News
World Routes kicks off in China’s Chengdu
September 30th 2016
Speaking at the World Routes conference in Chengdu this week, top executives at Chinese carriers said some airlines may not be able to continue their rapid long-haul expansions if the fuel price rebounds and local government subsidies abate, making consolidation a likely scenario. Read More »
Hainan Airlines vice-president, Hou Wei, said during a panel debate there were “too many” players in China today - 57 major airlines - compared with four hub airlines in the U.S. “For small airlines, their survivability is a question. They need to be really innovative in cost management and product design,” Hou said.
Hong Kong Airlines CCO, Li Dianchun, said start-up airlines initially might be blinded by receiving subsidies from provincial governments, where city fathers are encouraging carriers to launch long-haul services from non-core cities. Li said local governments tended to reduce or eliminate these grants three years after the launch of a subsidised route. Additionally, a slow but gradual rise in fuel costs, said Li, either might force some carriers out of the market or encourage network frequency reductions.
The concerns of the airline executives were reinforced by Air China assistant president, Zhu Songyan, who questioned the long-term financial viability of some recently launched long-haul services.
In Chengdu, several airlines have announced route launches. Hainan Airlines will launch a twice-weekly B787 Chengdu-Los Angeles nonstop service from December, increasing the service to three times a week in summer 2017. The HNA Group carrier also is considering a nonstop link between Chengdu, Sichuan Province’s capital city, and New York next year.
Chengdu-based Sichuan Airlines, which last week ordered four A350s for long-haul expansion, will launch flights between Chengdu, Mexico City, Dubai and Auckland.
There will be more links from Chengdu into Europe with confirmation from the airport that Capital Airlines would start a twice weekly service to Madrid from November 16, 2016. This route has been on sale since last month and will operate a Hangzhou-Chengdu-Madrid routing.
Meanwhile, Ethiopian Airlines will add a four-weekly Addis Ababa-Chengdu route “sometime next summer,” according to airline CEO, Tewolde Gebremariam, who attended the conference. Gebremariam told FlightGlobal the Star Alliance member chose Chengdu because it is not “highly congested and slot constrained” like Beijing, Guangzhou and Shanghai. “Chengdu has a very good opportunity to come up as a major hub that would be comparable with Shanghai, Beijing and Guangzhou," he said, and added he was very hopeful that the route would grow to daily “very easily”.
Irish transport minister, Shane Ross, signed a Memorandum of Understanding with CAAC chief administrator, Feng Zhenglin, to “facilitate the establishment of a direct air service” between their respective countries. It has been previously suggested HNA Group carrier, Hainan Airlines, was seriously studying a nonstop Beijing/Shanghai-Dublin route. The HNA Group acquired Dublin-headquartered aircraft lessor Avolon Holdings earlier this year.
