Not long after in December, Australia lifted all restrictions, allowing unlimited flights between the two countries. But not all is roses in bilateral agreements. According to Reuters , negotiations for more flights between the US and China broke down in late due to US concern that they would not be given adequate slots at Chinese airports. But while this is in part a political issue between the two great powers, it is also very much an infrastructure issue on the Chinese side. US carriers worry about airport slots because China just does not have enough. China is working very hard on this problem, adding eight airports last year for a total of According to the CAAC, the government is spending RMB 80 billion on the facility, which will be able to handle an annual passenger turnover of 72 million.
Carriers will have to wait until for it to open, though. Moreover, the CAAC noted that pressure from high-speed rail has caused passengers on routes around km to be cut in half.
Some airlines have even shut down their shorter routes. However, this problem will be solved in due time. There are plenty of quality co-pilots in China coming from its two primary air schools, but they do not have the experience to qualify as captains and it is impossible to shortcut that problem. Beijing, Shanghai and Guangzhou each have large hub airports, but their geographic situations are not conducive to transferring traffic to and from Europe, for example, which affects how airlines are able to funnel traffic to one another.
So instead of developing hubs and air alliances, local governments offer subsidies. Even Hainan Airlines, with its coveted five-star rating is not in an alliance, although one has recently been proposed by Virgin Australia.
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China is not content simply to have thriving airlines, it also wants to be a player in airliners. For China, having a competitive aircraft manufacturer is of course about national honor, but it is also a strategic business position. And although the jet is touted as a domestic achievement, it still relies heavily on foreign expertise and components. The wings, for example, were designed by the Ukrainian firm Antonov State, and the engines are from General Electric.
Commercially, the ARJ21 leaves a lot to be desired. Providing serious competition for the likes of Boeing and Airbus in the Chinese market, let alone the international market, is for the time being out of the question.
China's Big 3 airlines shaken out of status quo by a cooling Chinese economy
In his native Singapore, Yusof says he witnessed the arrival of Chinese manufactured cars some years ago, which initially flooded the market, but then disappeared within just a few years. However, like many issues facing the emerging aviation industry in China, this is also likely to be resolved given enough time and steady effort. It even took Airbus, which was founded in , many years to be truly competitive with Boeing. Outside the main holiday periods, domestic tickets are typically booked close to travel: Greater indications about demand ahead of departure would allow airlines to improve their revenue management, but a far greater impact on the bottom-line would come from curtailing the bloated cost bases of the legacy carriers.
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There is still much to be achieved towards becoming more entrepreneurial and to taking the initiative in selling rather than largely waiting for demand to find seats. Efficiency efforts are sorely needed. In 1H wages, salaries and benefits increased significantly: Alarmingly, the carriers say it was salary rises — not more staff — driving the increase, a feature consistent with the experience in other Chinese sectors such as manufacturing.
It was only in that the aviation regulatory authority, the CAAC, divested itself of commercial air transport responsibilities by breaking up the then-CAAC airline into six carriers, most simply named for their geography, illustrating the methodology behind the future strategy: After a frantic and often chaotic period of quasi-deregulation in the mid s, consolidation arrived in , well ahead of most other markets.
The carriers sought to cooperate while remaining independent, but the alliance has gradually disintegrated as some of the carriers have since aligned to one of the Big 3 — usually with the not always gentle guiding hand of Beijing. Shanghai-based China Eastern in merged with Shanghai Airlines under a move orchestrated to make the two more competitive with Air China and China Southern rather than with each other.
The market has since re-closed, except for new carriers formed as part of a joint venture with an existing airline. At first the Big 3 were effectively restricted to using these hubs at their home base, but eventually, as the airlines grew, it became obvious that if they were all to grow into strong units they would need to be able to make their own commercial route decisions.
