China Southern Airlines announced on Friday that it will invest 10 billion yuan (about 1.5 billion U.S. dollars) to establish a subsidiary corporation in Xiongan New Area in Hebei Province, reports thepaper.cn. One-quarter of the investment will be in the form of cash, and the remainder will be an in-kind contribution of aircraft.

A China Southern Airlines aircraft. (Photo: VCG)

China Southern Airlines is the first of China's three state-owned airlines (the other two are Air China and China Eastern) to establish a subsidiary corporation in Xiongan New Area and offer civil aviation transport services in the new city.

The subsidiary company will provide domestic and international passenger services, along with cargo transport, aircraft maintenance, and sales services.

In its announcement, the company said that the new subsidiary will also support its operations in its Beijing hub, and increase its market presence.

In April 2017, China announced its plans to establish Xiongan New Area, a new city in Hebei Province about 100 kilometers southwest of Beijing. Xiongan is the third "new area of national significance" to be established, following the Shenzhen Special Economic Zone and Shanghai Pudong New Area. The government's plan is to use the new city to better coordinate the development of Beijing, Tianjin, and Hebei, and to be a new home for government agencies and businesses that can be relocated from Beijing.