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Large Medium SmallHNA Group, the parent company of Hainan Airlines, will co-establish Urumqi Airlines Co Ltd with the municipal government of Urumqi, the capital of the Xinjiang Uygur autonomous region.
The two sides signed a strategic cooperation framework agreement on Monday, the group said on Wednesday.
The new carrier will be based on Hainan Airlines' Xinjiang branch.
Hainan Airlines, which has the second-largest market share in Xinjiang, operates several routes there.
The new airline will not just run routes inside Xinjiang, but also routes to Central Asia and Europe in the future.
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