Networks are largely hub-and-spoke and development outside of the main base is gradually occurring. So far China Southern is most developed outside its home owing to its sizeable international network from Urumqi. Air China is turning its attention to growth at Chengdu. When the CAAC opened the market to new and private entrants in , results were mixed. There was probably inadequate management within the carriers but it was the regulatory limitations designed to protect incumbents that really damaged them.
The two carriers which have done well, Juneyao and Spring Airlines, present something of a future glimpse into Chinese aviation. On the cost side it is much more focused, with attention to such practices as fast turnarounds. With a primary base at Shanghai Hongqiao , future growth will be tilted towards Shanghai Pudong. Frequencies are much lower than the Big 3 and its all- Airbus narrowbody fleet of approximately 25 is small to the hundreds of jets at the Big 3, including popular As used on trunk routes.
Juneyao is expanding internationally to popular tourist destinations in northeast and southeast Asia and is considering new domestic bases in what will be a test of whether other regions have the disposable income levels to generate as much success as it has found in Shanghai.
China's domestic airline market is still highly profitable
Spring has approximately 30 As with a goal of by Famously lean staff share hotel rooms on business trips and shun restaurants for cup noodles , Spring has also been agile and lately hybridising, offering a loyalty programme as well as its Spring Plus product that seats passengers in the front rows of economy with extra legroom and meals.
Elsewhere its service is a la carte, although checked luggage is included in fares. Its strong financial performance has continued since. The group is large and sometimes opaque; it has recently made some corporate structure changes and is mulling others, although few seem likely to increase transparency. While that leaves the majority of Chinese carriers unaligned, they are largely affiliated with the Big 3 or with Hainan. Codeshares between the Big 3 and affiliates are common, perhaps reducing the need for the smaller carriers to ponder joining an alliance.
If they did, they are all but guaranteed to follow their part-owner, as Shenzhen partially owned by Air China and Xiamen China Southern has a stake are doing. World Bank Office, Beijing. With negligible multi-modal coordination at government level, China has developed a massive high-speed rail HSR network in a typically incredible short time.
The sheer scale of the HSR system promised a clash and likely cannibalisation among duelling modes of state-backed transport. China Southern estimated that a quarter of its domestic network would be affected by the rail network. But some perspective is in order. In Nov, Chinese air carriers operated approximately unique city-pairs.
Lufthansa's digitalization strategy starts to take off
Some city pair routes of less than km, such as Urumqi- Korla km , will not see HSR service at all. Being a CEO of a leading brand can be tough. Can you share with us one challenge you dealt with in your career? First of all, I think it is more fun than it is tough, because I love the brands. And it's a wonderful job to represent those brands around the world.
But when you run a successful company, any form of restructuring is tough. Probably the most difficult thing has been to convince our unions in Germany that even though we were successful, we had to restructure to be fit for the future. So I think maybe a different quote: Modernization is not only about modernizing your fleet, it's also a modernization of culture and contracts, staff, payment schemes and labor agreements.
That was tough indeed. Actually, I am one of the few people on the plane who does not log onto the internet, because for me being on an airplane means peace, no phone calls, no emails. But because our customers see it differently, we now offer internet on board. I'm in the minority. It's about relaxing, thinking, reading and being disconnected from the world.
I fly once a day, so once a day I have peace. Master's degree in industrial engineering from the University of Karlsruhe Commercial pilot's license at the Lufthansa Verkehrsflieger-Schule in Bremen and Phoenix. Crew members pose for a photo as Lufthansa's first direct flight from Frankfurt to Qingdao arrives at the airport on March 29, How has your partnership with Air China benefited your business? What's the biggest driver for your business here and challenges? What efforts have you made on digitalization?
When was your first visit to China? How do you spend time on a plane? Various management roles at Lufthansa Group Education: Master's degree in industrial engineering from the University of Karlsruhe Commercial pilot's license at the Lufthansa Verkehrsflieger-Schule in Bremen and Phoenix Family: Married with two daughters.
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