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3 major airlines see Chinese market as quickest to recover

TRAVELER numbers may be down amid a global slowdown, but that hasn't damped the zeal of foreign airlines itching to expand business in China.

Senior executives from three major airlines gave the Chinese market the thumbs up recently, predicting it will be among the fastest to recover in the world.

They also shared with Shanghai Daily some of their strategies for coping with the fall-out from the global financial crisis.

Arved von zur Muehlen

Managing Director of Lufthansa China

"If you look at the aviation industry, we have had a lot of crises, starting with the Gulf War through to SARS, September 11 (2001), the Iraq war and the spike in oil prices," he said. "We have learned how to deal with crises, and even how to generate good numbers during difficult times."

He said the German flag carrier stresses efficiency and a focus on customers. Lufthansa, Europe's second-biggest airline, will invest 150 million euros (US$194 million) in new lounges and spend 14 billion euros on new aircraft in the next three years.

"The crisis will end at some point, and customer demand will go up again, so we have to focus on long-term development," he said.

Lufthansa has boosted its flights from Shanghai to Frankfurt from seven to 10 weekly in the summer.

Theo Panagiotoulias

American Airlines' vice president for Asia-Pacific

"We are the only US airline since 1978 to have never declared bankruptcy," he told Shanghai Daily.

He cited four successful strategies:

1. Continuously keeping the supply-demand equation in balance by adjusting capacity.

2. Fuel hedging, which cut costs by US$380 million last year.

3. Prudent financial management. Last year, American raised nearly US$2 billion in spite of tighter capital and credit markets. It also reduced and refinanced its debt, while accumulating more than US$3 billion in cash and short-term investments. These steps have put the airline on strong financial footing.

4. Customer service because the carrier is committed to improving products and services.

Jeffery A. Smisek

President of Continental Airlines

The United States carrier launched its daily direct flights from Shanghai to New York on March 26, a new service it has been promoting aggressively since last year.

"We focus on future development rather than on the present situation, and we have strong cash flow to support our expansion," Smisek said. "We are trying to grab market share while they (competitors) keep a low profile during the crisis."

Continental offers special discounts on tickets and services tailored to Chinese consumers. The airline has invested US$150 million to launch the new route.

"Our carrier prepared for the new route for years, and even the financial crisis can't dampen our confidence," he said. "A long-haul route is hard-pressed to earn money in the short term, but we believe that it will be profitable in the future."

The carrier will leave the SkyTeam alliance, which includes Delta and Northwest, in October and join the more extensive Star Alliance grouping.

"Star Alliance covers more than 1,000 destinations and 20,000 flights, which can facilitate our connection with other carriers," Smisek said.

"We look forward to setting up a joint venture with United, Lufthansa and Air Canada to deal in trans-Atlantic flights," he said.


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