Air China and Cathay Pacific Airways have received permission from the Chinese National Development and Reform Commission to establish an air cargo joint venture, reported IFW. The tie-up still requires the permission of the Ministry of Commerce.

The two airlines initially announced they were forming a JV in February 2010, and a launch date is now expected in the fourth quarter of the year.

It is anticipated that Air China’s existing cargo airline, Air China Cargo, will be the platform for the new venture. Air China Cargo will take control of four Cathay Pacific B747 freighters and the partners will offer international services from Shanghai and Beijing, with a focus on developing its share of the Yangtze River Delta market.

Upon completion of the transaction, Air China will hold 51 per cent of Air China Cargo, while Cathay Pacific will acquire a 25 per cent equity interest and fund an offshore trust, in the form of a loan, to hold the remaining 24 per cent.