China Eastern Airlines
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- 2550 Hongqiao Road, Hongqiao International Airport
- Main hub
- Shanghai Pudong Airport
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Shanghai-based China Eastern Airlines is one of China's 'big three' state-owned airlines, with hubs at Shanghai's Pudong and Hongqiao airports, as well as Kunming Airport in southwest China. The airline operates a fleet of Airbus, Boeing, Embraer and Bombardier aircraft to support an extensive network, serving over 350 domestic routes and 40 international destinations, including cities in Australia, Europe, Korea, Japan, North America and Southeast Asia. China Eastern merged with Shanghai Airlines in 2010 and joined China Southern in the SkyTeam Alliance in Jun-2011.
Location of China Eastern Airlines main hub (Shanghai Pudong Airport)
China Eastern Airlines share price
4,374 total articles
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Naming 12 Chinese cities would be a challenge for most people outside China. Yet that is how many mainland Chinese cities will so far enjoy non-stop service to Australia in 2016. Until 2011, only three Chinese cities had flights to Australia. This doubled to six in 2014, and will double again to 12 – maybe more – during 2016. A rising middle class coupled with Australia's liberal air service regime and low fuel prices have meant a growing prominence of Chinese aviation, and the visitors it brings.
The growth in Chinese airports with service to Australia coincides with growing Australia-China non-stop city pairs: from nine in 2013 to 21 in 2016. These 21 city pairs are just under the 22 between Australia and its far closer neighbour and partner, New Zealand. New Zealand is Australia's largest source of foreign visitors, but China will soon surpass New Zealand. The 12 months to Nov-2015 made the first year that Australia received more than 1m Chinese visitors, making Australia the second largest long haul market for Chinese visitors after the United States.
Delta Air Lines balances long term foreign investments (and JVs) with short term shareholder rewards
One of the largest agenda items for Delta Air Lines in 2016 is gaining approval for a joint venture with Aeromexico and moving forward to enlarge its stake in Mexico’s largest airline to force change that should drive financial benefits for both airlines. Delta plans to use its three year old investment in Virgin Atlantic as a blueprint for guiding Aeromexico to increased efficiency and margins.
Delta is also taking a stake in China Eastern, and once that agreement is formalised Delta says it will have a foothold in all the top international regions from the US. Many of Delta’s moves to invest in foreign airlines during the last few years reflect its strategy of building network utility for the long haul, creating a scenario where it has to balance those investments with creating an appropriate level of return for shareholders.
In the short term, Delta continues to stress measured capacity growth of flat to 2% in 2016, with the bulk of the increase allocated to the domestic market. Most of the domestic capacity is targeted to New York, Seattle, Los Angeles and Seattle, regions that Delta believes warrant the added supply.
In a changing aviation world, as specificity and pragmatism become the norm for partnerships, every relationship is being reevaluated. Part of this is due to altered market dynamics, part to new aircraft types making thinner routes viable.
British Airways and Qantas moved to a different relationship when Qantas decided it needed to partner with Emirates; and now another of aviation’s old world partnerships, British Airways and Cathay Pacific, is showing signs of strain as Cathay reinforces its European network and BA seeks better access in mainland China.
For decades the airlines have used two of world’s pre-eminent hubs – at London Heathrow and Hong Kong – to transfer passengers beyond. While the relationship continues, it is having to evolve in order to meet the pressures of the new world.
Cathay has needed BA’s short haul Heathrow feed to sustain about two of its five London flights (a sixth will be added in Sep-2016 with a new London Gatwick A350 service) while BA has unsuccessfully sought Cathay’s access to other Asian markets, in particular mainland China, and Australia. Cathay has grown its online presence in Europe from six cities in 2010 to 10 in Sep-2016. More Hong Kong-Europe non-stops will open as the A350 fleet grows. Local partnerships, albeit small, are following in many ports.
BA’s mainland China presence is a strategic imperative, and Cathay is blocking favourable connecting flights. Instead BA is looking to grow its online China network and partner with a Chinese carrier; China Eastern and China Southern are the obvious picks. In tandem with this, British Airways is adding a second Shanghai flight using peak London Heathrow slots.
Delta Air Lines has emerged as one of the strongest US airlines by many financial and operational measures. Its success is driven by clear cut internal targets, and also, the benefit of being a first mover in the last wave of US consolidation that began in 2008.
Delta has enjoyed many first mover benefits that have allowed the airline to leave its large US rivals in the rearview mirror as the merged entities of American and United are still working to fully exploit their projected synergies. As a result, Delta has adopted unconventional and aggressive business strategies including buying an oil refinery, hinging aircraft orders on tentative pilot deals, opting to operate a fleet with a higher average age and engaging in a battle with its long-standing partner Alaska Air Group for supremacy in Seattle.
The airline’s other controversial moves include leading the charge against claims that the three large Gulf airlines unfairly benefit from subsidies and the decision to un-align itself with the US airline lobbying group Airlines for America. Those actions raise questions about Delta’s global perception as it cries foul over Gulf subsidies, yet opts to invest in other subsidised airlines.
Air China's long haul Shanghai expansion targets Hainan Airlines, leaves China Eastern uncomfortable
Before China was recognised widely as a unique growth opportunity, its aviation planners already knew China would quickly evolve to becoming the world's biggest market. To guide development, they turned to the world's existing largest market – the United States – and became enamoured with the hub concept, from Northwest's fortress in Detroit to American's sprawling operation at Dallas. The lesson that US airlines and airports imparted on Chinese delegations was that when given large geography, numerous competitions and dozens of major cities, airlines needed to focus on dominating a strong hub.
And so Air China had Beijing, China Eastern occupied Shanghai and China Southern based at Guangzhou. Domestic competition has since become more complex but long haul flying has generally stuck to hub principles. Until recently, that is. In 2015 Hainan Airlines launched Shanghai services to existing long haul points it already served from its main Beijing base. This was a challenge to Shanghai-based China Eastern, which has lagged long haul development (and experienced hub encroachment from Air China). Air China has been annoyed by Hainan occasionally securing blue chip destinations – Chicago, Toronto – thereby blocking Air China from serving those.
Delta Air Lines has opted to expand its stake in Aeromexico, following a similar move earlier in 2015 when it increased its investment in Brazilian airline Gol. Delta has also invested in China Eastern Airlines during 2015, and unsuccessfully pursued a stake in Japanese airline Skymark.
With low fuel costs propelling record profitability at US airlines, perhaps the time is right for Delta to solidify investment to build a competitive network for the long term. Its moves during the past year reflect an aggressive pursuit of strengthening its presence in Latin America and Asia.
By enlarging its stake in Aeromexico, Delta also grows its ability to exert influence over the airline, something that Delta believes could help Aeromexico improve its overall business strategy.