Chinese airline outlook: slot shortages and yield pressures prompt the need for innovative solutions

For some blissful years last decade, China's Big Three carriers - Air China, China Eastern and China Southern - could grow revenue through the relatively straightforward, if operationally exhausting, path of pumping double-digit growth into the market, facilitated by slots at China's key airports.

But now those slots have become scarce, requiring Chinese carriers to seek out new markets - North America and Southeast Asia are the current targets - and also improve yield mix.

The task is formidable. The carriers' rapid growth last decade also involved increasing their international capacity but not necessarily their international experience and marketing, leading to a product and service that may be adequate but unknown or untrusted.

Channels for yield growth are many: Air China's revenue from Star Alliance is 4% and from premium classes about 13%, and many foreign carriers are willing partners. But the required experience from Chinese carriers to take advantage of these streams is not as strong as it is in direct capacity growth. China's carriers will soon discover their business is about more than putting aircraft into the sky.