline also placed an order for six 777 freighters in 2006, part of plans to increase market share in Southern China, especially Guangdong.

"Carriers are trying expand in the more profitable cargo business to gain from the economic growth," said Jack Xu, an analyst at Shanghai-based Sinopac Securities Asia. "The appreciation of the yuan and lower oil prices will allow them to continue spending on expansion."

He noted that China Southern's yield from carrying cargo is three times higher than for the passenger side of its business.

China Southern also intends to find a suitable overseas airline partner this year to form a joint venture air freight business, and has so far been holding talks with Air France-KLM, as well as other, unnamed US and Asia-Pacific carriers.

The race to secure a larger share of the mainland's airfreight market is hotting up, with China's airlines raising their cargo volume 11 per cent in 2006 to 3.41 million tons.

Cathay Pacific is adding six Boeing 747 freighter flights each week from its hub in Hong Kong to Shanghai, to operate 18 freighter flights on the route weekly. Cathay is also establishing a joint airfreight transportation firm in Shanghai with Air China Ltd, which will become the largest of its kind in China.

Deutsche Lufthansa and Singapore Airlines among other overseas airlines have also set up joint ventures in China as demand from Europe and the US for air cargo services from China rises, the report added.