China Eastern Airlines
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- 2550 Hongqiao Road, Hongqiao International Airport
China (People's Republic of)
- Main hub
- Shanghai Pudong Airport
- Business model
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- Air France
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
2,138 total articles
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Kunming-based Lucky Air, one of the many airline affiliates of privately-owned HNA Group, has applied to China's aviation regulator CAAC for permission to expand its business licence from domestic services only to include regional flights to Hong Kong, Taiwan and Macau. Expansion to "regional" markets in greater China is usually the first step for Chinese carriers to eventually open international markets.
Kunming, the capital of Yunnan province in southern China, is already linked to Hong Kong and Taiwan but not Macau. Kunming-Hong Kong is served by Hong Kong Airlines, also affiliated with HNA. Hong Kong sees the most international seats from Kunming while Taipei is the sixth-most popular international route.
A slowdown in Chinese traffic at the end of 2012 resulting from decreased activity in line with the government’s leadership transition saw Beijing Capital Airport miss a widely-held projection that it would overtake Atlanta Hartsfield airport for the title of world’s largest passenger airport. Beijing remained in the #2 spot after breathtaking growth that saw it enter the world’s 10 largest airports only in 2006.
Growth at Beijing and other major Chinese airports will slow as slots become increasingly difficult to secure. The highest growth amongst major Chinese airports is occurring in China’s west and northeast regions, home to airports including Chongqing, Shenyang and Urumqi.
They are a fraction of the size of Beijing, Shanghai and Guangzhou, which account for 31% of passenger movements, but will increasingly garner international attention.
Slots at Chinese airports cannot be openly swapped the way they can at other airports – such as at London Heathrow where slot trading over the past year has occurred between Jet Airways and Etihad, Cathay Pacific and Air New Zealand, Qantas and British Airways, Delta and unnamed partners and perhaps soon Aer Lingus and British Airways. This has become problematic for carriers like Delta, which are given late arrival times and early departures that stymie critical connecting traffic.
But Delta in recent months has been able to leverage its partnerships with fellow SkyTeam carriers China Eastern and China Southern to adjust their slot portfolio to maximise connections, which benefit both parties. Delta has been able to move its Detroit-Beijing/Shanghai Pudong services to arrive in the afternoon and depart in the evening, key times for foreign long-haul carriers. While this improves Delta's position in China – the smallest of the three US carriers present – its ability to tap into new cities appears limited owing to fleet limitations.
Australia needs to urgently negotiate expanded international air capacity which is constraining access to services from some of the country’s most important markets in Asia along with the United Arab Emirates. Capacity for several Asian markets, including China, Hong Kong, Vietnam, Malaysia and the Philippines, is fully utilised by carriers from those countries which are important source markets for both tourism and trade.
The Australian Government is being criticised for not negotiating new bilateral capacity to keep pace with demand. Melbourne Airport CEO Chris Woodruff said at the Australian Airports Association convention in Nov-2012: “These agreements provide the framework in which we can go out to the international market and attract new air services to meet the increasing demand for travel to and from Australia. The Government needs to lead from the front on this issue. Our bilateral agreements need to provide plenty of capacity for future growth in passenger numbers.”
Shanghai Pudong expects its fourth runway to be completed at the end of 2013 but new slots are unlikely to be available until some point in 2014. It is not clear – not even to Chinese carriers – how many new slots will be available, but an early estimate of 242 additional movements (121 roundtrips) between 07.00 to 22.00 each day could be possible. A more deciding factor will be how much additional airspace is opened by China's military for the runway.
The majority of the new slots at Shanghai Pudong Airport – and even upwards of 75% – will likely be allocated to China's domestic carriers. China Eastern, based at Shanghai, will have to battle Air China, which is based at Beijing but looking to establish a hub at Shanghai. As the national flag carrier, Air China and its lobbying network may do well. Private carriers Juneyao and Spring Airlines will also look to expand their home bases.
A number of carriers, including LCCs, will seek to move midnight services to daylight hours while any number of foreign carriers will seek to expand their presence or enter Shanghai for the first time. Strategic allocation will help Pudong, but the decision will be heavy, almost entirely, political.
Chinese airline outlook: slot shortages and yield pressures prompt the need for innovative solutions
For some blissful years last decade, China's Big Three carriers – Air China, China Eastern and China Southern – could grow revenue through the relatively straightforward, if operationally exhausting, path of pumping double-digit growth into the market, facilitated by slots at China's key airports.
But now those slots have become scarce, requiring Chinese carriers to seek out new markets – North America and Southeast Asia are the current targets – and also improve yield mix.
The task is formidable. The carriers' rapid growth last decade also involved increasing their international capacity but not necessarily their international experience and marketing, leading to a product and service that may be adequate but unknown or untrusted.
Channels for yield growth are many: Air China's revenue from Star Alliance is 4% and from premium classes about 13%, and many foreign carriers are willing partners. But the required experience from Chinese carriers to take advantage of these streams is not as strong as it is in direct capacity growth. China's carriers will soon discover their business is about more than putting aircraft into the sky.
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