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CZ: All CAN-Oceania Routes Are Profitable  
User currently offlinejustinlee From China, joined Aug 2012, 331 posts, RR: 0
Posted (1 year 5 months 1 week 22 hours ago) and read 5347 times:

On Feb 4th, CEO of China Southern Airlines, Wangeng Tan announced that all CZ's Oceania routes from CAN are profitable.

Now CZ has 45% market share on China-Oceania routes. The total international transferring passengers in CAN are 1.6 million. And the transferring passengers using 6th freedom has reached 370,000, which is 36 times the figure in 2011 before the introduce of Canton Route.

I am not quite sure about the figure especially the 6th freedom one and the profitability. But what CZ did is amazing and greatly changed the international aviation market in China, which was previously dominated by CA. Congrats!

P.S. Current CZ operates 45 weekly non-stop to the Oceania from CAN:
2xdaily to SYD
2xdaily to MEL
1xdaily to BNE
1xdaily to AKL
3xweekly to PER

Link: http://money.163.com/13/0128/01/8M95VG2C00253B0H.html





[Edited 2013-02-06 04:41:27]

37 replies: All unread, showing first 25:
 
User currently offlineAndrensn From New Zealand, joined Jun 2012, 70 posts, RR: 0
Reply 1, posted (1 year 5 months 4 days 10 hours ago) and read 4573 times:

Well done to CZ on their efforts on the Australia and New Zealand market.
What passengers take these flights to make them profitable and do you think that sometime soon we may see CZ flights to CHC? Maybe via Australia?


User currently offlineRyanairGuru From Australia, joined Oct 2006, 5167 posts, RR: 4
Reply 2, posted (1 year 5 months 4 days 10 hours ago) and read 4542 times:

Quoting Andrensn (Reply 1):
What passengers take these flights to make them profitable

From my understanding these flights are still primarily VFR and inbound tourism related, but CZ are steadily carrying an increasing number of outbound passengers as well which is really great. I have no doubt that they are picking up more Europe bound traffic (especially back packers) but I do wonder what the yield must be on those eye wateringly cheap fairs they offer!



Worked Hard, Flew Right
User currently offlineRyanairGuru From Australia, joined Oct 2006, 5167 posts, RR: 4
Reply 3, posted (1 year 5 months 4 days 8 hours ago) and read 4422 times:

Quoting justinlee (Thread starter):
what CZ did is amazing and greatly changed the international aviation market in China, which was previously dominated by CA

Further to my last post, while I agree 100% that what CZ has achieved is incredible, I feel that the biggest "change" (and biggest loser) with regards to China-AusNZ is in fact not CA, but CX. This Australia-China has been dominated by Cathay forever, but in the space of two years a new kid on the block has seriously ruffled some feathers. This is a rapidly expanding market so Cathay will do just fine (plus they are still very much preferred for connections to other parts of the region, and indeed the world) but it would be interesting to see a breakdown of their Aus-PRC traffic figures that compares 2010 with 2012. I would expect to see a decrease in terms of both passenger numbers and yield.



Worked Hard, Flew Right
User currently offlineprost From United States of America, joined Oct 2012, 898 posts, RR: 1
Reply 4, posted (1 year 5 months 4 days 8 hours ago) and read 4405 times:

Do you think CX would have been more succesful if they were willing to cooperate with their oneworld partner QF more?

User currently offlineBestWestern From Hong Kong, joined Sep 2000, 7062 posts, RR: 57
Reply 5, posted (1 year 5 months 4 days 8 hours ago) and read 4331 times:

What CZ has done in Australasia in such a short period of time is established a cash positive network, and alongside commence construction of a major hubbing system at their home in Guangzhou.

At my last time in Guangzhou I bumped into a family of Panda hatted Tweens and their happy australian parents. They had flown from London en route to Melbourne from memory, and had spend two days in Guangzhou en-transit. They loved the opportunity to visit China, the CZ experience was much better than expected - all three segments to date were punctual, modern aircraft, good AVOD and tasty food. The husband had an Flying Blue card on his bag, so mileage earning was probably another reason. The previous year they had flown via HKG with AF and QF, and their opinion was that this was of a nearly as good quality, but at a lower fare.

