New Harbin carrier strikes out for the world

It has only one plane and is owned by a local Chinese jeweler but that is not holding back Harbin’s Longjiang Airlines. It plans to be flying 40 aircraft by 2021, including seven A330s on routes to Sydney, London Heathrow and Los Angeles.

by DOMINIC LALK REPORTS FROM HARBIN  

September 1st 2017

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Longjiang Airlines’ (LJ Airlines) sole airline route is a daily 2,900 kms Harbin-Hefei-Zhuhai A321 triangular service commenced after receiving its air operator’s certificate (AOC) from the Civil Aviation Administration of China (CAAC) in February. Read More »

The new carrier is 98% owned by Harbin Xiangyu Co., a gold and jewellery company and has registered initial capital of 800 million yuan ($130 million). It is headed by chairwoman and CEO, Liang Fuhua, a 2% shareholder. LJ told Orient Aviation it has “the support of all levels of government”.

Longjiang Airlines president Zhang Yuming

The airline’s president and legal representative is Zhang Yuming, whose jewelry company owns 98% of LJ Airlines. But the carrier’s day-to-day business is run by LJ’s board director, Li Xiang, and vice-president, Jia Tiesheng. Both Liang and Jia were formerly members of Air China’s senior management. Jia was in charge of alliances and international partner relations and was one of the signatories to the Air China-Lufthansa Sino-Europe joint venture.

When Orient Aviation visited Jia, Li and Liang in Harbin in August, the airline’s planned second aircraft remained grounded after China Aircraft Leasing Group (CALC) served LJ with a termination notice in June that alleged the very young airline had failed to fulfil certain terms and conditions of contracts signed last year for the second A321. LJ bought the A321 flying Harbin-Zhuhai from bankrupt airberlin.

LJ confirmed to Orient Aviation there was a “controversy with CALC” because of an unspecified “deposit issue” and that it is considering legal action against CALC for misrepresentation. At press time, the two parties had not settled their dispute. CALC confirmed to Orient Aviation that following issues with the first lease it had cancelled LJ’s second lease contract.

LJ’s Harbin-Hefei-Zhuhai route is outperforming forecasts. From February to September, it carried approximately 100,000 passengers and achieved an average load factor of 80%. The aircraft arrived in a single-class configuration in Harbin after its short stint with airberlin, but it has been reconfigured to include eight lie-flat first class seats that sell for 8,000 yuan (US$1,200) per round trip. Uptake is good, LJ vice-president Jia said.

At domestic Mainland carriers, aircraft cabins are only fitted with domestic first – generally equivalent to business class elsewhere in the world – and economy seats. LJ serves meals in both domestic first class as well as economy class. Catering is provided by China Southern Airlines, the largest carrier at Harbin’s Taiping International Airport.

Zhuhai was picked as the inaugural destination, CEO Liang explained, because the airline was “bullish on the growth potential of the route as the Hong Kong-Zhuhai-Macau Bridge is about to open and it will take only 40 minutes to drive from Zhuhai to Hong Kong”.

LJ’s goal is to be Heilongjiang Province’s flag carrier. It plans to increase its fleet by six aircraft this year after taking delivery of an additional A321 and four A320s. In 2018, it intends to acquire another seven A320s, followed by seven more A320s in 2019 and, more interestingly, two A330s, one each in November and December, in the same year.

In 2020, seven additional A320s and two extra A330s will arrive at the fleet. In 2021, there will be six A320 and three A330 deliveries to the airline.

LJ will only install first class on the A321s operating to southern China, while the A320s will be fitted with a single-class layout for 180 passengers. The A330s will have 260 seats, including 18-24 flat beds.

The first A330 is due at LJ in November 2019. For now, it planned to launch a two to three times a week Harbin-Sydney route with the long-haul jet, followed by an A330 service to Singapore a month later. Li and Jia told your correspondent that Australia was the favourite vacation spot for people from Heilongjiang.

In 2020, LJ has the goal of inaugurating A330 services first to San Francisco, followed by Melbourne, and then London-Heathrow, Paris and Los Angeles in 2021. Tokyo, Seoul and Ho Chi Minh City routes will commence next year.

Domestically, LJ will have 36 routes by 2021, including multiple daily flights to Beijing, Shanghai and Guangzhou.

It has ambitions to carry four million passengers that year after building secondary hubs in Nanning and Xian and launching a frequent flyer programme.

LJ needs to improve its distribution. At the time of our visit, most sales were made through the indirect channel. The airline is rolling out a mobile app and WeChat booking and it is opening more ticket offices. In 2018, it forecasts 80% of sales will go through its direct channels.

The carrier is expected to face stiff competition in the first years of operation given the number of airlines opening in China and across the region. HNA Group is preparing to launch Heilongjiang Airlines, also to be based at Harbin Taiping International Airport, but like elsewhere on the Mainland the growth of new carriers is being hampered by acute pilot and slot shortages.

Taiping International Airport is undergoing major expansion that will include a new runway, a 163,000 square metre terminal and 43 new aprons. By 2020, the airport will accommodate 22 million passengers, up from 16 million last year.

The Airport, formerly known as Yanjiagang Airport, opened in 1979. The airfield is located approximately 37 kilometres southwest of downtown Harbin. It is the largest airport in north-eastern China.

In 2015, Harbin implemented a 72-hour visa-free transit scheme, allowing visitors from 51 countries to enter Harbin for up to three days without a visa.

Yet Harbin remains relatively isolated on the airline route map. While it boasts an extensive domestic network, the airport is lacking international connectivity.

The only scheduled international services are Seoul (Asiana Airlines), Taipei (EVA Airways), Vladivostok (Aurora Airlines, China Southern and Sichuan Airlines, as well as Bangkok, Macau and Nagoya (Spring Airlines). Lion Air operates charter flights to Denpasar and South Korea’s Eastar Jet offers charters to Cheongju. Singapore’s Scoot has announced Singapore-Harbin from December 1.