China Eastern Airlines
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- 2550 Hongqiao Road, Hongqiao International Airport
- Main hub
- Shanghai Pudong Airport
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- Part of China Eastern Air Holding Company
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China Eastern Airlines
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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
3,492 total articles
290 total articles
China's regulator the CAAC decreed that Air China is the largest carrier in the China-US market, ending the "domination" of US carriers. However this was based on Air China operating to six US cities while the largest US carrier, United, links China with only five US cities.
On almost every other metric – seats, frequency, city pairs – United (Air China's Star Alliance partner) is far larger and will grow in 2015 as it expands its Chengdu service and adds a second daily flight from San Francisco to Shanghai, the first example of a US carrier having more than a daily flight on a Chinese routing.
Perhaps more important though is the fact that the CAAC saw fit to announce the comparison, a clear statement that China's international airlines are on the march, particularly in one of their most important strategic markets.
Los Angeles International Airport has emerged as a battle ground for American Airlines and Delta Air Lines during the last couple of years as the market, while hugely fragmented, retains a high level of importance within the networks of most US major airlines.
But the success of each airline’s recent expansion in Los Angeles is tough to predict. Both American and Delta unsurprisingly declare that their operations in Los Angeles are successful; but the longevity of that success is difficult to predict given the tough competitive dynamics in the market.
The investments each airline is making in Los Angeles obviously carry some risk. But the scenario for American is a bit different given it does not have a true west coast hub for long-haul traffic, and the operating constraints in Los Angeles threaten to constrain its optimal growth path.
Delta Air Lines recorded a strong financial performance for 4Q2014 and YE2014 – excluding special items – driven by continued strength in its domestic entity and a solid cost performance as non-fuel unit costs remained essentially flat throughout 2014.
Delta is starting 2015 with headwinds due to the appreciation of the USD against some weaker currencies, but remains confident of meeting its stated financial targets that include ROIC of more than 18% and operating margins of 11% to 14%.
An anticipated significant USD2 billion in fuel savings during 2015 will also help blunt some of the effects from currency weakness; but Delta is stressing that it will use the savings to slash debt, and pending board approval, possibly increase shareholder rewards.
Japan has an extremely ambitious tourism target, to raise its 10 million visitor arrivals to 20 million in 2020 and 30 million in 2030. But these targets are in fact entirely feasible, and perhaps even conservative, given the stringent visa policies around regional Asia that only in recent times have been relaxed, but not fully liberalised.
Japan has achieved visitor growth of over 50% from Thailand, Malaysia, Indonesia and Vietnam following relaxation of border formalities. These are Japan's smaller Asian markets but can contribute significantly to its growth needs, and diversify its arrival streams. Four North Asian markets – China, Hong Kong, Korea and Taiwan – account for two-thirds of Japan's total visitor arrivals.
China has the biggest growth opportunities of all and is the next to have its visa rules relaxed. The biggest beneficiaries will be Chinese airlines and, later, Japanese LCCs. Asian visitor growth will involve Japan shifting its focus away from long-haul markets: Asian visitors comprised 64% of arrivals in 2000, but are now up to 81%. Japan in 2010 was the third most popular outbound market for Chinese, but in 2013 slipped to seventh place, suggesting considerable upside.
China Southern Airlines has become the sixth airline group in the world – and the first outside the United States or Europe – to transport over 100 million passengers a year. Founded only in 1988, China Southern reached this milestone in 2014 faster than the other groups carrying over 100m passengers: American Airlines, Delta Air Lines, Lufthansa Group, Southwest Airlines and United Airlines. Ryanair expects to carry 97m passengers in 2015, likely leading it to carry 100m shortly thereafter.
The Air China and China Eastern groups are expected also to cross the 100m mark. Fast growth at the HNA Group could also see it carry 100m passengers around the turn of the decade. This would be impressive given the group has limited public capital, but would also give China four groups with over 100m passengers, matching the US.
China Southern is big, but this fast growth, partly organic, partly through merger, has come at the expense of efficiency. It may have the highest growth prospects but it also has considerable work ahead to become agile. It could also have the most at risk as its core domestic market faces new competition while long-haul performance continues to lag.
China's aviation market is slowing. In aviation, China's double-digit growth days may be gone, but Boeing is buoyed by recent developments and has raised its 2013 projection for new aircraft by 7.8%. Underpinning the growth outlook are policy reforms that have ushered in new airlines, including low-cost carriers, which historically grow fast. They also grow traffic. No less than 19 airlines in China have recently launched or plan to.
In its growth trajectory, China is expected to receive 301 new aircraft every year for 20 years, or an average of one every 29 hours. In 2013, the main three airline groups – Air China, China Eastern and China Southern – collectively took about 200 aircraft. They expect finally to moderate growth in 2015, when a new five-year plan starts across the country.
Start-ups will quickly grow from small bases and Beijing must progressively find a balance between their ambitions and the protectionism sought by incumbents.