China Southern Airlines has its sights set on forming a joint venture air cargo transport business this year and has so far put forward its proposal to Skyteam Alliance members, including Air France-KLM.

The move to find foreign investors for the airline is part of a plan disclosed last year to operate an airfreight business separately from its passenger operation. The plan calls for a JV air cargo subsidiary to be set up with foreign-owned airline partners, said China Southern deputy general manager Xu Jiebo in a report published in Massachusetts-based Logistics Management magazine.

Existing legislation in mainland China stipulates that a single foreign investor is permitted to hold a 25 per cent stake in a Chinese airline and total foreign capital in a Chinese airline cannot exceed 49 per cent. However, Mr Xu expects the overseas partners to acquire the largest share of the company.

China's air cargo industry recorded a total transport volume of 3.07 million tons in 2005, up 91.2 per cent year on year. The sector is forecast to grow 10 per cent annually over five years, according to the General Administration of Civil Aviation of China.