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
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China United 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)
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2,701 total articles
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Asia’s largest airline, China Southern Airlines, is entering the home stretch of an ambitious strategy to boost its international network and shift reliance away from its domestic market. The largest of China’s major carriers, China Southern sees its 2014 launch to Frankfurt and New York as capping off a network that has grown rapidly in Australia, as well as adding London.
International RPKs comprised 20% of China Southern’s network in 2013 for the first time, up from 14% in 2010. International revenue has lagged, comprising 17% of 2013’s passenger revenue, up from 13% in 2010. This is not entirely a success story. Its A380s do not have enough markets to reach. Sustainability lags, and China Southern’s growth has often created over-capacity.
This is recognised by Chairman Si Xianmin, who has pledged to bed down markets and add more partnerships, including outside of its SkyTeam alliance, following a deal with Qantas. But China Southern’s eyes are still very much on long term success and not immediate results. As Mr Si said, “If you want to look into the future, look to the long-term.”
The largest unserved trans-Pacific route by many accounts is between a well known city – New York – and one few have heard of: Fuzhou in China's Fujian province. The unexpected destination may have a low profile but is rich in history: Fujian people are known for their migratory habits and comprise large parts of the overseas Chinese diaspora, where they have created economic activity, from Chinese restaurants to bus services. Besides Chinatown, New York City even has a "Little Fuzhou". Ties remain strong, and in Mar-2013 there were an estimated 201 people travelling from Fuzhou to New York City each day, according to Amadeus Air Traffic.
All of this traffic moves via intermediate hubs, but in the near future Xiamen Airlines could consider deploying its forthcoming 787 Dreamliners on the Fuzhou-New York route. Xiamen would take some beyond traffic, but would make inroads in the point-to-point Fuzhou-New York market. That would be to the detriment of Cathay Pacific, the largest carrier between the two cities, as well as China Eastern and Air China, which are also the main operators on the market.
However, Xiamen Airlines may not find it as easy as that: Fuzhou-New York is a heavy VFR market that lacks premium yields to sustain the non-stop service. But Fuzhou-New York may be the most promising long-haul route for Xiamen Airlines' 787s. Xiamen Airlines is primarily a domestic carrier and China's most consistently profitable carrier. It is rightfully hesitant to embark on long-haul operations that are being encouraged and pushed by the government and it will not help that some members of Xiamen's recently-joined SkyTeam alliance are apparently giving the carrier a cool reception.
North Asia will gain three new 777-300ER operators in 2014, boosting the number of 777-300ER operators in North Asia to nine. Deliveries in 2014 to China Airlines, China Eastern and China Southern will, for the first time, see the majority of North Asia's long-haul operators use the 777-300ER, mainly to North America but also to Europe. While the aircraft may be used similarly, their genesis, configurations and implications are different. China Airlines will catch up to EVA Air and replace 747-400s with the 777-300ER, allowing for moderate growth.
China Eastern will replace A340-600s with 777-300ERs and then conduct large long-haul growth, which it originally intended to do with now-cancelled 787s. China Southern will use its 777-300ERs to fill a capacity white spot in its fleet between A330/787 and the A380, evidenced by using the 777-300ER to open a new service to New York JFK.
China Southern will introduce the lowest business configuration yet on the 777-300ER in North Asia with only 34 seats; the average prior to its configuration was 50. This is in contrast to China Eastern, whose 56 business class seats – the second-largest density – come with the tradeoff of fewer economy seats than at China Southern.
North Asia is home to many of the world's most visible airlines based on size (China Southern), market capitalisation (Air China), profitability (Japan Airlines) and prestige (Cathay Pacific). The region's airlines face an encouraging 2014, and can certainly fare much better than European peers. The singular uniting theme for long-haul North Asian carriers is the strong market to North America, where corporate and premium travel is up while competitors are fewer than to Europe, for example.
Elsewhere the characterisation is that of nuances. Currency exchange rates are sharply impacting Japan, where the yen is down about 17%, while helping Chinese carriers with the appreciating yuan. Regional tensions continue to plague bilateral markets like Japan-Korea and China-Japan. There is growing sensitivity about unprofitable short-haul routes: Asiana will use a new single-class configuration while China Airlines and TransAsia expect to have new LCCs, adding more dual-brand strategies to the region, which otherwise lacks the vibrant LCC market of Southeast Asia – or Europe. Except in Japan, liberalisation has occurred more slowly in North Asia.
2014 will be a reflective year for liberalisation in the region. Jetstar Hong Kong continues to press for a licence while AirAsia is exploring Korea for new subsidiary options. Foreigners fear Taiwan's newfound pro-LCC attitude is only for LCCs established with an existing Taiwanese airline. And China, potentially the world's largest market for possible airline investments, shows no signs of receptiveness to foreign capital, which could be a game-changer on the global stage, although new airlines are being ushered in as part of government-led reforms. The wall is starting to show some cracks.
North Asia's airlines add capacity in 2014 as underdogs play catch up and short haul focus increases
All of North Asia's main 13 airlines except Korean Air will operate more flights in the first quarter of 2014 than in the year prior. But this has different impacts and not all airlines will grow seat and ASK capacity. On average 1Q2014 seats will be up 3.7% and ASKs 3.4% complementing 4.5% growth in frequencies. For Cathay Pacific and Japan Airlines, more frequencies come at the expense of ASKs as aircraft are down-gauged or see lower configurations. For others, frequency growth faster than seat/ASK growth will allow them to tap new short-haul markets.
Hong Kong Airlines, China Southern, EVA Air and TransAsia are due to be the region's largest-growth carriers. Carriers in Greater China are introducing seat and ASK growth above frequency growth due to limited slots and the nature of trunk routes. China Airlines and EVA Air have a similar growth profile, but in other markets the two big carriers (ANA and JAL in Japan, Asiana and Korean Air in Korea) differ.
The uniting theme is carriers looking to close the gap while incumbents seek sustainability. 1Q2014 is a relatively tame start to the year, which will see expansion from ANA at Haneda, Asiana take A380s and launch more long-haul flying, Skymark become Japan's third long-haul airline and Cathay put in 6.3% ASK growth after two quiet years.
China Eastern Airlines plans to convert wholly-owned subsidiary China United Airlines into a low-cost carrier (LCC), making it the first major carrier to partake in China's new aviation agenda that encourages LCCs. China sees LCCs – new, converted, private or affiliated with a state carrier – as jump-starting growth, expanding air links in the economically young western region and fighting against inefficiency and wastefulness.
Beijing-based China United is ideal for conversion to a LCC given its point-to-point focus, short routes, operation out of Beijing's second airport at Nanyuan, and small scale that limits potential for corporate travel. China Eastern is larger in Beijing but China United serves more secondary destinations that are potentially more suitable to LCC service.
There is already extensive cooperation between China Eastern and China United, with China Eastern codesharing on nearly every China United flight. There are opportunities for continued cooperation but the two will have to define what this dual-brand strategy entails and how much infrastructure – particularly IT – is in place to support it.