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US-China Market For US/Chinese Airlines  
User currently offlineB2443 From United States of America, joined Jul 2004, 703 posts, RR: 0
Posted (8 years 2 months 1 week 1 day 3 hours ago) and read 4278 times:

I recently read an article (in Chinese) http://news.carnoc.com/list/73/73436.html I thought was interesting to share.

Main points:

1) China routes for US airlines are money makers.
2) US routes for Chinese airlines are money losers.
3) Chinese airlines are not happy with the recent rights increases between China and the US.
4) Chinese airlines are unable to compete with US airlines on China-US or US-China routes to win high yielding business travelers due to their poor bussiness class products but some airlines like CA and MU have started upgrading bussiness class hardware.
5) US airlines have used up all their China rights and more are fighting to get in to the US-China market whereas Chinese airlines (only use about 50% their total capacity) have not and reluctant to increase their China-US service.
6) Problems with Chinese airlines may be attributed to poor in-flight service, ground service (ticketing), poor hub establishment for connecting, poor FFP, poor cabin hardware, in-sufficient flight frequencies and even US-visa restrictions, with connecting service being the most difficult.

Others points:

MU might start PVG-NYC 3 weekly in December 06 with A346;

Air China (CA) lost RMB600 million (USD 75 mil) in 2005 alone. but they did make money in China-EU routes.

Current Chinese airlines operating China-US: Air China, China Easter, China Southern, China Cargo, Yangtze Express, Shanghai Airlines. Hainan has been granted rights but no service has been scheduled.

My personal experience:
Even though CA, MU and CZ claim their "hub"s at PEK, PVG/SHA. and CAN respectively, they mostly just provide point-to-point service from the "hubs" with hardly any through check-ins even with domestic flights, let alone international. Not much networking whatsoever.

With that, the Chinese airlines have many long-range aircraft on order, one has to think what are they going to do with them?

10 replies: All unread, jump to last
 
User currently offlineEconojetter From Malaysia, joined May 2001, 430 posts, RR: 5
Reply 1, posted (8 years 2 months 1 week 19 hours ago) and read 4197 times:

Thanks for posting the link and listing the key points in the article. I have wondered about the state of the Chinese carriers.

In the China-U.S. market, the mainland Chinese carriers have a lot stacked against them
- established hubs like NRT, ICN, HKG in Asia, SFO, ORD, EWR etc. in the U.S.
- their own relative inexperience in intercontinental service product placement and differentiation, resulting in a limited pool of loyal premium customers

That said, these Chinese carriers also have important advantages
- potentially lower operating costs (depending on efficiency)
- extensive domestic networks

The key would be to make good use of these advantages. These airlines will need to be more aggressive on optimising connectivity within the network, product standardization, streamlining of fleet composition and deployment etc. so that the potential savings that can come from lower labor and procurement costs (relative to the foreign operators') aren't lost to operational inefficiencies. These Chinese carriers can potentially hurt competitors by outpricing them, as long as the product is safe, reliable, convenient and can be considered value-for-money (no need for fancy inflight meals or entertainment). In my view (as a casual observer), the mainland Chinese airlines still suffer from substantial inefficiencies that prevent them from competing effectively. It would be useful to have someone with direct involvement in the Chinese airlines comment on this.

Also, these carriers would benefit from more foreign partnerships for passenger loyalty schemes, and also for a more global corporate culture and service sensibility.


User currently offlineHumberside From United Kingdom, joined Dec 2005, 4924 posts, RR: 4
Reply 2, posted (8 years 2 months 1 week 12 hours ago) and read 4125 times:

Quoting B2443 (Thread starter):
Hainan has been granted rights but no service has been scheduled.

They are considering BOS I think



Visit the Air Humberside Website and Forum
User currently offlineJoFMO From Germany, joined Jul 2004, 2211 posts, RR: 0
Reply 3, posted (8 years 2 months 1 week 8 hours ago) and read 4053 times:

What makes me wonder is the fact, that all these Chinese airlines do good business on their European routes. Europe-China seems to be a much more even playground. Why that?

The differences in service level should be even bigger between Euroipena-Chinese than US-Chinese airlines.


User currently offlineB2443 From United States of America, joined Jul 2004, 703 posts, RR: 0
Reply 4, posted (8 years 2 months 1 week 8 hours ago) and read 4028 times:

Quoting JoFMO (Reply 3):
What makes me wonder is the fact, that all these Chinese airlines do good business on their European routes. Europe-China seems to be a much more even playground. Why that?

The Chinese airlines believe the visa grants played a role. The fact is that it is more difficult to get a visa to US than to EU for Chinese visitors. They believe if they could fly more pax then they will become profittable.


User currently offlineJoFMO From Germany, joined Jul 2004, 2211 posts, RR: 0
Reply 5, posted (8 years 2 months 1 week 7 hours ago) and read 4011 times:

Quoting B2443 (Reply 4):
The Chinese airlines believe the visa grants played a role. The fact is that it is more difficult to get a visa to US than to EU for Chinese visitors. They believe if they could fly more pax then they will become profittable.

Does the US qualify as a destination for Chinese tourists? I know that this status is required for getting Chinese tourists. So it might not be a problem caused by the US side.
I know that the UK doens't have this status while Germany has. Therefore the Amount of flights between China and Germany is 3times as high as between UK-China (certainly excluding Hong Kong, but HKG is't China aviationwise anyway)


User currently offlineB2443 From United States of America, joined Jul 2004, 703 posts, RR: 0
Reply 6, posted (8 years 2 months 1 week 5 hours ago) and read 3963 times:

Quoting JoFMO (Reply 5):
Does the US qualify as a destination for Chinese tourists? I know that this status is required for getting Chinese tourists. So it might not be a problem caused by the US side.

