Air China chairman Wang Changshun said he is optimistic of the outlook for 2013. Mr Wang, as reported by Carnoc.com, said the carrier's revenue increased slightly in 2012 but profit has declined compared to 2011 due to rising operating costs including a CNY2800 million (USD437.5 million) decline in the carrier's exchange earnings and a CNY2000 million (USD312.5 million) increase in aviation fuel costs. Air China accumulated 1.28 million safe flying hours in the first 11 months of 2012.
Air China chairman optimistic of outlook for 2013, 2012 profit may decline
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Chinese long haul secondary city air routes: BA's Chengdu exit does not reflect the broader market
The fastest long haul airline growth is not occurring with Gulf airlines but rather, with services to and from secondary Chinese cities. It is not a secret that local incentives and subsidies, generally common in any market, are especially large in price and duration for secondary Chinese cities. An airline might expect over a third of revenues to be subsidised. This drastically alters the business case in a low-margin industry, hence the proliferation of secondary city services. This extreme dependence on subsidies raises the question of how long governments are willing to issue generous subsidies, and how many routes can be sustainable without them.
British Airways' decision to exit its only secondary Chinese route to Chengdu, in Jan-2017, might suggest the music is ending and the secondary long haul bubble is popping. There is added colour given the recent UK-China air service agreement expansion, and Brexit/British pound depreciation overhangs.
BA's exit does confirm market fundamentals: secondary city yields are low, and some routes are ahead of their time. Yet a number of factors unique to British Airways suggest caution in concluding that BA's Chengdu exit could foreshadow other withdrawals.
Northeast Asian airlines seek India connections to diversify away from SE Asia, China competition
Aviation has yet to define India’s role in the trans-Pacific growth story. Geography allows connections from North America to India via Europe, the Gulf and – more quietly – Northeast Asia. Northeast Asian airlines have a theoretical advantage linking India with the North American west coast. The challenge they face is fitting a square peg into a round hole.
The presence of Northeast Asian airlines is large in North America but small in India, while Southeast Asian airlines are small in North America but large in India. Cathay Pacific, and to a lesser extent All Nippon Airways, are in the strategic sweet spot, relatively. Growing China-India relations could result in Chinese airlines playing a larger role in this market. The different transit regions available mean that there is competition between partnerships and joint ventures. These pressures could grow as the Indian market continues expanding.