- 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.
Delta Air Lines plans a China Eastern stake. Will other US airlines follow the foreign equity path?
Delta Air Lines is making its largest airline investment yet at USD450m. The prize is China Eastern Airlines, on the cusp of re-vitalisation, long-haul growth and a beneficiary as China's aviation power looks set to tip to Shanghai. Yet Delta's largest investment buys it only 3.55% and an observer's seat on the board. In comparison, USD360m bought Delta 49% of Virgin Atlantic and three board seats. In light of Delta's anti-Gulf carrier dispute, Delta will quietly need to reconcile the fact China Eastern is the most heavily subsidised Chinese airline.
Delta emphasises it is "solidifying" its partnership with China Eastern. The two account for 24% of US-mainland China seat capacity in Jul-2015. That is approximately 20,000 weekly one-way seats compared to the 78,000 US-UK seats Delta and Virgin have on the tightly held North Atlantic. Delta's stake reflects long term potential but as a mere 3.5% it is more symbolic and a placeholder for a potentially deeper partnership.
China Eastern has been considering its future direction, and even whether it should leave SkyTeam for the oneworld alliance. Delta's stake is an attempt to maintain the status quo. Delta needs China Eastern more than the China Eastern needs Delta. There is some wariness at China Eastern about Delta's intentions, but this could be the start of a long and close relationship. It is likely to spark competitive responses, such as United Airlines re-evaluating Air China's wish for a deeper partnership. It is unclear if Delta's stake signals other foreign airlines can buy into Chinese airlines.