Congrats to CZ - another future airline to be reckoned with in Southern Asia.



The world is really getting smaller these days
User currently offlineMaverickM11 From United States of America, joined Apr 2000, 17290 posts, RR: 46
Reply 6, posted (1 year 5 months 4 days 7 hours ago) and read 4275 times:

Does this really mean anything? Without any context, accounting, or verification that a state directed carrier is making money anywhere, I'm not sure how relevant this is.


E pur si muove -Galileo
User currently offlineBen175 From Australia, joined Jul 2008, 674 posts, RR: 0
Reply 7, posted (1 year 5 months 4 days 7 hours ago) and read 4267 times:

I'm rather surprised to see PER is profitable, considering they cut reservations for it late last year and only reinstated them recently. Nonetheless, CZ is seriously shaking things up down under, and I wish them the best for the future.

User currently offlineBestWestern From Hong Kong, joined Sep 2000, 7062 posts, RR: 57
Reply 8, posted (1 year 5 months 4 days 7 hours ago) and read 4231 times:

Quoting MaverickM11 (Reply 6):

I think it means something. MU for example recently came out about losses being made on a HKG service.

I too was sceptical of how profitable the Australian services were, but we have to take the CEO at his word that the Australian services are cash generating at an operational level. This probably includes new route support that the Chinese regional governments are fond of.

Asia is changing - Chinese carriers are improving and becoming world players. It's time to accept the change.



The world is really getting smaller these days
User currently offlineIndianicWorld From Australia, joined Jun 2001, 2881 posts, RR: 0
Reply 9, posted (1 year 5 months 4 days 7 hours ago) and read 4178 times:

Quoting Ben175 (Reply 7):
I'm rather surprised to see PER is profitable, considering they cut reservations for it late last year and only reinstated them recently.

I agree.

In saying that though, in other cases given the constant shuffling of frequency levels into MEL and SYD, it shows though that they are willing to make changes to meet demand during the year. That is at least a commercially sensible decision.

Quoting MaverickM11 (Reply 6):
Does this really mean anything? Without any context, accounting, or verification that a state directed carrier is making money anywhere, I'm not sure how relevant this is.

Very true. Its easy to say things are profitable but to prove that is another story.


User currently offlineJU068 From Serbia, joined Aug 2009, 2579 posts, RR: 6
Reply 10, posted (1 year 5 months 4 days 3 hours ago) and read 3944 times:

A Japanese friend of mine lives in Sydney and every time when going home she would fly via Singapore Airlines or Malaysian Airlines. Last time she decided to try China Southern and she told me that from now on it will be her airline of choice. The price wasn't that much lower than their competitors, so I guess they can make a profit since they are not selling unreasonably low fares.

User currently offlinefactsonly From Montserrat, joined Aug 2012, 797 posts, RR: 0
Reply 11, posted (1 year 5 months 4 days 1 hour ago) and read 3768 times:

China Southern is definitely improving its overall product. This Summer CZ will offer one of the fastest Europe to Australia connections and two European stations (CDG & AMS) are being prepared for the arrival of the A380 with the training of local ground and cabin crew.

CZ plans to continue to expand in all markets; Oceania-China, Oceania-Asia, Oceania-Europe. As an example of their development, their fastest routing to Sydney in July 2013 is from AMS in just 22h20m. Only SQ is faster at 21h20m. However, for the time being, they need to improve their timings in the Australia-Europe market, where they do not have a similar fast one-stop J class product yet.

- dep. AMS 13:20 - arr. SYD 19:40+ 1 day CZ308/CZ301 via CAN 22h 20m Daily = 1h30m in CAN
- dep. SYD 09:50 - arr. AMS 06.45+ 1 day CZ326/CZ307 via CAN 26h 45m Daily = 4h15m in CAN

From Europe to MEL, CZ is 3rd fastest after SQ and EY. CZ still lacks in speed in the Australia-LHR market due to slot timings at Heathrow. Give them time to develop this product further as well.


