- CAPA Analysis
- Airline Comparision
- Airline Non-Stop Connectivity
- Airline Groups
- Airline Aggregator
- Airport Groups
- Airport Comparision
- Airport Non-Stop Connectivity
The much-celebrated growth of Chinese tourism is not occurring evenly. An additional 3.8 million Chinese visitors travelled to core Northeast and Southeast Asia in 2014 compared to 2013, representing 19% growth. But this growth was concentrated exclusively in Northeast Asia while Southeast Asia actually contracted. This excludes Thailand, which is earning its "Teflon Thailand" reputation: after flat performance over much of 2014 due to political uncertainty, Chinese visitors have sprung back up to all time highs. Its neighbouring countries are far less fortunate. It is little wonder Korea, Thailand and Japan are the largest growth markets for Chinese airlines.
Despite weakness in Southeast Asia, foreign airlines are typically not planning to further reduce capacity. As one example, Singapore Airlines instead plans to link outbound China traffic with other markets, such as Australia.
Rapid growth within Northeast Asia now means that Chinese visitors have come to define tourism profiles: they accounted for 18% of all visitors to Japan in 2014, 43% to Korea and 40% to Taiwan. Such high shares become contentious locally – and risks that countries and airlines need to carefully manage.
Sichuan Airlines is due to take delivery of an Airbus A320 family aircraft on 22-May-2015, giving the Chengdu-based carrier 100 aircraft. Sichuan becomes the seventh airline in China to have a fleet of 100 or more aircraft. Globally Sichuan will be the world's 50th largest airline by fleet size. Sichuan intends to take another 100 aircraft over the next decade.
Sichuan's hinterland is mostly in China's west, from Xi'an and Kunming to Chengdu and Chonqging, although it also has a large presence along China's eastern seaboard. Sichuan carried just under 20 million passengers in 2014, almost all domestic.International flying, which accounts for 9% of Sichuan's seats in May-2015, is mostly around Northeast and Southeast Asia but limited long-haul links extend to Australia, Moscow and Vancouver.
All of China's Big Three airlines – Air China, China Eastern and China Southern – have a direct or indirect stake in Sichuan Airlines, creating competing interests in China's booming west.
American Airlines' 07-May-2015 launch of daily Dallas-Beijing services gives Dallas/Fort Worth airport, in the space of a year, its trifecta of Greater China destinations: Beijing, Hong Kong and Shanghai. Dallas becomes the 10th North American airport to offer flights to the three cities. Four airports – Los Angeles, New York JFK, San Francisco and Vancouver – have services to additional cities; San Francisco has the most with six greater China destinations.
The Dallas-Beijing service also cements a turning point for American Airlines' Asia network, which in 2015 will be larger in mainland China than Japan, the historical Asian focus for US airlines. American in 2015 will have 22% more seats to mainland China than Japan. United also will now have an 11% larger network in China than it has in Japan in 2015. Delta remains anchored on Japan, with twice as many non-stops seats there as to China, although the gap has been narrowing.
China's regulator the CAAC decreed that Air China is the largest carrier in the China-US market, ending the "domination" of US carriers. However this was based on Air China operating to six US cities while the largest US carrier, United, links China with only five US cities.
On almost every other metric – seats, frequency, city pairs – United (Air China's Star Alliance partner) is far larger and will grow in 2015 as it expands its Chengdu service and adds a second daily flight from San Francisco to Shanghai, the first example of a US carrier having more than a daily flight on a Chinese routing.
Perhaps more important though is the fact that the CAAC saw fit to announce the comparison, a clear statement that China's international airlines are on the march, particularly in one of their most important strategic markets.
Delta Air Lines and Virgin Australia are seeking re-authorisation for 10 years from Australian regulators for their joint venture. The US DoT initially took longer to approve the alliance but gave indefinite approval. Virgin continues to need Delta as a partner more than Delta needs Virgin, owing to the numerous connections from US gateways Virgin needs access to. The two will account for 25% of 2015's seat capacity compared to a much larger 56% for Qantas, with the remaining 19% held by United.
There have been limited developments from the smaller carriers, and Delta and Virgin have offered little growth. Nor in their application do they suggest further growth is on the horizon. Virgin Australia is short on long-haul aircraft and anyway is focused on its core domestic market. Delta has a much larger globe to tend to. United has made incremental changes while Qantas has grown the most. Given market dynamics, there is little prospect for a new entrant.
AirAsia nears 50 million annual passenger/200 aircraft milestones, having transformed Asian aviation
AirAsia ended 2014 having carried about 50 million annual passengers and with a fleet of nearly 200 aircraft across its portfolio of eight airlines. Nearly 280 million passengers have flown on AirAsia since its launch at the end of 2001.
AirAsia has had perhaps the most remarkable run by any airline in history and almost single-handedly shaken up Asia’s aviation industry. The LCC penetration rate within Southeast Asia is now nearly 60% compared to near zero in 2001.
AirAsia becomes the first airline brand in Asia outside China to carry 50 million passengers in a year. As a yardstick of its global scale, only 10 airline brands globally are currently in the 50 million passenger club.
