China Eastern Airlines grows rapidly in Kunming-Southeast Asia market but at expense of yield

There can be too much of a good thing, even precious slots at China's major airports. Kunming released new slots simultaneously, sparking a market share battle. Kunming's largest carrier, China Eastern Airlines, is increasing frequencies by 37% and seat capacity by 47% in the peak summer period in 2014 compared to 2012. China Eastern has broadly been able to maintain market share, with only a 1ppt decrease, but this has come at the cost of declining yields.

China Eastern undertook rapid growth in the Kunming-Southeast Asia market and saw international yields decline by 9%, largely due to the Kunming expansion. Kunming is becoming a more important part of China Eastern's hub strategy as it uses Kunming's southern geography as a hub for South and Southeast Asian flights. This is allowing China Eastern to alleviate growth pressure at its slot constrained Shanghai hubs; North Asia and regional Hong Kong/Macau/Taiwan services are growing faster out of Shanghai than Southeast Asian flights from Shanghai. China Eastern now has more capacity to Chiang Mai from Kunming than it does from Shanghai.