China's airlines soar, Hainan Air interest in Virgin America

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China's airlines soar, Hainan Air interest in Virgin AmericaHainan Airlines, privately owned and not one of China's Big 3, could be the reported bidder interested in Virgin America

The international growth of Chinese airlines is increasingly evident. Air China will have upwards of three daily flights to Los Angeles; China Eastern has received investment from Delta Air Lines; Xiamen Airlines will launch four long haul routes in 10 months; and Hainan Airlines has invested in airlines as far flung as Brazil and South Africa. Closer to home, visitors from China are the number one source market for many Asian countries and growing fast, centreforaviation.com reports.

Chinese airlines have been growing at double digit rates in international and domestic markets for a number of years. It is only in recent times that international growth has taken its place in a structural shift where international gains more prominence.

In 2016 Air China could fly more internationally than domestically. China Southern has increased international's share of capacity from 27% in 2014 to a projected 34% in 2016. Chinese airlines are realising their potential, are benefitting from increased outbound travel demand and are being pushed by the government to grow internationally. Yet as much as Chinese airlines have already had an impact, there is no sign that they have yet reached their peak. The growth of international traffic on Chinese airlines in the 12 months of 2015 was the same as in the previous three years combined.

New record in international passengers 

In 2015 international passengers to/from China reached 42 million – unsurprisingly, a new record. This is for international excluding 'regional'  traffic (Hong Kong, Macau and Taiwan), carried only on Chinese airlines. It thus excludes international passengers arriving/departing on non-Chinese airlines. The international China market is one of growth, so this scenario is not a case of Chinese airlines carrying passengers (counted under these statistics) who used to fly on non-Chinese airlines (not counted under these statistics). The total market has experienced growth, but there has undoubtedly been market share shift as Chinese airlines come to dominate foreign markets.

For example, Chinese airlines are now larger than their US counterparts in the China-US market.

The year 2015 recorded 33% growth, equating to 10.5m additional passengers compared with 2014. These 10.5m additional passengers in a single year (2014-2015) are the same number as the 10.5m additional passengers carried in the three years between 2011 and 2014. What the market used to add over three years has now been achieved in a single year. The 42m international passenger figure  in 2015 is double the 21m carried in 2011. 

 

Internationalisation of Chinese airlines has yet to reach its peak

There is no sign that this pivot towards international markets is reaching its peak. Chinese airlines are realising their potential. They have been emboldened to a degree by an increasingly improving on-board product and growing partnerships.

Hainan Airlines, privately owned and not one of the Big 3, could be the reported bidder interested in Virgin America

Delta's stake in China Eastern has brought the airline greater awareness in the US. On 23-Mar-2016 Air China and United, distant partners, announced closer cooperation that will "prepare both companies for future joint opportunities" – which could be interpreted to mean a joint venture, once that becomes possible under the regulatory framework. Air China has a growing number of JVs in place or in works, and likewise for China Eastern. China Eastern has confirmed talks with Etihad Airways about a partnership.

Such a move would greatly accelerate Hainan's expansion in the US market, which Chinese airlines regard as their biggest long haul opportunity.

Read more here.

RELATED TOPICS: GreeceGreek tourism newsTourism in GreeceGreek islandsHotels in GreeceTravel to GreeceGreek destinations Greek travel marketGreek tourism statisticsGreek tourism report

 

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