China Southern Airlines has become the sixth airline group in the world – and the first outside the United States or Europe – to transport over 100 million passengers a year. Founded only in 1988, China Southern reached this milestone in 2014 faster than the other groups carrying over 100m passengers: American Airlines, Delta Air Lines, Lufthansa Group, Southwest Airlines and United Airlines. Ryanair expects to carry 97m passengers in 2015, likely leading it to carry 100m shortly thereafter.
The Air China and China Eastern groups are expected also to cross the 100m mark. Fast growth at the HNA Group could also see it carry 100m passengers around the turn of the decade. This would be impressive given the group has limited public capital, but would also give China four groups with over 100m passengers, matching the US.
China Southern is big, but this fast growth, partly organic, partly through merger, has come at the expense of efficiency. It may have the highest growth prospects but it also has considerable work ahead to become agile. It could also have the most at risk as its core domestic market faces new competition while long-haul performance continues to lag.
The New Year 2015 welcomes in a new Alitalia as Alitalia CAI becomes Alitalia SAI on 01-Jan-2015, having completed an ownership change in which Abu Dhabi's Etihad Airways takes a 49% stake, adding to its investments in other European carriers including Aer Lingus, Air Serbia, airberlin and Darwin/Etihad Regional.
But 2015 will also witness a record amount of seats offered between Italy and Gulf hubs as Alitalia and Etihad grow flights to Abu Dhabi under their partnership, while Emirates and Qatar make their own additions. There will be approximately 1,200 more seats a day between Italy and the Gulf in 2015 compared to 2014, for a total of over 5,100 seats a day.
Alitalia and Etihad will add more seats than they have in the past while Emirates and Qatar, so far, will have their highest growth year in Italy since 2012. In the space of four years the Italy-Gulf market will have doubled from 840,000 seats in 2011 to a projected 1.9 million in 2015.
Turkish Airlines is planning further growth in Africa in 2015 with at least six new destinations. Turkish already has the largest network in Africa among foreign carriers, overtaking Air France and Emirates as it has added a staggering 25 African destinations over the last three years.
By the end of 2015 Turkish will have at least 45 destinations in its African network across 30 countries. North Africa continues to account for most of its African capacity but Turkish also has established a large presence in east, central and west Africa.
Turkish is able to enter relatively thin underserved African markets by offering a myriad of connections to Europe, Asia and the Americas. Narrowbody aircraft have been the driver of its African expansion strategy as it has used 737-900ERs to open up destinations as far as seven hours from Istanbul.
Jin Air, the LCC associated with Korean Air, has become the first active LCC in North Asia to have a widebody operation. Jin Air has commenced 777-200 flights between Seoul Incheon and Guam. Its initial single 777 will be joined by two more in 2015, at which point Jin Air will look to add destinations such as Hawaii. The low-density configuration with generous luggage allowance and snacks included indicate Jin Air is less aggressive than the likes of AirAsia X and Scoot, although Korean consumers have signalled they want a higher standard of carrier.
Jin Air hopes the 777 project will see it overtake Korea's largest LCC, independently-owned Jeju Air. Jeju has responded by considering its own long-haul operation as it builds to a fleet of 40 737s as early as 2018; it has 17 737s in Dec-2014. An IPO for as early as May-2015 will see around 20% of the company floated and cash used to fund expansion and IT infrastructure developments. This is a considerable amount of activity in Korea, which has been a sleepy market for LCCs.
The history of intercontinental passenger routes into secondary Chinese cities is brief: as recently as 2010 there was on average just one or more long-haul flight a day into a secondary market. This more doubled in 2011, and in 2015 there will be 11 flights a day. These will be spread across 26 city pairs, up from only four in 2010. Most secondary long-haul routes are to Europe, with the Middle East and Australia prominent. North America is catching up.
Foreign airlines have led the push, namely KLM and Lufthansa. Etihad Airways and Qatar Airways were also some of the first before being joined by others including British Airways and United Airlines. Chinese carriers are gaining a presence on secondary long-haul routes, largely as a result of incentives and subsidies. In 2015 so far there will be eight foreign airlines operating secondary routes compared to five Chinese airlines. 2015 marks the first time a secondary long-haul route (Etihad's Abu Dhabi-Chengdu) will be operated daily across the year. The routes as a group face sustainability challenges, with losses common, but more growth is still likely.
Cultural interest in Korea has helped the Hong Kong-Seoul route grow 65% over the years, pushing the route from being Asia's 13th largest based on international seats to ninth largest. LCCs have amassed a 21% market share, mostly at the expense of Cathay Pacific and Korean Air even though they have increased capacity. Asiana has slightly increased market share due to its very large growth, albeit from a smaller base. HK Express in Feb-2015 will operate 18 weekly flights. Jin Air will grow beyond a daily flight, which Jeju Air did earlier in 2014. The route also sees fifth freedom operators that aggressively compete on price.
Airline expansion has helped the number of Korean visitors to Hong Kong grow 22% while Hong Kong visitors to Korea have grown a faster 40% but from a lower base. Overall tourism expansion is lower than air capacity growth, suggesting local full-service airlines are growing to increase transfer traffic while fifth freedom operators have low load factors and limited demand between Hong Kong and Seoul.