No the US does not have the status. But even before EU Schengen States worked out the status, visa application was not too big of a deal, in comparison to the US one.

I doubt anyone will be granted a visa to the US by simply stating "I want to spend 2 weeks in the US (as an individual or with a group)." No one in the US consulates will believe you have strong enough "ties" to return. Their visa policy is perhaps a problem "caused by the US side".

I've heard many unfortunate stories of visa rejections with Chinese parents attempting to visit their childern in the US, even when some of the childern are already US citizens.


User currently offlineAaway From United States of America, joined Oct 2003, 1535 posts, RR: 14
Reply 7, posted (8 years 2 months 6 days 16 hours ago) and read 3840 times:

Quoting B2443 (Thread starter):
MU might start PVG-NYC 3 weekly in December 06 with A346

MU will begin PVG-JFK-PVG 08Dec06. Initially, flights will be 2x p/wk



With a choice between changing one's mind & proving there's no need to do so, most everyone gets busy on the proof.
User currently offlineChinaeastern From China, joined Apr 2004, 348 posts, RR: 0
Reply 8, posted (8 years 2 months 5 days 14 hours ago) and read 3730 times:

Quoting B2443 (Thread starter):
My personal experience:
Even though CA, MU and CZ claim their "hub"s at PEK, PVG/SHA. and CAN respectively, they mostly just provide point-to-point service from the "hubs" with hardly any through check-ins even with domestic flights, let alone international. Not much networking whatsoever

not too sure about CA and CZ. but on domestic-domestic connections MU does provide through check-ins but the issue is that some flights flight into and out of PVG while others SHA.
international through chech-ins?
who on earth provides through check-ins for domestic/international or vv?
for purely international connections, MU does provide through check-ins on certain routes. from what i know, SYD-PVG PVG-CDG was amongest the first.
for US flights however, where can pax really connect to internationally from US beyond shanghai? surely u can do LAX-PVG-SIN but who on earth would fly MU from LA to SIN unless they want a stopover in shanghai?


User currently offlineBluewhale18210 From United States of America, joined Aug 2006, 237 posts, RR: 0
Reply 9, posted (8 years 2 months 5 days 14 hours ago) and read 3725 times:

Chinese carriers need to upgrade their soft products more badly than the hard products. I have passengers rather taking LAX-TPE-HKG-PVG on CI/KA than LAX-PVG nonstop on MU. Same is also true for PEK passengers. All of them make their cases on the service, and at the same time complained about CI's C hardware...
I guess job security does make people undermotivated.
One thing China could do is to make itself the second transit center through Asia, like NRT. For that it needs a lot more reginal flights and better marketing strategy. CI fills half the capacity with transit passengers to SE Asia.

Poor FFP is definitely a problem. My GF traveled to PEK almost 2 month ago on CA and give her Mileage Plus # to be credited...it's still not in. US carriers usually do it within 2 weeks.

Finally, they probably have not figured out that E-tickets can save them a bundle...hard to imagine that in a land that makes (and uses) millions of computers a year they would be so slow to upgrade their system...



JPS on A300-600RF A319/320 B737-400/800 B757-200F B767-300F CRJ-200/900. Looking to add more.
User currently offlineB2443 From United States of America, joined Jul 2004, 703 posts, RR: 0
Reply 10, posted (8 years 2 months 5 days 6 hours ago) and read 3655 times:

Quoting Chinaeastern (Reply 8):
who on earth provides through check-ins for domestic/international or vv?

I can give you one example:
on US airlines, say I am flying CLE-PEK on SA)">NW (stop at DTW) or SA)">UA (stop at ORD), I check all my luggage at CLE and pick them up at PEK, ie. no second check-in at DTW or ORD.

On Chinese airlines, say I am flying from Zhengzhou to LAX on either CA (stop at PEK) or MU (stop at PVG), wouldn't I have to claim my bags at either PEK or PVG and re-check them from LAX flight, unless my Zhengzhou to PEK or Zhengzhou to PVG have the SAME flight number as those for PEK-LAX or PVG-LAX? I might have to buy separate tickets, right?

On China domestic-domestic, if I fly from A to B with a stop at C, wouldn't I have to claim my bags at C and recheck it for B, unless A-C and C-B use the same plane? In that case I'd have to buy A-C, C-B tickets separately, wouldn't I?

Compare that to US domestic-domestic, you'd never have to claim your bag at C even though A-C and C-B are completely different flights. They can be sold on single ticket. And that's what I understood for "through check-in". Does MU do that?

Quoting Chinaeastern (Reply 8):
for US flights however, where can pax really connect to internationally from US beyond shanghai?

I doubt that too. I meant more domestic connections. The point of using PVG as a hub I think would be: You take international pax and utilize your domestic network (hub) to provide one-stop destinations, say from LAX to Chongqing, Chengdu, Guizou, etc. You schedule your flights to those domestic flights around your LAX-PVG flight so they can make easy connections. That's how you feed international travelers to your domestic flight. From the other way around, you feed your international flights with domestic connections to them. Maybe PEK or PVG are self sustainable o/d markets that don't need pax other than locals...


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