China Eastern Airlines turns Beijing unit into budget carrier

(Adds details from chairman, context)

BEIJING, July 2 (Reuters) - China Eastern Airlines Corp

said on Wednesday that it has officially transformed

its Beijing-based full-service subsidiary China United Airlines

into a budget carrier.

China Eastern will also increase the number of planes in

China United's fleet to 80 by 2019, from 26 as of the end of

May, the carrier said in a statement. It was not immediately

clear whether the airline would order more planes, or use

aircraft from its parent's fleet.

China Eastern Chairman Liu Shaoyong told reporters China

United hopes to bring on board a strategic investor.

The launch of China United may also raise questions about

the fate of Jetstar Hong Kong, a budget carrier jointly owned by

China Eastern, Macau gambling mogul Stanley Ho and Australia's

Qantas Airways Ltd.

Intended to be the only low-cost carrier flying from Hong

Kong, Jetstar Hong Kong has faced delays in securing its airline


China's airline market, which is dominated by state-owned

carriers China Eastern, China Southern Airlines and

Air China, is believed by analysts to be on the cusp

of a low-cost travel boom.

Northeast Asia, especially, is seen to be a laggard in the

low-cost air travel market, with only a handful of small

carriers flying in Japan and South Korea.

($1 = 6.2115 Chinese Yuan Renminbi)

(Reporting by Fang Yan and Koh Gui Qing; Editing by Ryan Woo

and Miral Fahmy)