China United Airlines
- CAPA Analysis
- Schedule Analysis
- Route Maps
- Print Summary
China United Airlines is a scheduled domestic carrier operating from its main hub at Beijing Nanyuan Airport. Parent company China Eastern Airlines announced plans to change China United's business model from Full Service to Low Cost Carrier in 2014.
Location of China United Airlines main hub (Beijing Nanyuan Airport)
96 total articles
CAAC: 21 airlines to receive USD68m in subsidies for regional services in 2013, led by China Eastern
8 total articles
What is exciting about the next act of Chinese aviation is that a new script is now emerging.
China’s ascent from a single national airline in the 1980s to dozens of airlines in what is today the world’s second-largest market has occurred over many acts, but to date they have largely been highly choreographed.
There were surprises as some characters assumed roles larger than they were written and as some unscripted characters appeared, but mostly the state has applied a rubric of growing the market while ensuring a predominant role for the three protagonists: Air China, China Eastern and China Southern.
This is changing now as China looks to generate higher growth rates: home grown LCCs are to be permitted formally for the first time. Highly successful models like Spring Airlines have led the way; now others will have the opportunity to follow the precedent.
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.
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….
The CAAC has come out with an extraordinary prediction this month: Chinese airlines will nearly double their fleet size to as many as 5,000 aircraft by 2015. In the shadows of a major international air show on home soil, one might expect some bullish sentiment from the hosts. But the comment, by CAAC Head Li Jiaxiang, that the nation's domestic carriers will have an expected combined fleet of 4,800-5,000 aircraft in just five years (from 2,600 at present) is a breathtaking assessment. Even if it's only 50% accurate, aircraft manufacturers big and small are in for a bonanza.
China’s fragmented airline industry is undergoing a shakeup. Merger and acquisition activity is intense – probably more so than any other aviation market in the world. In the space of a few short years, the majority of China’s second tier airlines have, at least partially, become owned or controlled by one of the "Big Three" carriers and/or HNA Group, as consolidation accelerates in China. In this report, CAPA reviews what’s fuelling the feeding frenzy and who the targets are.
The contract offered by Latvia’s Riga Airport to national airline airBaltic to build and operate a EUR92 million terminal for seven million passengers per annum by 2014 is unusual but not unique. For more than a decade airlines have been investing in some of the airports at which they operate, and on some occasions as the only investor. A new report published by CAPA highlights this practice.
Great news! CAPA now offers email and phone contact functionality through its partnership with Gooey. Corporate access for this feature is USD1000 per annum.