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Chinese airlines face stiff
competition
BEIJING - Air
China, China's largest airline, plans to invest
688 million yuan (around US$83.19 million) to
renovate the first-class and business-class
hardware of 15 long-range aircraft before the end
of next year. The level of service in these
airplanes, Boeing 747-400s and Airbus A340-300s,
will also be upgraded, said president of Air China
Li Jiaxiang. The move is widely regarded as part
of the national carrier's efforts to cope with the
fierce competition of foreign airlines, which are
trying to grab a bigger share of the growing
Chinese market.
Ten days after Spain's Air
Europa launched a direct Beijing-Madrid flight, a
Boeing 777 passenger plane of British Airways
landed at Shanghai Pudong International Airport on
the morning of June 2, marking the official
opening of the direct Shanghai-London air route.
British Airways will operate five weekly direct
flights between Shanghai and London's Heathrow
Airport. Before 2004, British Airways operated
only six direct flights to Beijing weekly.
On May 20, US-based Continental Airlines,
the world's sixth largest airline, announced that
it would launch a daily non-stop air service from
Beijing to New York starting June 16. It will be
the only carrier offering daily non-stop service
between the two cities. "We have full confidence
in the air route," said Jim Compton, executive
vice president of Continental Airlines. "China's
fast growing economy, its attraction to foreign
capital, and the business opportunities arising
from the 2008 Olympics and the World Expo will
enable [China's] aviation industry to rise quickly
in the future," he said.
Continental
Airlines is the third US airline to enter China's
passenger transport market, after Northwest
Airlines and United Airlines, since China and the
US signed an aviation agreement in 2004. "We are
very pleased to offer world first-class service to
the rapidly growing and flourishing Chinese
market," said Compton, "and we are also very proud
to have been approved to launch an air route
linking New York and Beijing, the world's two most
important cities." Continental's round trip ticket
from Beijing to New York is priced at only 5,288
yuan (US$639), compared with the 5,700 yuan fare
offered by Air China. Besides, passengers can get
a reward of 21,100 frequent flyer miles during the
company's promotion period. The attractive offer
showed the determination of US airlines to win a
strong share in the Chinese market, industry
insiders here said.
Meanwhile, United
Airlines offered passengers a Beijing-New York
return ticket priced at 4,900 yuan, with one stop,
starting May 5. Northwest Airlines joined the
price war by selling Beijing-New York round trip
tickets at 5,260 yuan (US$636), albeit with two
stops.
US airlines are also trying to
upgrade their planes serving the Beijing-New York
route. Continental announced that 283-seat Boeing
777 planes, with 48 business and first-class
seats, will operate on the route. Compton said the
opening of the Beijing-New York air route is only
the airline's first step toward entering China's
aviation market. The US carrier also plans to
launch a direct Shanghai-New York air route in
2007 and has already submitted its application to
the relevant departments.
United Airlines,
which already has 28 flights to Chinese inland
cities each week, is also stepping up efforts to
expand its market share. It plans to further
increase its flights to certain cities in the near
future. At the same time, Sri Lankan Airlines will
open direct Beijing-Colombo flights beginning June
15. This will be the first Sri Lankan air route
linking the two nations. The new route is expected
to facilitate Chinese travel to Sri Lanka and the
Maldives.
Chinese airlines, meanwhile,
seem a bit passive in facing aggressive foreign
counterparts. So far, only state-owned Air China
operates Beijing-New York flights. The airline has
reported losses each year since launching the air
route in 2002, a report of the Beijing-based China
Economic Times has said. That explains why other
Chinese airlines, mainly including Guangdong
province's China Southern Airlines and
Shanghai-based China Eastern Airlines, hesitate to
initiate new air routes between China and the
United States. The only Chinese airline to
recently announce new service to the US was Hainan
Airlines, of south China's Hainan province, which
announced plans for direct flights to the US last
year.
"This is related to China's overall
national strength," said Li Xiaojin, a researcher
with the China Civil Aviation College. "Chinese
airlines bear greater pressure compared with their
foreign counterparts as jet fuel prices are higher
in China's domestic market and they also have to
spend heavily on importing airplanes. This puts
them at a disadvantage in competing with foreign
airlines." Besides, domestic airlines are still
less competitive than foreign ones in terms of
capacity and management efficiency, said Li.
At present, Chinese airlines usually adopt
a "me-too" policy on international routes, Li
noted. "They will first study how the foreign
airlines operate, then adjust their own operation
accordingly." It will take time for Chinese
airlines to catch up with their foreign
counterparts and learn to compete with them, he
said. An earlier report said that by the end of
2004, 74 foreign airlines were operating 1,091
flights to China each week, and eight Chinese
airlines were operating 994 weekly flights to
overseas destinations.
(Asia
Pulse/XIC) |
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