Popular Chinese travel site is starting its own airline

Plane mock-up by TiA.

Qunar, the Baidu-backed travel booking website, released an unexpected piece of news earlier this week: the company is going to start its own airline.

This is like Uber making its own car – something that sort of makes sense at first glance, but is also deeply complex in a way that the company might not be ready for.

Qunar isn’t doing it alone. According to Caixin (link in Chinese), Qunar is joining two co-founders in the venture, and will focus primarily on the ticketing and tech side of the airline.

Any travel website is only as good as the deals that it has on offer.

The co-founders have not yet been made public. Qunar will be a minority shareholder, and Caixin speculates that a major investor may be the Baoneng Group, which is reportedly in the process of launching its own airline in Shenzhen.

We are still waiting for comment from Qunar for more specifics, but we so far we know that the airline will be based in Shenzhen, focus on budget travel, and will complete both international and domestic routes.

A bold – but necessary – move

This news comes after an eventful winter for Qunar. In January, a number of Chinese airlines – including giants like China Eastern and Hainan Airlines – revolted against the firm over a dispute regarding discounts and the style of the listings on Qunar’s website.

Any travel website is only as good as the deals that it has on offer. January’s uprising against Qunar showed that the company’s entire model – especially its discounts – was dependent on currying favor with major airlines, and hoping that its competition couldn’t make them a better deal.

By owning a stake in its own airline, Qunar will be able to sidestep this problem. But running an airline isn’t exactly a risk-free proposition. The airline industry is a notoriously difficult one: profits are linked to many things outside of the company’s control (like oil prices) and margins can be razor-thin – it’s been dubbed “an industry that has been notorious for destroying capital.”

Qunar’s investments will not only give it an inside advantage for discounts and ticketing for its own line but also bragging rights against its main competitor – and incestuous part-owner – Ctrip. That is, of course, until Ctrip decides to get involved in the airline game as well.