China Southern Airlines, Hainan Airlines and Shangdong Airlines are aggressively expanding their short-haul businesses, buying a mix of China- and foreign-made commuter aircraft. China Southern just took delivery of the first two of six mainland-assembled 50-seat ERJ-145s. Hainan Airlines said it is committing US$200 million to buy 20 32-seater Dornier 328s and Shandong Airlines, which opeates 10 Canadian-made Bombardier CRJ-200s, has ordered 10 70-seater ARJ21-700s from China Aviation Industry Corp I. Explaining his company's preference for buying local, one airline executive said carriers pay a 5% duty importing smaller commuter aircraft, as against 1% importing larger planes like the Boeing 737 or Airbus 330. Added to current value-added taxes, the tax bill on commuter imports came to 22%.
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