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- HNA Development Building, 29 Hixiu Road,
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Hainan Airlines is the leading business enterprise in the air transportation division of the HNA Group. The carrier is one of the largest Chinese airlines behind the "big three". Since 1993, in additional to its main base at Haikou Meilan International Airport, Hainan Airlines has established hubs in Beijing, Xi'an, Taiyuan, Urumqi, Guangzhou, Lanzhou, Dalian and Shenzhen, as well as an extensive network across China, and connecting Asia, Europe, America and Africa. It has opened nearly 500 domestic and international routes flying to more than 90 cities. The carrier operates both scheduled and charter services.
Location of Hainan Airlines main hub (Beijing Capital International Airport)
Hainan Airlines share price
1,062 total articles
Hainan Airlines considering entering Italy, UK and Spainish markets amid economic recovery in Europe
113 total articles
Privately-owned carrier Xiamen Airlines has regained its position as China's fourth largest airline after a drop in capacity in 2H2012 and early 2013 when measured on available domestic and seat capacity and frequency. This places Xiamen as the world's 27th largest airline by seat capacity – larger than perhaps better-known carriers including KLM, Korean Air and Cathay Pacific. While those carriers eclipse Xiamen when weighing available seat kilometres, Xiamen as the 51st largest on ASKs is still larger than Air New Zealand, Finnair or Vueling.
This strong domestic carrier – 94% of seat capacity is within mainland China – will accelerate growth of its small international footprint by adding services around Southeast Asia following its ascension to SkyTeam in late 2012. But the domestic Chinese market remains its focus, and Xiamen will use many of the 15 737-800s it is receiving this year to grow its presence around its namesake home of Xiamen. Despite the name connection, Xiamen Airlines has more capacity outside of Xiamen than it does to or from the city. In 2013 Xiamen Airlines aims to break the 20 million threshold for annual passengers carrier, and also carry over 200,000 tons of cargo and mail.
Hainan Airlines, China’s largest private carrier, is planning to launch three new airlines in the domestic Chinese market, continuing its portfolio strategy. While China’s other big carriers have their own partially or wholly-owned subsidiaries as well, only Air China has shown recent interest in high growth through this approach.
While different brands and management teams mean synergies are diluted, many of these carriers receive equity from their hub’s regional government, which want a local airline of their own.
Hainan differs from competitors in also having an international subsidiary strategy, although this approach is still only vaguely defined. No specific growth is planned for the future, and Hainan’s proposals to launch a domestic carrier in Saudi Arabia and to acquire the Philippines’ Zest Airways have fallen through.
This report reviews the establishment of Urumqi Airlines, Heilongjiang Airlines and Fuzhou Airlines - each working towards a hub strategy.
China is the world’s most populous nation and its second largest passenger aviation market with enormous growth potential in spite of some regulatory brakes. So why is it that some European countries are under-served to China by their home carriers, in particular Spain, but also Italy and the UK? It is not an easy market to serve and yields remain low, but it is a must-do market.
Air China and Lufthansa are the biggest players on Europe-China and this is reflected in the Star Alliance controlling almost half of the seats on these routes and SkyTeam’s Air France and KLM both have strong positions in Amsterdam and Paris respectively. By contrast, British Airways finds itself in the most competitive Europe-China market, the UK and without a Chinese partner.
While BA is starting a Chengdu service and increasing its Shanghai frequency from six times weekly to daily, Iberia is absent entirely from China and IAG looks very under-represented in this large and fast-growing market. In spite of Finnair carving out a successful niche, oneworld is an also-ran on Europe-China, with only a 10% share.
The North American market continues to outperform for Chinese airlines, a result of high demand and more limited competition than on European routes. In addition to Air China's forthcoming Beijing-Houston service, the carrier will add another four weekly services to New York JFK. A decade ago Air China had only a three times weekly Beijing-New York service, reflecting the rise of China as both a country and aviation market.
Air China's 2013 capacity to North America will be 183% greater than in 2003 and is quickly closing in on United Airlines' position as the largest carrier between North America and China.
In China it is not just the flagship and government-preferred Air China looking to expand. Hainan Airlines last year announced a Beijing-Chicago service to start in Mar-2013 with Boeing 787s. Following delayed Chinese certification of the 787 – which was stalling well before the aircraft's Jan-2013 grounding – Hainan has pushed the launch back to Sep-2013 and plans, for now, to operate the service with A330-200s.
The route marks the first high-profile long-haul route for Hainan Airlines, which has faced route restrictions as the government seeks to protect incumbents.
There is no doubt that Chinese carriers will be a force to be reckoned with. They are working with the world’s largest population and when travel propensity increases this will quickly make China the biggest market; they have the potential to maintain a low cost base; and they have favourable geography – through hubs in each corner of the country they will be able to route traffic efficiently, their sixth-freedom operations posing a threat to existing hubs in Asia and the Middle East. Realising all of this remains a question of when, how and with whom.
Long-haul aircraft deliveries are scheduled to pick up around the middle of the decade and ensure expansion (the short-term deliveries are mostly single-aisle equipment). The key will be to ensure profitable expansion. Service delivery and international marketing still lags noticeably. Functional non-Chinese-language websites can be a novelty.
The following is an extract from the special China edition of Airline Leader, CAPA’s management journal for CEOs. Click on the side panel on this page to obtain full access to the soft copy.
China's domestic aviation market is vast, even mystifying. Although 12 mainland carriers have scheduled international services – the largest amount for any country besides the United States – most have a low profile externally, where China’s top four airlines comprise 86% of international seats.
And then there are another 11 mainland carriers still nestled within China’s boundaries, giving the country 23 scheduled carriers compared to the 27 in the US, still a much larger market.
Overall, China’s domestic market is half the size of the US, but through expansion, consolidation and more expansion, China has created three formidable main carriers as well as more balanced medium and small carriers. The top 10 carriers in the US account for 96% of domestic capacity, but in China the top 10 represent 87%.
The average top 10 US carrier has 54% more domestic seats than the average top 10 Chinese carrier, but the 11th through 20th biggest Chinese carrier has 40% more seats than its respective US counterpart.
The following is Part 2 of extracts from the special China edition of Airline Leader, CAPA’s management journal for CEOs. Please click on the side panel on this page to obtain full access to the soft copy.
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