A new bonded maintenance model at Hainan Free Trade Port is cutting costs and red tape for international airlines, positioning the island province as a rising hub for aircraft repair in the Asia-Pacific region.

Dubbed a "duty-free shop" for plane repairs, the initiative offers tax exemptions on imported parts, and waives import guarantees and streamlines Customs clearance.

Local officials said the incentives can slash airline maintenance expenses by 10 to 15 percent.

At a Haikou maintenance base operated by HNA Technic and its subsidiary Grand China Aviation Maintenance, a Mongolian Airlines Boeing 787-9 underwent major repairs in mid-January, the first bonded service for a Mongolian carrier in Hainan. The facility has also serviced aircraft from Thailand, Vietnam and South Korea since its launch in 2022.

Since June 2023, Hainan's bonded policy has allowed tax-free use of repair materials and temporary import permits for planes later sold domestically, a rare feature in global trade zones. Local Customs have accelerated approvals with pre-submitted documentation and dedicated "green channels" for bonded zone traffic.

The reforms are driving rapid growth. In the first quarter of 2025, 19 aircraft and four engines underwent maintenance at Hainan Free Trade Port's one-stop aircraft repair base, with the total value of serviced equipment reaching 148 billion yuan ($20.5 billion), up 72 percent from a year earlier, Haikou Customs reported on April 8.

The growth builds on a record-breaking 2024, when 49 planes and 16 engines entered Hainan's bonded zone for repairs, totaling 311.3 billion yuan in value.

Last year saw Vietnam's VietJet Air complete its first widebody A330 inspection in Hainan, involving engine removal and structural upgrades. Grand China Aviation Maintenance, certified in over 15 countries and regions, including the United States, European Union, Thailand, and Vietnam, credits Hainan Free Trade Port's preferential policies for attracting overseas clients.

With Hainan preparing for expanded Customs operations under its Free Trade Port status, companies are targeting markets in Southeast Asia, the Middle East and beyond.

"Policy innovation and international cooperation will be crucial in making Haikou a full-scale Asia-Pacific maintenance, repair and operation center," said Zhou Junping, chairman of Hainan Development Holdings Co.

The push is believed to be China's strategy to establish Hainan as a high-end service hub amid competition with Singapore and Dubai for aviation repair business.