Air China

New routes to China to flourish in the next few years

China's leading airports are on the cusp of strong international growth, with several new routes to be launched in the coming 12 to 24 months. Growth will be driven by foreign and local needs: countries will have greater needs to further link with China while locally there will be an increasing propensity to travel among the Chinese population as incomes rise, while high-speed rail expansion will push Chinese airlines to grow internationally, at the same time providing feed opportunities for foreign carriers at the main Chinese gateways.

But growth is not only expected at the main Chinese hubs. Second tier airports can also look forward to increasing air services as the Government supports expansion from these hubs and as the LCC revolution takes hold in North Asia. New carriers across the region will be looking for new route opportunities, fuelling rapid growth at non-congested Chinese gateways. China's own second tier airlines are also looking to expand abroad, mainly within the Asia Pacific region, which will spur development at the provincial capitals across China's vast interior and economic zones.

As AirAsia X switches from Tianjin to Beijing, Asian alternative airports face uncertain future

AirAsia X has received final clearance to move its five weekly flights from Tianjin to more centrally located Beijing Capital International Airport, only 30km from the city compared to 80km at Tianjin. The move from Tianjin, considered an alternative airport to Beijing Capital, leaves Scoot as the sole foreign LCC at Tianjin. When the move is made on 22-Jun-2012, AirAsia X will join fellow low-cost, long-haul competitor Jetstar at Beijing.

The move raises the matter if it is in a carrier's financial interest to serve a cheaper yet less convenient airport but possibly forgo revenue by alienating some passengers and reducing options for connectivity, which is increasingly becoming common as carriers pursue hybrid paths. Demand in the region is still relatively strong, eliminating the need to incentivise the market by passing on savings from alternative airports. What the region's LCCs do want are low-cost terminals, which Tokyo Narita and Melbourne Tullamarine will soon offer, while Kuala Lumpur and Singapore Changi will construct new ones.

More subdued outlook for China in short term but some mighty changes afoot

The year of the dragon, 2012, is typically the mightiest of the Chinese signs, symbolising dominance and ambition; consequently this should be a time for making a large leap forward. However, indicators and performance in the first few months of 2012 suggest a more subdued outlook, at least on the surface with recent commentary coming out of China revealing a tone of caution and concern, a foreboding situation given the previous robustness of demand in the country. Yet below the surface, there are indeed some mighty changes afoot. Liberalisation and economic growth are laying the foundation for a rapid acceleration, for aviation overall, but more particularly for a new generation of airlines, most of which did not exist a decade ago.

Carriers could benefit from US Government’s pledge to increase visa throughput for Brazil and China

Small steps by the US to increase visa processing capacity for Brazil and China are the result of a campaign by the country’s travel and tourism advisory board to enrich understanding about the economic repercussions of failing to bolster efforts to increase the annual number of visitors from those countries. If those initial moves to strengthen visa processing capacity are successful, more initiatives could follow to capitalise on the economic benefits in opening travel to more visitors from Brazil and China to the US. Airlines already entrenched in those markets stand to increase traffic from those countries if travel restrictions are further loosened.

China Eastern announces June-2012 Boston service as North Asia-North America traffic flows increase

After many years of waiting for Asian service, Boston Logan International Airport will see two Asian services this year after China Eastern Airlines announced it will open a daily Beijing-Shanghai route from 01-Jun-2012. The route launch follows recent CAAC approval. While Japan Airlines (JAL) will be the first Asian carrier to serve Boston, with a Boeing 787 service to commence on 22-Apr-2012, it is worth contemplating the speed with which China Eastern can launch its route compared to JAL. While JAL has had open access to Boston for many years, the Beijing-Boston route authority had been sitting idle since being granted to Hainan Airlines/Grand China Air in 2006. China Eastern’s approval for the route indicates Hainan has lost the route authority.

China Eastern is expected to take up the capacity in the short-term, reflecting the underlying strong potential of the China-US market, as well as the increased agility Chinese carriers have compared to fellow North Asian carriers in Japan, Korea and Taiwan.

End of line carriers increasingly relying on partners to serve China

Air New Zealand's decision to end Auckland-Beijing services in favour of a one-stop service on its Shanghai flight with onward connections by partner Air China is the latest example of the difficulties 'end of line carriers' in Australia and New Zealand are having serving China, which is a top trading partner for both.

Ending services to Beijing is not a light decision given how coveted Beijing slots are, but Air New Zealand's move is not unprecedented. Qantas in 2009 made the exact same move, ending Beijing service in favour of a one-stop partner connection. Qantas also bolstered its Shanghai schedule, which Air New Zealand is doing too with progressive daily service.