User currently offlineSYDSpotter From Australia, joined Oct 2012, 152 posts, RR: 0
Reply 12, posted (1 year 5 months 4 days 1 hour ago) and read 3717 times:

Quoting factsonly (Reply 11):
CZ plans to continue to expand in all markets; Oceania-China, Oceania-Asia, Oceania-Europe. As an example of their development, their fastest routing to Sydney in July 2013 is from AMS in just 22h20m. Only SQ is faster at 21h20m. However, for the time being, they need to improve their timings in the Australia-Europe market, where they do not have a similar fast one-stop J class product yet.

Speed is only one aspect, the likes of CX, MH and EK will also have similar timings speed wise from Australia, but offer multiple frequencies in the case of CX/EK/SQ.
Problem is that their Europe network only consists of LHR, CDG and AMS. Pretty limited compared with the other SE asian and ME carriers. I think they will pick up alot of the Y fares since their pricing is very competitive but will struggle with the corporate/J market due to limited frequencies, limited destinations and also a low brand awareness (for now).



319_320_321_332_333_388 / 734_738_743_744_762_763_772_773_77W
User currently offlinenrt1011 From Canada, joined Jan 2005, 104 posts, RR: 0
Reply 13, posted (1 year 5 months 4 days ago) and read 3642 times:

So you believe everything a CEO tells you huh? Add on to that, a Chinese CEO and well, I don't believe a word

User currently offlineJU068 From Serbia, joined Aug 2009, 2579 posts, RR: 6
Reply 14, posted (1 year 5 months 4 days ago) and read 3619 times:

Quoting factsonly (Reply 11):
This Summer CZ will offer one of the fastest Europe to Australia connections and two European stations (CDG & AMS) are being prepared for the arrival of the A380 with the training of local ground and cabin crew.

So if they keep up working like this, how big of a threat could they be to the airlines which are well established on the Europe-Oceania market? I guess they have an advantage when compared to the Gulf carriers, they have a considerable O&D market which will help them sustain future growth. Also, I am sure there is quite a lot of premium demand between China and Australia as both countries have strong industries.

Quoting nrt1011 (Reply 13):
So you believe everything a CEO tells you huh? Add on to that, a Chinese CEO and well, I don't believe a word

So what if he is lying? The most important thing is that they are doing a fine job and that their safety record is very good. Plus, didn't the airline say that they were losing money when they flew the A380 domestically? So he might not be lying after all.


User currently offlineMaverickM11 From United States of America, joined Apr 2000, 17290 posts, RR: 46
Reply 15, posted (1 year 5 months 3 days 18 hours ago) and read 3339 times:

Quoting JU068 (Reply 14):
So if they keep up working like this, how big of a threat could they be to the airlines which are well established on the Europe-Oceania market?

None really, because the market is so hyper competitive and Chinese carriers aren't particularly competent internationally, so I don't see how they affect much of anyone.



E pur si muove -Galileo
User currently offlineJU068 From Serbia, joined Aug 2009, 2579 posts, RR: 6
Reply 16, posted (1 year 5 months 3 days 18 hours ago) and read 3315 times:

Quoting MaverickM11 (Reply 15):

Well I have a hard time believing that with so many frequencies to Oceania they are not getting any transfer passengers. Anyway, like I said before, my Japanese friend who flew on Singapore Airlines and Malaysian all the time said that she was very happy with the experience. I doubt that she would have such an opinion of them if they were truly incompetent internationally.


User currently offlineMaverickM11 From United States of America, joined Apr 2000, 17290 posts, RR: 46
Reply 17, posted (1 year 5 months 3 days 16 hours ago) and read 3111 times:

Quoting JU068 (Reply 16):

Well I have a hard time believing that with so many frequencies to Oceania they are not getting any transfer passengers. Anyway, like I said before, my Japanese friend who flew on Singapore Airlines and Malaysian all the time said that she was very happy with the experience. I doubt that she would have such an opinion of them if they were truly incompetent internationally.

