AirMedia partners with HNA Group to explore the opportunity of in-flight internet service

BEIJING - AirMedia Group Inc., a leading operator of out-of-home advertising platforms in China targeting mid-to-high-end consumers, announced that AirMedia Group Co., Ltd., one of its consolidated entities, has recently entered into a strategic alliance agreement with HNA Xinhua Culture Holding Group Co., Ltd., a subsidiary of HNA Group, to form an industry development fund of in-flight internet to explore the opportunity of in-flight internet service and in-air multimedia platform.

HNA Culture will be responsible for obtaining exclusive rights to develop and operate in-flight internet service and in-air multimedia platform from member airlines of HNA Group. In a power of attorney, HNA Group authorized HNA Culture to act as the exclusive general coordinator for HNA Group's in-flight connectivity project, with full authority to coordinate with all member airlines of HNA Group, HNA Technik, equipment providers and satellite service providers in setting up in-flight internet connectivity for HNA Group-operated airplanes. HNA Group recognizes the documents executed by HNA Culture on behalf of HNA Group in relation to the Fund and the Joint Fund Management Company, including the strategic alliance agreement, as within the scope of such authorization. HNA Group now operates more than 400 airplanes on over 570 domestic and international routes that connect more than 190 cities. Member companies under Hainan Airlines Group include Grand China Airlines, Hainan Airlines, Tianjin Airlines, Lucky Air, West Air, Yangtze River Express, my Cargo, Ghana AWA Airlines, Aigle Azur Airline, HNA Technik, HNA Sales, HNA Aviation Academy, HNA Cargo, myTECHNIC and others. According to a report released by the Civil Aviation Administration of China, Hainan Airlines Group had 42 million air passengers in 2012, representing approximately 13% of the total air passengers in China in 2012.

AM Advertising will act as a limited partner, primarily in charge of fundraising and capital contribution for the Fund. The Fund has a planned fund raising target of approximately RMB1.0 billion, to be adjusted according to the Fund's operational needs. AM Advertising alone commits to invest no less than 40% of the total targeted fund size in the Fund and to provide the remaining portion of the total targeted fund size if it cannot secure other limited partners. The first round of fund raising for the Fund will be RMB400 million, and AM Advertising commits to invest no less than 60% in the first round.

"We are excited about this strategic development in providing enriching in-flight entertainment to air passengers and expanding our revenue sources. Internet has been an integral part of people's daily life, even for air travelers on the go. We believe more and more people will have demand and be willing to pay for in-flight internet connectivity so that they can continue to work, communicate with friends or enjoy online entertainment while in the air. According to an online survey of approximately 300 various Chinese airlines clubs' members conducted by Sinomonitor, a third-party market research firm, in March 2013, 80.6% of the participants in the survey are willing to pay for in-flight internet connectivity. Other than connectivity charges paid by air passengers, we also expect our revenues to come from advertisements on our in-air multimedia platform, revenues from self-operated e-commerce transactions or commissions from sponsored e-commerce companies on our in-air multimedia platform, and sponsorship from advertisers or internet companies for putting their contents or services on our in-air multimedia platform. We believe this business has great potential in China and are happy to partner with HNA Group to explore this great opportunity," commented Mr. Herman Guo, chairman and chief executive officer of AirMedia.

Sourced: TravelDailyNews