China Eastern Airlines
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- 2550 Hongqiao Road, Hongqiao International Airport
China (People's Republic of)
- Main hub
- Shanghai Pudong Airport
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- Domestic | International
- Airline Group
- Part of China Eastern Air Holding Company
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China Eastern Airlines
China Southern Airlines
China United Airlines
Delta Air Lines
Hong Kong Airlines
KLM Royal Dutch Airlines
Shanghai-based China Eastern Airlines is one of China's 'big three' state-owned airlines, with hubs at Shanghai's Pudong and Hongqiao airports, as well as Kunming Airport in southwest China. The airline operates a fleet of Airbus, Boeing, Embraer and Bombardier aircraft to support an extensive network, serving over 350 domestic routes and 40 international destinations, including cities in Australia, Europe, Korea, Japan, North America and Southeast Asia. China Eastern merged with Shanghai Airlines in 2010 and joined China Southern in the SkyTeam Alliance in Jun-2011.
Location of China Eastern Airlines main hub (Shanghai Pudong Airport)
China Eastern Airlines share price
2,979 total articles
272 total articles
The competitive and fragmented aviation market of Shanghai will become more complex with China Southern Airlines' Jun-2014 establishment of a branch while HNA seeks to have locally-based Yangtze River Express transition from freight services to freight and passenger services. China Southern's enlarged Shanghai presence will follow its notable presence in Beijing and hub in Guangzhou. The long term could see China Southern attempt to launch long-haul routes from Shanghai, which have been lacking, although China Eastern Airlines is seeking to change this. Yangtze River Express holds some prime slots that could be used for passenger service, finally giving the HNA Group a presence in Shanghai.
China Eastern's market share in Shanghai has declined faster than Air China's in Beijing or China Southern's in Guangzhou, and this is likely to continue. Shanghai's Hongqiao and Pudong airports collectively handled 82.8 million passengers in 2013, just shy of Beijing Capital's 83.7 million. Over the next year, a slot expansion at Shanghai Pudong will increase the number of slots for existing and new entrants.
While US airlines focus on traditional domestic housekeeping, they are largely overlooking the bigger, faster growing – but more risky – long-haul international markets. This short termism may well come back to bite them. In their absence Chinese and Gulf airlines are re-shaping international travel to and from the United States. A decade ago they collectively operated half a million annual seats to the US; in 2014 it is over four million. By nature of demand and technical requirements they initially focussed on the US points relatively closer to home, with Gulf carriers planting themselves on the eastern coast and Chinese airlines on the west coast.
But now the two groups are reaching further inland, with Gulf carriers expanding to the west coast. Emirates will up-gauge its San Francisco service to an A380 while Etihad in Nov-2014 will launch a San Francisco service. Chinese airlines are extending their reach to the eastern part of the US, with Hainan Airlines launching Boston, Air China Washington Dulles and China Southern New York JFK. Gulf capacity quickly overtook Chinese capacity, with Gulf carriers in 2014 having twice the seat capacity of Chinese airlines. In recent years the Chinese growth rate has picked up but is still below that of Gulf carriers.
Qantas is expected to post a loss of between AUD700 million and AUD1 billion for the full 2013/14 financial year to 30-Jun-2014 and now faces the unsettling reality that the Qantas Sale Act (QSA) isn’t going anywhere.
Australia’s Federal Government retreated on the planned Qantas Sale Amendment Bill 2014 that would have repealed part three of the QSA, recognising it wouldn’t pass the Senate, and agreed to side with the Australian Labor Party (ALP) to remove foreign ownership limits. The largely pointless compromise revision was adopted on 18-Jul-2014.
The previous provisions prevented any single airline investor holding more than 25% of Qantas and of total foreign airline investment of 35%, capping the total foreign investment at 49%. The new provision simply caps foreign ownership at 49%, with no airline restrictions.
China Eastern Airlines is not Beijing's favourite child. China’s second-largest airline and the world’s eighth largest is still coming out of its merger with Shanghai Airlines some five years after being announced. This is partially due to competing interests from centrally owned China Eastern and municipally owned Shanghai Airlines, which has left neither side completely fulfilled. The clunky merger has fuelled anecdotal experiences of inefficiency. Passengers are able to take their business elsewhere, with Shanghai increasingly the most fragmented of major Chinese hubs, to China Eastern’s disadvantage.
Nonetheless Shanghai is a hub with tremendous international growth opportunities, and China Eastern sits astride it. But the airline has failed to capitalise on this with slow long-haul growth. This owes much to 787 delays and then the carrier’s conversion to 777s. Now the first 777 is due by the end of 2014. With 20 on order – a huge number for a Chinese airline – China Eastern is seeking long-haul growth, mainly in North America, and looking to make a statement change. This will be helped with a new brand, a first to occur in China, and spearhead Shanghai’s growing position with a new Disneyland park and growing free-trade zone. China Eastern will be seeking to prove it is not too little too late. If its bet is correct, its stature will rise – to the detriment of others.
China Southern Airlines on 11-Jul-2014 projected a rare first half net loss of RMB0.9-1.1 billion (USD145-177 million). This adds to growing weak performance in Asia's airline sector. With China sneezing, is the rest of Asia in for a cold? While there may be more declining performances across greater China and broader Asia, they are not inherently linked. Thai Airways is suffering from its national political environment and Malaysia Airlines from weakened traffic following its MH370 tragedy (which even Singapore Airlines is feeling as Chinese tourists avoid Southeast Asia).
China Southern's challenges are equally nuanced. While shifting exchange rates continue to impact the carrier, its core business has been caught in China's economic re-ordering. Economic growth is slowing but China Southern is having to adhere to state-led capacity growth plans established when the economy was stronger. China Southern has been unable to revise capacity at its discretion, resulting in over-supply that is causing load factors and yields to decline. A net 1H2014 loss follows 1H2013's net profit but operating loss, further highlighting shakiness.
A new MoU between Air China and the Lufthansa Group to establish a joint venture covering Europe-China routes still awaits many – in fact, nearly all – details. But it is not difficult to see this JV enhancing the position of each airline, assuming it meets EU competition requirements. Competitors will seek to grow existing JVs while establishing new ones. In some instances they will be responding to the Air China-Lufthansa JV, and in other instances they have been ready but held off due to an uncertain regulatory environment. Allowing another JV potentially increases the pressure for more to follow.
But more immediately, and closer to the purposes of Air China and Lufthansa, the JV will at least partly remove lingering tensions between Air China and Lufthansa Group, the two largest carriers between Europe and China. Air China has overshadowed Lufthansa, with more growth to come as Air China sits astride what will be the world's single largest aviation market. But Air China requires precious beyond traffic that Lufthansa can control, as well as more extensive international experience. Between them, the two account for 35% of Europe-China flights, and 84% of Germany-China flights.
For Lufthansa, a China JV adds to those in Japan and North America, while this is the first long-haul JV for Air China. Meanwhile Gulf carriers are not this JV's primary target; their access in China is relatively restricted and routes to Europe via the Gulf are circuitous.