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Unforeseen:Air China, China Eastern Airlines Both Obtained Dual Airport Operation Rights

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The Civil Aviation Administration recently issued a document agreeing that China Eastern Airlines will keep the Beijing-Shanghai route at the Capital Airport and reduce its time slots ratio at Daxing Airport by 10%. Correspondingly, AVIC Group (Air China parent company) was approved to enter Daxing Airport and use the time slots vacated by the Eastern Airlines Group.

This means that both Air China and China Eastern Airlines have been able to operate at the Capital Airport and Daxing Airport at the same time, reversing the earlier statement made by the Civil Aviation Administration that “the domestic aviation division is not allowed to operate at both airports concurrently”, which is unexpected. According to informed sources, the document was sent to the local administration by the Civil Aviation Administration headquarters and then verbally notified to the two airlines.

“This program looks more like a negotiation between Air China and China Eastern Airlines. The Civil Aviation Authority is in a ‘passive’ role.” Many industry insiders pointed out that the changes in this program are perspectives on the country, the East and the South. The game between the large aviation enterprises and the civil aviation regulatory authorities is fierce.

Known as the “Civil Aviation Century Project”, Daxing Airport is scheduled to be officially launched at the end of September this year, with a total investment of about 80 billion yuan. It is one of the largest airports in the world. According to official forecasts, the annual passenger throughput of Daxing Airport will exceed 100 million by 2040.

Behind the billion-level throughput target is a huge new aviation market that is very attractive to the airline. Before the Daxing Airport allocation plan was released, the airlines began to plan for a response. However, for the overall relocation of Daxing Airport or two simultaneous operations, the airlines have “abacus”: the Beijing market has always been dominated by Air China, and Daxing Airport has become an expansion opportunity for China Eastern Airlines and China Southern Airlines; however, compared with the Capital Airport, Daxing Airport Distance The urban area is far away, and the disadvantages are obvious for the routes of business customers such as the Beijing-Shanghai route.

In July 2016, the State Council approved the Daxing Airport Airline Base Construction Plan, which stipulated that airlines should be divided into new and old airports according to their subordinate alliances. Among them, members of the Star Alliance, such as AVIC Group (Air China Parent Company), stayed at the Capital Airport, and members of SkyTeam, such as China Eastern Airlines Group and China Southern Airlines Group, relocated to Beijing New Airport. Although China Southern Airlines has since announced its withdrawal from SkyTeam, it does not affect the above allocation.

Many industry professionals pointed out that this kind of base distribution plan is the most reasonable one in the current technical means, and at the same time, it has actually avoided more interest entanglement through the “one size fits all” approach. “There is cooperation in code sharing and transit between alliances. From the passenger’s point of view, it is more convenient to travel to passengers in an alliance manner,” said Yu Zhanfu, global partner and vice president of Greater China at Roland Berger.

By the beginning of 2019, the Civil Aviation Authority reinforces this statement. On January 3, the Civil Aviation Administration issued the “Transition and Operation of Beijing Daxing International Airport and the “One City Two Airports” Flight Time Resource Allocation Scheme”, clearly emphasizing that other domestic airlines may not operate at both airports except postal aviation. The two airports operate simultaneously; foreign airlines, Hong Kong, Macao and Taiwan airlines can choose to operate between one or two airports. At the same time, the transition plan will also adjust the relocation period of China Eastern Airlines and China Southern Airlines from the original four-year transition period to five seasons.

“This is a clear indication that the three major airlines can no longer bargain.” The industry generally believed. According to the reporter, after the above-mentioned base distribution plan was released, the three major airlines arranged for the response. Both China Eastern Airlines and China Southern Airlines planned to keep one of their subsidiaries behind the Capital Airport. Air China also intends to intervene in Daxing Airport and is unwilling to let the market share in Beijing.

After the introduction of the transition plan, the industry once thought that the distribution pattern of Daxing Airport Airlines had been fixed. However, the new notice issued by the Civil Aviation Administration recently showed an unexpected “reversal.”

In this new notice, Air China was approved to enter Daxing Airport and received 10% of the time. Previously, Air China once had a lot of competition for the competition between Daxing Airport and the Capital Airport, and had publicly questioned whether Daxing Airport could achieve the expected scale.

