Hainan Airlines stated the carrier’s first Boeing 787 will be delivered in late Jun-2013, becoming the second Chinese carrier to take delivery of the aircraft after China Southern Airlines (WCCDaily, 05-Jun-2013). As previously reported, China Southern took delivery of China’s first 787 on 31-May-2013, with the aircraft scheduled to enter service operating domestic route between Guangzhou and Beijing initially on 06-Jun-2013.
Hainan Airlines to take delivery of Boeing 787 in late Jun-2013
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China Southern and Hainan Airlines evaluate Virgin Australia stake to grow tourism potential
Chinese visitors are reshaping tourism flows and aviation opportunities in many markets. This has been readily apparent in Australia, where China Southern in the space of a few years has become a household name, and Chinese tourists are the second largest visitor source. The next manifestation could be a Chinese airline purchasing the stake in Virgin Australia that Air New Zealand is looking to divest itself of. China Southern and Hainan Airlines are evaluating the opportunity, according to the Australian Financial Review.
China Southern would benefit from a stronger local partner after its previous partner Qantas formed a JV with the rival China Eastern. With every Chinese visitor taking two to three domestic Australian flights, an equity stake could allow the Chinese airline to capture back revenue streams. China Southern could also invest as a defensive move. Hainan serves Australia seasonally and its use of Virgin could be more radical, with an outcome of Virgin flying to mainland China and Hong Kong, accessing routes that Hainan's HNA Group (including Hong Kong Airlines) is unable to serve. Hainan already has an airline investment portfolio but Virgin would be its most significant. For China Southern, a Virgin stake could start state-owned Chinese airlines buying foreign airlines as they seek to be at the centre of most things in the world; including, one day, global consolidation.
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.