- Passenger numbers: 2.9 million, +18.1% year-on-year;
- Cargo volume: 77,700 tonnes, -2.1%;
- Aircraft movements: 23,400, +12.1%.
Shenzhen Airport pax up 18%, cargo down 2% in Jan-2014
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China Eastern's LCC China United is expected to start international flying, challenging Air China
China Eastern Airlines is taking the lead amongst the country's state-owned carriers in developing an LCC presence. This follows Beijing's embrace and active promotion of LCCs, which it sees as spearheading new growth and being in line with the country's increasing austerity and efficiency targets. China Eastern has converted its subsidiary China United Airlines, based at the smaller Beijing airport of Nanyuan.
China United only flies domestically, and mostly to secondary cities, but in Jan-2015 applied to regulator CAAC to expand its business licence to international services. China United is expected to be given the right to fly internationally from its Beijing home but also Shenzhen.
Shenzhen's international development has been stunted – possibly due to lobbying from Air China partner Cathay Pacific, which feeds on the Shenzhen market – and local carrier Shenzhen Airlines has a minimal international presence. Shenzhen Airlines is majority owned by Air China, meaning China United's international expansion could eventually challenge the Air China group at multiple levels. With time there will also be an impact to the Hong Kong market, although crossing the border is still far from seamless.
British Airways: IAG's favourite child should follow reformed sister Iberia's unit cost example
In a May-2013 report on British Airways, we called it the favourite child of parent IAG. Its good behaviour was being rewarded with new fleet toys, while sister Iberia was scolded to mend its ways.
BA should match its best ever operating margin in 2015 and better it in 2016, even covering its cost of capital - a salutary model for its European counterparts. After the global financial crisis, margin recovery was mainly due to unit revenue growth. A RASK downturn in 2014 and 1H2015 has seen margins improve through lower unit cost, but these were largely thanks to lower fuel prices. Even a premium brand cannot always rely on unit revenue growth and BA still needs to cut CASK, with a focus on labour. It remains one of Europe's higher unit cost airlines and Iberia has cut CASK more successfully.
Iberia's reformed ways have been feted like the return of the prodigal and now BA has two more siblings. Up and coming teenager Vueling has been given significant trust and responsibility for one so young, while new arrival Aer Lingus will demand much parental attention. BA will need the maturity and determination of the eldest child to graduate to full value-creating adulthood.