More High-End Travelers, Increased Domestic Business Travel, Helping Industry Perform Better Than Many Other Markets
In the last several years, air travel in China has “taken off” among younger travelers, who traditionally take long-distance sleeper trains when traveling between provinces or far-flung destinations. While this has been great for domestic airlines such as China Southern or Air China, recent moves have indicated what many people find obvious — that Chinese airlines like the growing number of economy travelers, but love the growing number of luxury or business travelers, who have no qualms about plunking down top dollar for longer domestic or international flights.
The Financial Times recently wrote on the current state of the Chinese airline industry, which is performing very well despite concerns that a potential drop in travelers may dent their earnings. Despite this, the difference between the successes of Chinese airlines and the woes of American or European airlines are, in many ways, like night and day:
After a turbulent first half, it seems that China’s aviation industry is flying into clearer skies. On Tuesday, Air China, the country’s flag carrier, said profit for the first six months of 2009 jumped more than 50 per cent from the same period last year, due to strong domestic traffic, fuel hedging gains, stringent cost control and state support.
The news came on the heels of a long-awaited announcement by China Eastern to buy smaller rival Shanghai Airlines for $1.3bn. The takeover is likely to help the carrier return to profitability this year following the end of a fierce price war between the two Shanghai-based airlines.
While some airline execs are concerned about issues they cannot control, such as the price of jet fuel or overall pricing — as Chinese travelers have a cultural propensity to choose flight only if the price is right (unless, of course, they are the upper class) — it looks as if Chinese airlines are doing something right, and maybe other global airlines could learn something from them.