The emergence of Xiong‘an New District is considered by the industry to be an important factor affecting Air China’s transformation. In addition, in order to ensure that Daxing Airport can achieve the expected throughput after it is put into operation, the Civil Aviation Administration has also issued a series of resource allocation policies that are inclined to Daxing Airport, such as introducing a competition mechanism on the long-haul route and breaking the original “one carrier per longhaul route ”. The system has affected Air China’s previous absolute competitive advantage on international routes.

China Eastern Airlines has been able to preserve its advantages on the Beijing-Shanghai route. The Beijing-Shanghai route is known as the domestic “golden route” and is the most abundant domestic route of the company. China Eastern Airlines has a market share of nearly 50% on this route. A brokerage analyst told reporter that through the calculation, the Beijing-Shanghai route in 2018 contributed a gross profit of about 890 million yuan to China Eastern Airlines.

According to this new plan, China Eastern Airlines avoided the loss of the Beijing-Shanghai route due to the relocation to Daxing Airport, and Air China also obtained a “pot” at Daxing Airport, which seems to be a two-pronged plan. “Actually, this plan is not conducive to China Eastern Airlines.” A person close to China Eastern Airlines pointed out.

The person told Caixin reporter that there are currently 23 flights on the Eastern Airlines Beijing-Shanghai route, with a fixed time of 46, and the amount of Daxing Airport is increasing dynamically. According to the short-term plan of the Civil Aviation Administration, by 2021, the number of time slots at Daxing Airport will reach 1,050, corresponding to a passenger throughput of 45 million. In the long-term plan, Daxing Airport will achieve a passenger throughput of 72 million in 2025 and 100 million in 2040.

“In the short term, the plan will help China Eastern Airlines avoid the loss of the Beijing-Shanghai route, but with the development of Daxing Airport, the 10% lost time of China Eastern Airlines will become a major loss,” said the person close to China Eastern Airlines.

On the other hand, from the overall planning of Daxing Airport, the change of the base allocation plan means that the CAAC’s previous policies for Daxing Airport may need to be adjusted. Among them, the most important concern of the market is that after Air China and China Eastern Airlines will realize the two dual airport operations, whether China Southern Airlines will respond and propose its own two-hub operating plans. “This is equivalent to opening a new hole.” Industry insiders pointed out.

Albert K. Field Albert is my name, and travel the world is my game. I began my passion for travel at a very young age, I started this website as a strong means to further explore the world of frequent flyers programs (FFP). The relationship between customers and service providers in the aviation and hospitality industry always seems to be in opposition, however, since the introduction of United Airlines’ Frequent Flyers Programm since 1972*. This has significantly eased the middle spectrum between 2 parties. While the aim of airlines is still to generate more revenue; but for us,as consumers, are also given the opportunity to participate in the bargaining and exploiting from service providers. Living in a world of globalization where big data becomes vital for simulating successful economical activities, most of us will have to travel to other locations whether willingly or unwillingly, while you hearing all this fascinating stories about others, In fact, you too, can blend into the trend. It may not sound like how media illustrates, but indeed there are possibilities for us to have more spontaneous travel without getting held back by financial situation. My website consists of reviews of airline premium cabin products,airport lounges and stay reports of 5-star hotels and their executive lounges across the globe. In addition to all of that, I care the most about their frequent flyers program and loyalty program, which also includes banking partners. Plus, I spontaneously put up reviews and news update regarding premium water brands and restaurants. The purpose of this website is to share all of this information with my audience as well as inviting you to be part of my journey.

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Fleet Management

KLM Signs 21 E195-E2 Confirmation Orders

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Embraer and the Netherlands KLM Cityhopper signed 21 E195-E2 confirmation orders and 14 purchase rights. The 21 confirmed order aircraft will be purchased and leased by Airbus Industrial Leasing business partner Aircastle and ICBC Leasing. At this year’s Paris Air Show, the agreement was announced in the form of 15 confirmation orders and 20 purchase rights letters of intent. If all purchase rights are converted to confirmation orders, the total value of the agreement will be $2.48 billion. It is confirmed that the 21 aircraft in the order will be leased from Aircastle and ICBC Leasing respectively, providing 11 and 10 E195-E2 aircraft to KLM.

Embraer & KLM at the 53rd International Paris Air Show

“KLM’s decision to add a further six aircraft to this order is a significant vote of confidence in our E2 programme”, said John Slattery, President and CEO, Embraer Commercial Aviation. “Delivering 30% lower emissions when compared to KLM’s current E190s, yet still providing a further 32 seats, the E195-E2 will simultaneously increase capacity for KLM at slot constrained Schiphol Airport, while also delivering huge reductions in emissions.”

