Air China Update
Transcript
Zhihang Chi:Shanghai is a very important gateway for Air China. In fact, we, we used to operate out of Shanghai to the United States, and at some point we dropped that. And Beijing obviously is our number one hub, but Shanghai is gaining importance. And today we operate many flights out of Shanghai to Europe, and I think it's high time that we resumed our service from Shanghai to the United States. And the first point we want to tackle is a point on the West Coast, and we believe that San Jose is a fantastic choice. San Jose, as you know, is— well, in case you go to China, if you ask people, have you heard of San Jose? And they will probably tell you no. However, if you ask them, have you heard of Silicon Valley? Everybody will say, of course. So there goes the importance of San Jose. Just so you know, all major IT companies in San Jose Silicon Valley set up shop in Shanghai. So we are really thinking of this flight, San Jose-Shanghai, as a Silicon Valley flight. Both Air Canada and United Airlines are 2 of our most important Star Alliance partners, and with Air Canada we're negotiating a JV contract, and then with United we just recently announced that we want to have deeper and broader cooperation. Our relationship with Cathay Pacific is very important. In fact, we, we have a 30% stake in Cathay Pacific, and then Cathay Pacific owns about 20% of Air China, 18% to be exact. And we would like to have a stronger Hong Kong, Asia, Trans-Pacific relationship, but to some extent it is preempted by our Star Alliance relationship. And so, but any relationship that we had prior to our Star Alliance membership is grandfathered in, and we continue to seek other ways to to build a better relationship with Cathay Pacific within the Star Alliance framework. Airlines are airlines. I mean, they're businesses and they do things out of their best interest. So I wouldn't label them as being protectionist or not. But I will express my concern that I think what needs to be paid closer attention to is government behavior and government action. I want to argue that the interests of US carriers is separate from US aviation policy, and I'm hoping that There needs to be— there will— the policy of more access, the policy of open skies will continue to exist and be promoted. That's definitely an area of concern for us. Both U.S. and Chinese carriers are bumping against our current frequency caps, and we would like to see a discussion to happen soon to mitigate that situation. In fact, there was a round of consultations last year, last May, but my understanding is it was not productive, and we certainly hope that situation can change fairly soon. Thank you, Zhihang Chi.
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