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Air China says market not ready for budget carriers
By Yang Jian |
June 11, 2012, Monday
|
Online Edition
Online Edition
AIR China will not step into the budget carrier market in the near future because China's policy and market environment isn't ready, a top official with the nation's biggest international carrier said today.
Wang Changshun, chairman of the airline, made the remarks on the sidelines of a meeting in Beijing about three months after China Eastern Airlines and Australia's Qantas banded together to set up a regional low-cost carrier called Jetstar Hong Kong.
"China's civil aviation industry is facing a more severe situation than that during the financial crisis in 2008... So, Air China will mainly focus on improving its current major services," Wang said.
He said the country's airlines had been impacted by the debt crisis in Europe, slowing economic growth in the United States as well as the sluggish Asian economy.
Referring to Chinese airlines, he said: "Passenger transport service is better than cargo, the domestic market is better than the international one and regional routes are better than the artery ones."
Air China made a net profit of 7.5 billion yuan (US$1.17 billion) last year, down 38.8 percent from 2010 mainly due to a rise in fuel prices.
However, the Chinese market is expected to expand this year.
Wang estimated passenger volume will increase to about 350 million this year from last year's 290 million, while the fleet number will increase by about 200 by the end of the year.
China Eastern, the country's second-largest airline by passenger numbers, and Qantas, Australia's top carrier, announced in March they would invest up to US$198 million over three years for the equally-owned Hong Kong-based joint venture.
Jetstar Hong Kong will start operation in mid-2013 with three Airbus 320 aircraft before expanding to 18 planes by 2015, when the venture is expected to be profitable, according to China Eastern.
"I believe this low-cost model, whether in a high or low oil price environment, will be competitive," said Liu Shaoyong, China Eastern's chairman.
Shanghai-based Spring Airlines, another low-cost airline in China, made a profit of 500 million yuan in 2011.
Wang Changshun, chairman of the airline, made the remarks on the sidelines of a meeting in Beijing about three months after China Eastern Airlines and Australia's Qantas banded together to set up a regional low-cost carrier called Jetstar Hong Kong.
"China's civil aviation industry is facing a more severe situation than that during the financial crisis in 2008... So, Air China will mainly focus on improving its current major services," Wang said.
He said the country's airlines had been impacted by the debt crisis in Europe, slowing economic growth in the United States as well as the sluggish Asian economy.
Referring to Chinese airlines, he said: "Passenger transport service is better than cargo, the domestic market is better than the international one and regional routes are better than the artery ones."
Air China made a net profit of 7.5 billion yuan (US$1.17 billion) last year, down 38.8 percent from 2010 mainly due to a rise in fuel prices.
However, the Chinese market is expected to expand this year.
Wang estimated passenger volume will increase to about 350 million this year from last year's 290 million, while the fleet number will increase by about 200 by the end of the year.
China Eastern, the country's second-largest airline by passenger numbers, and Qantas, Australia's top carrier, announced in March they would invest up to US$198 million over three years for the equally-owned Hong Kong-based joint venture.
Jetstar Hong Kong will start operation in mid-2013 with three Airbus 320 aircraft before expanding to 18 planes by 2015, when the venture is expected to be profitable, according to China Eastern.
"I believe this low-cost model, whether in a high or low oil price environment, will be competitive," said Liu Shaoyong, China Eastern's chairman.
Shanghai-based Spring Airlines, another low-cost airline in China, made a profit of 500 million yuan in 2011.
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