China Southern Airlines expects to open 7-8 new international routes this year, expanding on a plan that saw it open 10 new foreign destinations in 2007. Chairman Liu Shaoyang said this year’s routes will originate mostly in Guangzhou and serve neighboring countries in Southeast Asia, in addition to a London flight scheduled to start in the fourth quarter.

It aims to increase the percentage of its revenue derived from international operations from the current 19% to 25%-30% in the next five years while expanding its fleet from 332 aircraft at Dec. 31, 2007, to 400 by 2010.

However, Chairman Liu Shaoyang said, domestic consolidation likely is necessary to maximize international competitiveness. He said Beijing is considering a reorganization of the domestic airline industry but a decision will not be made this year as carriers concentrate on August’s Olympic Games.

Last month he proposed a China Air Holding Co. that would hold stakes in China Southern, Air China and China Eastern Airlines and also would ‘be able to make investments in foreign carriers as well as conduct internal integration.’
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The prospect of weekend ‘charter services’ from July 8 across the Taiwan Strait, as pledged by Taiwan’s President-elect, Ma Ying-jeou, could kick-start the process of opening one of North Asia’s biggest air travel markets. Currently, non-stop services are only permitted in the four major holiday periods on the Chinese calendar.

Daily charter services could be introduced this Northern Winter and be replaced as scheduled services in 2009, under Ma’s proposal.

Airlines on both sides are moving quickly to take advantage of the opportunity.Air China, for example, has applied to establish a representative office in Taiwan after Ma Ying-jeou is sworn in as President on 20-May-08.

EVA Air (shown in our illustration) forecasts a 50% increase in passenger numbers between Taiwan and the Mainland after the first stage of expanding the charter operations.

More than 1.5 million Taiwanese live on the mainland and are expected to travel more, if the inconvenience and added expense of a transit at a third point are removed. Furthermore, the Ma government proposes increasing ceilings on Mainland tourists, to help stimulate the island’s economy. Mr Ma plans to allow 3,000 Mainland arrivals per day to Taiwan from Jul-08, rising to 10,000 by 2012.

But the expansion of cross-Straits services is a serious looming threat for airports in Macau and Hong Kong and the carriers based there that have built large revenues from transfer services between Taiwan and the Mainland.
In terms of seat capacity, Cathay Pacific is the most exposed. Cathay accounts for almost one quarter of seats across the Taiwan Strait (from Hong Kong and Macau) at present, or around 38% including Dragonair. It will have to seriously consider how it will make good that shortfall.

Source: Centre for Aviation

Hainan Airlines, China’s fourth-largest air carrier, saw its unaudited net profit for 2007 jumped at least 300% from 2006.

In January, the airline estimated the rise in profit at 200% but that was being a tad conservative.

China’s airlines were buoyed last year by booming domestic demand for leisure and business travel, as well as the benefits of a rising yuan. Air China posted a 19% rise in second-half profit.

Hainan Airlines said details of its 2007 results would be published in its annual report, which will come out this weekend.

The airline posted a net profit of RMB181.6 million ($25.64 million) in 2006.
Source: Reuters

China Eastern, the nation’s third-largest carrier, has won official approval to establish a regional airline called Happy Airlines. (The name sounds a bit daft but so did EasyJet and Virgin the first time you heard them.)

The Beijing News reported that China Eastern will invest RMB400 million ($55.8 million) and take 40% in the new company, which will cater to west China’s middle and low-end tourist market.

The rest of the airline will be owned by the state-owned China Aviation Industry Corporation I (AVIC I), manufacturer of China’s first home-made passenger airliner ARJ-21.

The new airline will be based in Xi’an Xianyang International Airport in the country’s northwest and expects to hire transport plane pilots from the air force.

The newspaper said there are a handful of Chinese air companies running regional airlines, whose services are in huge demand but suffer from low profitability.

It further said, without elaboration, that China Eastern expects the new company to get beneficial treatment by the government. Beijing wants to boost the economy in the west to tackle unbalanced regional development. Note the illustration has nothing to do with the airline but this might be the image it wants to convey with its name.
Source: Economic Times

The Rhapsody of the Seas has just sailed from Kaohsiung harbor and out towards Hong Kong. That fact is nothing out of the ordinary. Such cruise liners frequently stop at Taiwan’s biggest commercial port. What was unusual was the cruise carried an unprecedented boatload of mainland Chinese tourists

The authorities in Kaohsiung were the first to admit that the tour party, which numbered only 668, was not enormous, nor was its expected impact on the local economy. But it was symbolic of change: the beachhead in a lucrative capital invasion for which the business leaders of Taiwan have been preparing for years.

If, as expected, the KMT under Ma Ying-jiu regains the Taiwan presidency next month, then there is expected to be a speed-up of the opening of economic ties between Taiwan and the mainland. Mainland tourism into Taiwan will be one of the most significant events.

There is huge pent-up demand for mainlanders to visit the ‘Precious Isle’, and they increasingly have big money to spend on eating out, medical care, and general tourist pursuits.

This is desperately important for the airlines of Taiwan. There are four of them and they are all bleeding money.

Taiwan’s overcrowded air passenger market began showing severe signs of financial strain this week when Far Eastern Air Transport, the island’s largest domestic carrier, admitted that a US$4.8m cheque for fuel had bounced.

Although the company obtained a one-month extension for the payment, the incident suggests the island’s aviation industry, which has been losing money for years, is operating in unsustainable conditions.

The airlines are caught by the ban on air transport between Taiwan and the mainland.

If the restrictions were to be lifted the airlines would become profitable and the whole of the economy would receive a boost. That is why the 668 tourists on the Rhapsody of the Seas are so important.
Source: Times Online