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China's new airlines – Donghai, Loong & Qingdao – preferring to follow rather than innovate

Analysis

China's three newest airlines - Loong Airlines, Donghai Airlines and Qingdao Airlines - are adopting different initial strategies. Their bases range in size from Donghai's Shenzhen (sixth largest airport in 2013 based on total passenger movements) to Loong's Hangzhou (10th largest) to Qingdao's namesake Qingdao (16th largest). Donghai and Qingdao Airlines are initially flying to smaller destinations while Loong is serving some of Hangzhou's largest domestic markets.

So it follows that Donghai and Qingdao are seeing larger marketshares while Loong is seeing lower marketshares given more intense competition. Neither of the three carriers have yet to be one of their hub airport's nine major carriers. As they grow this will change, but current incumbents will likely continue to hold the top largest ranks at the airport. Growth aspirations - or at least those publicly stated - vary too. Qingdao Airlines expects to have 50 aircraft by 2020 and 100 by 2025, Donghai 29 737-800s by 2020 while Loong has not stated long-term growth projections.

For now the carriers appear to follow a stock-standard approach to airline building rather than enter the market with a new proposition. Such an approach is common in fast-growing markets, but with China overhauling its market approach, the new airlines may need to adjust before they even settle in.

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