Beijing's second airport at Daxing: risk of unproductive competition, China Eastern the big winner

The most important regulatory development in Chinese aviation in 2016 - and possibly one of the top for the decade - was awarding China Eastern Airlines home carrier status for Beijing's second airport, Beijing Daxing, due to open in 2019. There are usually few surprises in Chinese aviation: if word does not leak out, it is softly dripped. But few expected that China would award China Eastern in this way. China Eastern is due to become the only Chinese airline with dual home hubs in Beijing and Shanghai, granting a remarkable advantage.

Rather than allow airlines to operate from both airports, Air China and its Star Alliance partners will remain at their existing Beijing Capital hub and benefit from significant slot growth. China Eastern, China Southern (which was also named base carrier at Daxing) and SkyTeam partners will gradually move to the new Beijing Daxing.

Yet this move, expected to be backed by added traffic rights, risks the two airports competing with each other rather than singularly growing the Beijing hub, which has better geography as a connecting point for Europe and North America. China Eastern may indirectly receive a second victory: fragmenting Beijing adds relative strength to China Eastern's hub at Shanghai, where it is the only intercontinental home airline. China can make sweeping policy changes, but until then China Eastern's advantage is undeniable.