Hangzhou Airport

Spring Airlines, nearing 10 million pax p/a, looks to leverage agility and grow where permitted

Spring Airlines is China’s only notable (international) low-cost carrier and a successful one at that, having recently taken delivery of its 35th aircraft. One of China’s few private carriers, it is still a third the size of the AirAsia or Jetstar Groups, but that is largely a result of Beijing’s tight control of fleet growth. No doubt without this restriction Spring would grow even faster.

In 2013, when Spring will carry more than 10 million passengers for the first time, the carrier will look to expand its presence in Hangzhou, 90 minutes west of Shanghai and boasting incomes higher than those in China’s financial capital. Spring’s expansion announcement was quickly followed by competitors Air China and low-cost Juneyao. While the domestic market remains the staple for Chinese carriers including Spring, Spring has expanded regional routes to Hong Kong, international services and is looking to establish a subsidiary in Japan to accelerate growth.

Spring Airlines in major move adds flights from Hong Kong to Chongqing, Hangzhou, Nanjing and Xiamen

At CAPA's World Aviation Summit in Hong Kong on 28 & 29 Nov-2012, Spring Airlines announced a significant expansion of its services between Hong Kong and mainland China, a high-demand market that has only recently seen competition. Spring's addition of services from Hong Kong to Chongqing, Hangzhou, Nanjing and Xiamen supplement its three daily flights between Hong Kong and its base at Shanghai.

The once-stagnant market is seeing rapid change and competition with fledging carrier Hong Kong Airlines, invigorated mainland carriers, a tie-up between Hong Kong Airlines and China Eastern as well as the forthcoming entry of planned LCC Jetstar Hong Kong.

Spring commenced services in 2005 as a LCC but is moving away from a strict interpretation of the model at it seeks higher yields, hybridising as other former LCCs have done. Its advantage and platform for growth is efficiency, which is generally lacking in China's state-owned airlines.

China Eastern-Hong Kong Airlines partnership bolsters them in a market dominated by Air China-Cathay

The melting pot of increasingly tangled and conflicting alliances is perhaps bigger nowhere else than in Greater China. Driving the partnerships is an entanglement of its own, the cross-holding between the state-favoured, Star-aligned Air China and powerhouse but oneworld member Cathay Pacific. The message that formidable force sent – a region divided between Air China-Cathay and The Rest – is producing smart partnerships amongst the comparatively smaller participants.

The latest is a codeshare between China Eastern and Hong Kong Airlines covering flights between Hong Kong and mainland China. So far it is a limited partnership on reciprocal routes that gives a larger offering of flight times. That appeases the corporate market which China Eastern reckons it has under-captured due to its lack of widebody flights compared to competitors. The partnership also allows China Eastern to regain momentum in the Hong Kong market, where it has decreased capacity following the opening of cross-strait flights to Taiwan in 2008.

New routes to China to flourish in the next few years

China's leading airports are on the cusp of strong international growth, with several new routes to be launched in the coming 12 to 24 months. Growth will be driven by foreign and local needs: countries will have greater needs to further link with China while locally there will be an increasing propensity to travel among the Chinese population as incomes rise, while high-speed rail expansion will push Chinese airlines to grow internationally, at the same time providing feed opportunities for foreign carriers at the main Chinese gateways.

But growth is not only expected at the main Chinese hubs. Second tier airports can also look forward to increasing air services as the Government supports expansion from these hubs and as the LCC revolution takes hold in North Asia. New carriers across the region will be looking for new route opportunities, fuelling rapid growth at non-congested Chinese gateways. China's own second tier airlines are also looking to expand abroad, mainly within the Asia Pacific region, which will spur development at the provincial capitals across China's vast interior and economic zones.

Hangzhou, China’s ninth largest airport, targeting 52 million pax by 2015

China Hangzhou Xiaoshan Airport, China’s ninth largest airport by passenger numbers, is preparing for strong growth as it capitalises on its prominent position in the Yangtze River Delta Economic Zone. The airport is progressing on its wide-ranging expansion efforts that will see the opening of a third terminal in the last quarter of 2012, providing a much-needed capacity boost at the airport.

The airport has ambitious plans to triple annual passenger levels from 17.5 million in 2011 to 52 million by 2015, while cargo volumes are also expected to triple, to 1.0 million tonnes. To put this in perspective, the nation’s second largest airport in 2011, Guangzhou Baiyuan, handled only 45 million passengers in the year. In terms of cargo, the nation’s two largest cargo airports in 2011, Shanghai Pudong and Guangzhou handled 3.1 million and 1.2 million tonnes of cargo respectively in 2011.