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Location of Chengdu Airport, China
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570 total articles
29 total articles
United Airlines plans a realignment of its Pacific operations centred on increasing direct flights rather than stop-overs in Tokyo as the weakness in Japan’s currency has dragged down the carrier’s results in those markets for most of 2013. United is also building a strategy to directly serve non-traditional gateways to China as competitive capacity increases have also pressured the carrier’s Pacific performance.
The adjustments are freeing up some aircraft for redeployment into new markets from United’s Houston Intercontinental, Washington Dulles and Chicago hubs for new service to Europe, which perhaps seems like a safer option at the moment even as the region is on an at-best slow trajectory to economic recovery.
The success of these planned network shifts necessarily depends on execution, an area where United has faced challenges with respect to the merger with Continental. Now, getting it right will be central to the airline's Asian strategy.
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.
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.
United Airlines has entered into the growing competitive fray on the US west coast with a push from its hubs in the region into two of Delta’s hubs. Competition was ignited by Alaska Air Group and Delta with Delta increasing its service footprint from Seattle to drive feed for its burgeoning Pacific operation from the airport.
United’s decision to add service from San Francisco to Atlanta and between Los Angeles and Minneapolis occurs as Delta in early 2014 begins a push into Seattle from the airport’s heavily travelled domestic markets to bolster its growing international footprint from Seattle with a particular focus on Asia.
The decision by United to add service into its west coast hubs is occurring against a backdrop of weaker than expected revenue performance for 3Q2013 driven by lower yields in some trans-Atlantic markets and competitive capacity in China that contributed to lower than expected yields in the carrier’s Pacific entity.
Air China's hub at Beijing Capital is effectively at capacity for movements between 07:00 and midnight. Consequently the carrier is increasingly using its existing slots to launch international services that support its positioning as China's international flag airline; this also allows Air China to grow revenue, which in 2012 surpassed RMB100 billion (USD16 billion) for the first time. But these services, aside from Taiwan, offer only lower yields and faint glimmers of profitability – unlike the domestic heartland operations.
With Air China's domestic RPKs growing only 0.5% in 2012, the carrier is seeking to assure the market it has domestic growth opportunities left by expanding its hubs at Chengdu and Shanghai, although the latter is also constrained by slots. The Air China Group also has a portfolio of domestic carriers, including Shenzhen Airlines (the country's sixth largest), Shandong Airlines and Tibet Airlines. They account for about a third of the group's domestic revenue and most traffic growth.
The central Chinese city of Zhengzhou may seem obscure, but it is estimated to produce half of the world's iPhones. It is part of the story of Chinese manufacturing shifting from traditional coastal areas to central and western China, where wages are lower. That in turn is contributing to new air services and is directly impacting freight, with demand moving to what Cathay Pacific terms the "Three Cs": Chengdu, Chongqing and CGO (the airport code for Zhengzhou). This trio of cities has collectively overtaken Shanghai as Cathay's largest Chinese freight market.
Volumes at Zhengzhou, the smallest of the three, grew over 40% in 2012 while Chengdu saw steady growth and Chongqing double-digit growth. Shanghai saw single-digit percent decreases.
More resources are being put into establishing Chengdu and Chongqing as western capitals for China, and passenger services have flowed, with British Airways and Qatar Airways the latest to announce service to Chengdu. Finnair and Qatar already serve Chongqing. Zhengzhou maintains a less diversified economy and so sees a heavy presence of dedicated freighters and no intercontinental services.
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