Home' Asian Aviation : AAV Sept 2010 Contents 28 AsianAviation | SEPTEMBER 2010
According to statistics released by
the Civil Aviation Administration
of China (CAAC), Chinese
airlines recorded a 36 percent
increase in international traffic
for the 12 months ended 30 June,
while domestic carriers saw 18.6 percent growth.
The gains come thanks to China's booming
economy, the increasing number of a uent Chinese,
demand for travel to the Shanghai Expo, which
is being held from 1 May to 31October, and the
global rebound in air travel. e country's economy
grew 11.1 percent in the rst half of the year and is
projected to expand 9.2 percent in 2010.
CAAC Deputy Director Wang Changshun says the
airline industry is beating performance expectations
and has tremendous potential for continued growth.
e CAAC has predicted that Chinese airlines'
combined profit will surpass 18 billion yuan
(US$2.65 billion) in 2010. Last year, the airlines
posted a pro t of 7.4 billion yuan, a stark contrast to
their 31.8 billion yuan loss in 2008.
Domestic carriers reported pro t of 5.2 billion
yuan for the rst half of this year, while the result for
international carriers was still being nalised as Asian
Aviation went to press.
China's four largest carriers by eet size -- China
Southern Airlines, China Eastern Airlines, Air
China and Hainan Airlines, in that order -- expect
their pro t for 2010 to more than double. e
appreciation of the yuan against the US dollar is
expected to reduce the airlines' debt.
China Southern operates a eet of 400 aircra ,
with a network of 150 domestic and 40 international
Wang says that a er a series of mergers and acquisitions
over the past ve years, China's market is being ser ved
by fewer, but much stronger, airlines. e carriers are
also in the process of expanding eets, while enhancing
their in- ight product to compete with global rivals.
Air China Senior Vice-President He Li says the
airline is investing signi cantly in its in- ight o ering,
as passengers are getting very choosy. is investment
will cover catering, seat comfort and in-flight
"We have to invest, as there is still a di erence
in ser vice quality between China's airlines and
international carriers," he says. e carrier hopes that
ser vice improvements will help boost its premium-class
London-based research rm Skytrax awards China's
three largest carriers three-star ratings (out of a possible
ve) for in- ight service.
Air China is planning to increase eet capacity
by 12 percent this year to meet increasing travel
demand. e airline has rmed up plans to order 20
Boeing 737-800s, ten of which will be assigned to the
carrier's wholly-owned subsidiary, Shenzhen Airlines.
Deliveries are scheduled to take place from the rst
quarter of 2013 through to the third quarter 2015.
The aircraft will be deployed on domestic and
regional routes to South Korea and Japan. Air China
currently has another 130 Boeing and Airbus aircra
on order. e Chinese ag-carrier operates a eet of
269 aircra , covering 258 domestic and international
A er failing in 2008 to secure Singapore Airlines
as a strategic partner, China Eastern is hoping it will
be successful this year in teaming up with a pro table
airline. e carrier's chairman Liu Shaoyang says he
is interested in a successful carrier that could o er
Liu does not rule out the possibility of establishing
a partnership with another SkyTeam member. China
Eastern will o cially join the SkyTeam global alliance
in June 2011.
Liu acknowledges that although China Eastern is
nancially more stable than in 2008, it still needs a strategic
investor to enhance competitiveness internationally.
China Eastern, which ordered 16 Airbus A330-200s
in March to expand its international network, will
take delivery of the aircra from the rst quarter 2011
through to mid-2014. e jetliners will be deployed on
ser vices to Europe and Australia.
e carrier reported a pro t of 540 million yuan
(US$79.85 million) last year, and predicts a four-fold
increase in 2010. It merged with Shanghai Airlines
early this year to strengthen its position in Shanghai
China Eastern will set up a new joint-venture airline
in Kunming with the Yunnan provincial government
as part of the carrier's plan to tap the booming south-
western market. The Shanghai-based carrier will
hold a 65 percent stake in the new venture, with the
remaining 35 percent held by the Assets Super vision
and Administration Commission (ASAC) of Yunnan
e airline will have start-up capital of 3.66 billion
yuan, with China Eastern providing 700 million in cash
and 1.68 billion yuan in kind. e new carrier, which
will be based at the Kunming Wujiaba International
Airport, will start operations next year using a eet of
single-aisle Airbus A320 aircra .
China Eastern entered the province in 2003 a er
acquiring Yunnan Airlines as part of the restructuring
of the Chinese aviation industry.
Meanwhile, privately-owned Spring Airlines has
secured CAAC approval to operate international
flights. According to company Chairman Wang
Zhenghua, the carrier has yet to decide when it will
launch the ser vices.
"It will take quite some time for us to rm up the
date, as there is a lot of planning to do, including
acquiring more aircra ," Wang said. Spring Airlines is
planning to begin ights to Hong Kong , Macau, Japan,
South Korea and Russia. n
China's airlines are experiencing a surge in domestic
and international travel demand that will more than
double their profits this year, writes William Dennis.
China Eastern is hoping to secure a strategic
partnership with a profitable airline this year. Credit: Airbus
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