China Eastern Airlines
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- 2550 Hongqiao Road, Hongqiao International Airport
China (People's Republic of)
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- Shanghai Pudong Airport
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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
2,465 total articles
China Eastern Airlines Northwest to use last aircraft delivery in 2013 to increase Xian market share
249 total articles
Privately-owned Shanghai carrier Juneyao Airlines is looking to capture growth across multiple segments. Complementing its full-service brand with an increasing array of partnerships is a pending new low-cost carrier, Jiu Yuan Airlines, which will offer “jiu yuan fares” (CNY9/USD1.48) in China's domestic market.
Jiu Yuan will be based in Guangzhou, well away from Juneyao's base, and is a by-product of recent change in China that supports new private carriers, the LCC model and deregulation of minimum fare pricing. It is early days for this more relaxed – but still restricted – environment, so Juneyao’s Jiu Yuan strategy may change. For now the intent is to keep the two carriers separate, which should be easy as Juneyao's only service from Guangzhou is to Shanghai. A shakeup could occur if, or when, there is the emergence of an LCC subsidiary from China’s largest domestic carrier: China Southern, whose fortress hub is at Guangzhou.
In its first year of pursuing partnerships, Juneyao has secured 15 interline agreements and two domestic codeshare partners. It now awaits its first international codeshare.
When CAAC vice-administrator Xia Xinghua proclaimed “We urgently need to develop LCCs” at a public forum in Beijing on 5-Nov-2013, it became clear that fundamental changes are on the way for low-cost carriers and the overall aviation market in China.
Within the overriding goal of ensuring stability for the Big Three Chinese flag carriers, it will not be a simple process. One thing is very clear however: the CAAC is serious about introducing significant change in the sector. This includes approving new carriers, reforming airport charges, introducing LCC terminals, changing aircraft acquisition processes and taxes, not requiring approval for new routes, and the ever-topical matter of airspace reform (albeit largely outside its control).
The forthright move is part of a wider commercial agenda of China's new leadership, which meets again on 9-Nov-2013, seeking to find the right formulas to allow greater play of market forces, while maintaining appropriate regulatory backstops. Purists will see this as being half pregnant. For example, in Oct-2013 the CAAC abolished minimum pricing requirements in the domestic market, an important step for LCCs; but price caps remain as a consumer protection measure – despite total price freedom being integral to LCC structures.
But China has repeatedly shown the ingenuity to evolve tailored solutions that fit the very different environment in this enormously complex country. There will be a "China solution" and it will allow more LCC operations – but there will be differences….
Sichuan Airlines, China's fifth carrier to offer international long-haul services, will increase its presence in Australia with a new twice-weekly Chongqing-Sydney service launching 20-Dec-2013 with A330s. The route complements Sichuan's existing Chengdu-Melbourne service and will more easily allow passengers to visit Australia's two largest cities. Short connecting flights between Chengdu and Chongqing will complete the loop. The service will further expand the massive influx of Chinese capacity Australia has seen in recent years, including China Southern's A380 deployment to Sydney in Oct-2013.
Yet to be realised are Sichuan's bold plans to grow in Europe and North America. While the carrier's largest shareholder is the Sichuan government, all three of China's main airlines – Air China, China Eastern and China Southern – own a stake in Sichuan Airlines, complicating its aspirations. Slower growth may be wise: the Chengdu-Melbourne service in its first five months averaged only a 45% load factor. While China's secondary and western cities have geographical advantages for European services, for Australia it will be some time before they mature. This is not helped by the fact that Sichuan does not have an English language website.
The growth of China’s “Big Three” airlines – Air China, China Eastern and China Southern – has been spectacular. China Southern’s RPKs have increased from 20 billion in 2000 to nearly 140 billion in 2012. Outside China, the airlines' growth has generally been noticed in terms of international flights, leading to some misconceptions about the sector.
While the Big Three are increasing international flights, they are also increasing domestic services in the same proportion. Domestic RPKs in 2012 accounted for 79% of China Southern’s total RPKs – little change from 2000’s figure of 78%.
This is perhaps baffling to those aware of the huge potential of the outbound Chinese market. While the demand exists, Chinese carriers have failed to capitalise on it – and for good reason. International yields are often significantly lower than domestic yields, and international services are often unprofitable. The implication for the international community is huge: China will continue to hesitate to dispense traffic rights until its airlines have stronger performance, which will enable them to balance foreign growth. But many of the problems are well within their power to solve.
For all their success elsewhere, the Gulf carriers and Turkish Airlines are looking rather thin in China. This is not by their choosing. Emirates, Etihad, Qatar and Turkish have reached the limit of air rights and slots made available to them.
All are ready to expand, and Turkish has even said it has service to five cities ready to launch if approved. That is probably of little comfort to China. While the country wants a flourishing aviation market, it also wants its airlines to have a fair share. But this is not classic protectionism. The argument is Chinese carriers are still young and need time to gain experience before being on equal footing with peers.
Yet Etihad and Qatar are younger than China’s long-haul airlines. With a mindset change that favours liberalisation in China being unlikely in the medium term, the foreign carriers will have to find ways to stress their value and why they should receive more air rights. Partnerships are one such answer.
Eleven airlines during the past year have announced their intention to launch in China's domestic market. Increasingly, they are being approved (three so far) by regulator CAAC after a few years of a policy that technically forbade new entrants - although there were exceptions, allowing some new airlines to launch.
The new airlines fulfil the objective of creating growth and inviting private capital into the aviation industry as the state grows weary of its large investments across numerous sectors. Space will have to be created for these new airlines in China's ecosystem where 79% of seats are flown by state-owned carriers or their subsidiaries and affiliates. A full 94% of capacity is flown by airlines part of either the Big 3 – Air China, China Eastern or China Southern – or HNA Group. That leaves just 6% of capacity for independent airlines. So the incumbents are not facing an immediate threat, especially as the new airlines are not being based in first-tier cities.
But the additional airlines come as China already has an over-supply of airlines, despite the enormous potential for growth. The fragmentation means few can gain scale and synergies. That situation could be exacerbated by further airline approvals - yet liberalisation is undoubtedly where the system needs to head, creating a dilemma for the CAAC.
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