Yield pressure for China Southern Airlines as it deploys A380 to Sydney

While China Southern's announcement to serve Sydney from Oct-2013 with the A380 may be good for Australia at large, for China Southern there are limited upsides besides strategic ambition and slowly ending its negative perception from not being able to use the A380 in international markets.

The carrier will replace one A330 Sydney service with the A380, generating a 41% increase in capacity, which will likely make the service loss-making for some time. Sharper increases will occur in the premium cabins, where daily business class seats will rise from 48 to 100 and first class from four to eight.

The increase in capacity will occur in an already over-saturated Australia/NZ-Asia market, which is seeing increased capacity from AirAsia X, Air New Zealand, Emirates, Qantas, Scoot and Singapore Airlines.