John Slattery, President and CEO Embraer Commercial Aviation

“For KLM this aircraft is a significant part of our commitment to improving our environmental impact. Not only is the E195-E2 the most fuel efficient lowest emission aircraft in its class, it is also the quietest by a considerable margin – a huge benefit for both our communities and our passengers.

Pieter Elbers, President and CEO of KLM Royal Dutch Airlines
Embraers in factory
Embraers In Factory

The economic and environmental performance of the aircraft makes the E195-E2 the ideal aircraft for growing KLM’s European business and supporting their hub-and-spoke operation, complementing the mainline fleet. This is why Embraer nicknamed the jet – The Profit Hunter. KLM Cityhopper started the process of replacing its fleet of venerable Fokker aircraft for E-Jets in 2008, in order to enhance the existing network and to permit the efficient development of new routes. KLM Cityhopper’s all Embraer fleet currently has 49 E-Jets, the largest E-Jet fleet in Europe – 32 E190s and 17 E175s.

KLM will use a 132-seat layout for the E195-E2 aircraft. Delivery will begin in the first quarter of 2021.

E195-E2 Prototype
E195-E2 Prototype

Embraer is the world leader in the manufacture of aircraft below 150 seats. At present, more than 100 customers worldwide operate the ERJ series and E-jet series aircraft of the Embraer industry.

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Fleet Management

Cathay Pacific Group To Optimise Fleet Allocation With 16 A321neo To HK Express

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Cathay Pacific B777

Cathay Pacific Group is set to receive 65 new aircrafts by 2024 despite recent developments in Hong Kong; in an effort for fleet modernisation, the group’s 3 airlines – Cathay Pacific, Cathay Dragon and HK Express (acquired since March 2019 for HK$4.93 billion or US$628 million) will be each taking deliveries of a dozen new aircrafts that better suits their respective market positioning.

In order to continue strengthen Hong Kong’s position as Asia’s leading international aviation hub; the group’s existing aircraft order is comprised of 21 Boeing 777-9 aircrafts, 12 A350s and 32 A321neo aircrafts between 2020 and 2024, the group has decided upon the following fleet allocation after a comprehensive review.


B777-9XA350A321neo
Cathay Pacific2112n/a
Cathay Dragonn/an/a16 (2020-2022)
HK Expressn/an/a16 (2022- )

Cathay Pacific B777
Cathay Pacific B777

“We have four airlines in the group, each of them has its clear proposition. Cathay Pacific will continue to operate as an international full-service airline providing premium services to customers while Cathay Dragon is our regional full-service carrier. Meanwhile, HK Express will remain as a standalone, low-cost airline focusing on serving leisure travel destinations. AHK Air Hong Kong will continue to be the Group’s all-cargo carrier specialising in express cargo services.

“We will continue to invest in each of our airlines, their products and services. New aircraft are always the best platform to showcase our customer experience offerings which we are continuously enhancing in the spirit of our progressive and thoughtful ‘Move Beyond’ brand values.  Our goal is always to move people forward in life through our ability to connect them to meaningful people, places and experiences through our Hong Kong hub.”

Cathay Pacific Group Chief Executive Officer Augustus Tang

The Chinese market currently makes up around 20% of Cathay Pacific’s daily flights, however, the airline is facing negative exposure in China following criticism from the Civil Aviation Administration of China, resulting the airlines earning of HK$1.34 billion in the first half of year 2019.

HK express currently operates 13 routes to Japan, marks up half of its total destinations, recent meetings between executives at HK Express and Japanese official and business in both Hong Kong & Japan signals the airline group will double its effort for Japanese expansion to offset its negative exposure from China.


Aircraft TypeInventoryOn OrderFirm
Cathay Pacific Boeing 777-200
3

Boeing 777-300 15

Boeing 777-300ER 52 Boeing 777-9X 21

Airbus A330-300 33


Airbus A350-900 23 Airbus A350-900 5

Airbus A350-1000 12 Airbus A350-1000
8
Cathay Dragon Airbus A320
15

Airbus A321 8 Airbus A321neo
16

Airbus A330 25

HK Express Airbus A320 8


Airbus A321 11 Airbus A321neo 16

Airbus A320neo 5

Cathay Pacific Boeing 747-400ERF 6


Boeing 747-400BCF 1


Boeing 747-8F 14

Air Hongkong Airbus A300F 10

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