At 6:02 p.m. New Zealand Standard Time on Tuesday, Airbus A330-200 B-8962 touched down at Auckland Airport.
The aircraft was operating Sichuan Airlines flight 8909 from Chengdu, China. The inaugural flight not only represented a new route, but was also emblematic of a larger expansion, one that continues to reach all corners of the globe with its hub sitting in China.
In recent years, airlines based in mainland China, both big and small, have been further growing their route networks. With new flights from Oceania to the Americas to Europe, they are showing no signs of slowing down.
The following airlines represent the seven biggest carriers in China by passengers carried in 2016. They all fall into the top 20 when ranked among carriers in Asia. Stats are for most recent fiscal year readily available.
China Southern Airlines
Revenue: CNY99.5 billion (14.6 billion USD) (2016)
Passengers carried: 114.6 million
Hub(s): Beijing–Capital, Guangzhou
Number of destinations: 208
City/Cities from which they operate to LAX: Guangzhou
China Eastern Airlines
Revenue: CNY98.6 billion (2016)
Passengers carried: 101.7 million (2016)
Hub(s): Shanghai–Pudong, Shanghai–Hongqiao
Number of destinations: 217
City/Cities from which they operate to LAX: Shanghai–Pudong, Nanjing
Revenue: CNY100.2 billion (2016)
Passengers carried: 96.5 million (2016)
Hub(s): Beijing–Capital, Chengdu
Number of destinations: 201
City/Cities from which they operate to LAX: Beijing–Capital
Revenue: CNY35.23 billion (2016)
Passengers carried: 38.6 million (2015)
Hub(s): Beijing–Capital, Haikou
Number of destinations: 110
City/Cities from which they operate to LAX: Changsha, Chengdu, Chongqing
Revenue: CNY19.9 billion (2015)
Passengers carried: 24.9 million (2015)
Hub(s): Xiamen, Fuzhou, Hangzhou
Number of destinations: 70
City/Cities from which they operate to LAX: Xiamen (begins June 28)
Revenue: CNY7.34 billion (2015)
Passengers carried: 20.0 million (2013)
Hub(s): Shenzhen, Guangzhou, Nanjing, Nanning, Shenyang, Sunan, Xi’an
Number of destinations: 74
City/Cities from which they operate to LAX: None
Revenue: CNY345 million (2014)
Passengers carried: 16.7 million (2013)
Number of destinations: 67
City/Cities from which they operate to LAX: Hangzhou, Jinan
Potential for Expansion
One of the metrics that best shows how Chinese airlines are forced to expand is “City/Cities from which they operate to LAX.” While at first glance this may just seem to show routes, this piece of information symbolizes the difficulty airlines have overcome in order to grow.
In short, the Chinese government has an established rule saying only one airline can fly a certain long-haul route unless an exception is made.
This rule does two things. First, it decreases competition on each individual route. But at the same time, this rule encourages airlines to jump at the opportunity to launch a new route before one of their competitors has the chance to take it, even if the route may not be profitable for several years.
Sichuan, for example, is based in Chengdu, but the airline does not have aircraft capable of operating directly to LAX. Before they could take delivery of new aircraft, Hainan snatched the route, adding it to their network despite the fact they do not have a hub in the city.
This is all in stark contrast to the way the U.S. and DOT operate when it comes to air travel. The government consistently promotes competition on various routes. That is the reason multiple airlines fly from Los Angeles to Sydney or from New York to London. The mentality is truly one of, “If there’s money to be made, why not try to make some?”
Unlike with U.S. carriers, Chinese carriers are forced to look for opportunities to grow in unoccupied routes. To add to this, more carriers are working to grab a piece of the long haul market before all the good routes are gone.
These two factors continue to push airlines to launch new, long-haul routes as quickly as possible. The biggest three carriers – Air China, China Eastern, and China Southern – have already had the chance to cement the routes they wanted out of their large hub cities.
Though they continue to add flights, the true growth lives in the airlines that are smaller, yet still know how to operate a long haul route for a profit. Every airline from Hainan to Sichuan and even various smaller carriers have proven they can turn a profit in the current economy.
As a result, there is only one question surrounding the aviation market in mainland China. What’s next?
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