China’s airlines gear up for business
Print Edition
RIDING an overseas tourism boom, China’s airlines are sprucing up services on gleaming new jets to fresh destinations with the bold aim of cracking a lucrative passenger market dominated by established rivals — Western business travelers.
At Airshow China this week, the country’s largest air expo, flag carrier Air China showed off virtual reality goggles for long-haul business class customers. Fast-growing Hainan Airlines has unveiled menus by Michelin-star chefs, joining bigger players like China Eastern and China Southern in touting new offerings.
China already accounts for a quarter of all business travel spending, according to a Global Business Travel Association report this week, up from 5 percent in 2000. But much of that is domestic: as they expand economy service abroad — and rates of growth ease at home — mainland carriers are preparing to do battle for the highest-margin travelers.
“The work required to create growth is exhausting. That has not left much bandwidth to focus on strategic growth, like improving corporate and premium,” said Will Horton, a Hong Kong-based senior analyst for aviation consultancy CAPA. “But the push is definitely there. Why leave money behind?”
The logic for pursuing business travel growth is clear. On flights between the South Pacific and Asia, according to data from the International Air Transport Association, premium passengers account for 8 percent of travelers but generate close to a third of revenue.
As the volume of Chinese air travelers grows, weekly nonstop flights between Australia and China’s mainland alone have grown by 18 percent to 114 over the past 12 months, according to data from CAPA. Each business class seat filled would give a handsome boost to revenue.
As Chinese carriers move to market their premium services by advertising in places like Australia, they face having to persuade Western customers that their customer service and amenities match standards elsewhere.
After a spate of crashes in the 1990s, airlines have revamped and invested heavily, spending billions of dollars in recent years on buying new planes, led by China Southern which took delivery of its 700th aircraft in September. The carrier is currently the fourth largest in the world by fleet size, according to China Aviation Daily.
There has not been a fatal crash involving a Chinese airline since a China Eastern domestic flight crashed after takeoff in 2004.
“(Wary flyers) have a perception that is based on the past 30 years,” said Louis Lu, managing director Australia and New Zealand at Guangzhou-based China Southern.
“But just like China’s economy, a lot has changed in the past 30 years. We have a brand-new and young fleet and it is all Boeing and Airbus models ... safety is definitely not a problem.”
Assuming the carriers convince on safety, they will still need to meet service requirements.
“You can spend money on brand-new aircraft with decent business class seats, such as China Southern’s (Airbus) A380,” said David Flynn, editor of travel website Australian Business Traveller.
“But when your flagship business lounge is little better than a domestic Qantas lounge, or your crew serve soft drinks warm and red wine chilled, you are going to struggle to win over any Western business travelers.”
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