China Air Transport Association stated the EU carbon tax would cost the carrier an additional CNY800 million (USD122 million) p/a (Beijing News/AFP, 24-Mar-2011). This would increase to CNY3 billion p/a by 2020 according to the association. Air China, China Southern and China Eastern are reportedly planning to jointly lodge a legal case with the China Air Transport Association with Hainan Airlines also considering taking part in the litigation.
China airlines to challenge EU carbon tax: report
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China Southern Airlines deflects yield pressure concerns. Long haul focus shifts to North America
China Southern Airlines may be Asia's largest airline, but it has one of the smallest long haul networks. China Southern has shifted growth to international markets, which represented only 17% of capacity in 2009 but doubled to 34% in 2016. Its long haul plank has been Australia and New Zealand, funnelling traffic from around China down to its southern hub at Guangzhou. China Southern has met its objectives for Australia/NZ and now turns its focus to the market that has preoccupied most other Northeast Asian airlines: North America.
China Southern plans to increase flights from five daily to 11 daily, about the size that ANA is today – and larger than Air China and China Eastern. Although China Southern can build on the principle of using Guangzhou as a North-South hub, North America is a radically different proposition. Guangzhou's southern positioning limits exposure to the Chinese market that China Southern knows best. China Southern will need to target connections to Southeast Asia and India, which have only been a small component of Air China and China Eastern's network.
China-UK air service agreement permits growth as Chinese airlines constrained in most other markets
An agreement between China and the UK to more than double their air service agreement is good timing for both sides. Chinese airlines are finding an imbalance: they are taking delivery of widebody aircraft and more Chinese airlines are flying long haul but traffic rights to major markets – the US, Canada, Germany and France – are becoming depleted. Negotiations to add traffic rights have not succeeded, typically due to the foreign side being concerned about accessing Chinese slots or Russian overflight rights.
The agreement with the UK to expand the number of weekly passenger flights from each side from 40 to 100 reflects considerable pragmatism on the part of the UK: British Airways and Virgin Atlantic are not growing in China, and China is a large growth opportunity. The UK has lagged on Chinese tourism. It was only in 2015 that China became the UK's largest inbound market.
Consistency is challenging: Chinese visitors to the UK decreased in 2014, then rapidly grew in 2015 and declined in 1H2016, although the full year looks more upbeat. The pound's post-Brexit depreciation has meant that the Chinese receive about 20% more for their currency. Despite a seeming alignment of factors in the UK's favour to grow tourism, it must continue to reform its visa policy so that the UK can compete with China's more preferred European markets of France, Germany and Italy.