(Yicai) Dec. 18 -- As China’s southern Hainan province officially starts operating as the mainland’s first free trade port today, airlines and shipping companies are ramping up the expansion of their route networks around the island to capitalize on tax breaks and other preferential policies.

Hainan Airlines has added 78 new flights in the region since November, including more frequent services from the provincial capital Haikou to international destinations such as London, Auckland, Sydney, Melbourne, Moscow and Kuala Lumpur, the Haikou-based carrier told Yicai.

At sea, China COSCO Shipping has rolled out 25 container liner routes at Hainan’s two core ports of Haikou and Yangpu. Of these, eight are domestic routes linking major ports across China, while 17 are international trade routes serving the Americas, Southeast Asia and South Asia, the shipping giant said.

China launched island-wide special customs operations in the Hainan Free Trade Port today, making it the world’s largest FTP by area, allowing freer entry of overseas goods, expanded zero-tariff coverage and more business-friendly measures, Xinhua News Agency reported.

Even before the launch, Hainan had already applied zero import tariffs on a wide range of goods, including transportation vehicles, raw materials, pharmaceuticals and medical devices, all of which benefit airlines and shipping companies.

Thanks to tariff waivers on imported transportation vehicles, Hainan Airlines expects to save more than CNY16 million (USD2.3 million) in taxes during the lease period of an A321neo and an A330 aircraft that it started renting from European aircraft maker Airbus this year, the company said.

COSCO said the FTP’s tax incentives have lowered its costs for purchasing ships, equipment and spare parts, as well as operational costs. On top of that, the FTP’s 15 percent corporate income tax, which is well below the national average of 25 percent, has also helped boost profits.

With the full rollout of closed-loop operations at the Hainan FTP, tax incentives are being expanded both in scope and intensity. The zero-tariff goods list has grown from about 1,900 items to 6,600, covering almost all production equipment and raw materials, which is expected to further cut import costs for companies operating in the region.

Editors: Dou Shicong, Kim Taylor