It's not so much a question of how they treat passengers once onboard, so much as how they capture them in the first place. I'm sure they're capturing plenty of transfer passengers, but I doubt their ability to attract any high yield passengers, or their ability to penetrate as many sales channels as say a EK/QF/BA/SQ can.



E pur si muove -Galileo
User currently offlinewowpeter From Hong Kong, joined Oct 2006, 145 posts, RR: 0
Reply 18, posted (1 year 5 months 3 days 15 hours ago) and read 3071 times:

Quoting RyanairGuru (Reply 3):
Further to my last post, while I agree 100% that what CZ has achieved is incredible, I feel that the biggest "change" (and biggest loser) with regards to China-AusNZ is in fact not CA, but CX. This Australia-China has been dominated by Cathay forever, but in the space of two years a new kid on the block has seriously ruffled some feathers. This is a rapidly expanding market so Cathay will do just fine (plus they are still very much preferred for connections to other parts of the region, and indeed the world) but it would be interesting to see a breakdown of their Aus-PRC traffic figures that compares 2010 with 2012. I would expect to see a decrease in terms of both passenger numbers and yield.

The common believe is that these chinese carriers are doing awesome and they are doing a great job and that is why they are gaining market share...

Yes, they are indeed gaining a lot of market share, but why? They are gaining market share for one reason and one reason only, price... What is the reason why most airline can not effectively compete with mainland chinese carriers on price? That's because the mainland chinese carriers are heavily subsidize (especially with the fuel, as aviation fuel price is regulated by central government for use by domestic carrier and tare offer to them at below cost). Together with the mainland carrier lower labour cost, at fares that is profitable for CZ (or MU or CA flying the Pacific route), it will never be profitable for other carriers like CX, SQ or QF.

For example (these are fares that my auntie told me during different time last year, my auntie runs a local travel agent in HKG):

Example 1) CZ offer China to Australia return tickets at low season at discounted travel agent price as low as HKD3899 (tax and surcharged included), this is equivalent of HKD1950 one way. I have to pay more to fly within Asia, and here you are talking about a 9 to 10 hours of flying.

Example 2) CA offer Hong Kong to JFK or LAX via Beijing, return ticket of less than HKD5000 (tax and surcharge included). This is less than HKD2500 one way for a two sector HKG-PEK-JFK, over 16 hours of flying...

Example 3) MU offer Hong Kong to LAX via Shanghai, return tickets of less than HKD4500 (tax and surchage included), add HKD300 for a night stay in Shanghai for your short vacation. This is less than HKD2250 for a HKG-SHA-LAX, over 13 hours of flying...

With fares like that, it is impossible for anyone to compete with these Chinese carriers. You can barely pay for fuel with prices like that... So that is why they are able to gain so much market share in such short period of time. People always like a good deal.

So it is easy for CZ boss to say they are profitable at all Oceanic routes... Yes profitable with subsidies, but subsidies will not last forever. The mainland government is already saying that they are going to try to bring the fuel price to level that will most closely match the real spot price.

The mainland Chinese government will most likely continue to subsidize their top airline until they have a big enough international market share before they will pare down on the subsidies... so for anyone willing to fly via mainland China, you will be able to continue to enjoy low fares, courtesy of the chinese government.


User currently offlinedtfg From China, joined Jan 2013, 74 posts, RR: 0
Reply 19, posted (1 year 5 months 3 days 15 hours ago) and read 3045 times:

If you look at CZ's international expansion in recent years (they launched CAN-AMS, CAN-LHR and added frequencies to CDG while they were increasing Oceania), it is pretty obvious that they want to enter the Europe-Oceania market. They might not be practically competent shortly, but their bases in northern China do provide stable feed to maintain their Oceania routes while they are forging their path into Europe.

User currently offlinevfw614 From Germany, joined Dec 2001, 3946 posts, RR: 5
Reply 20, posted (1 year 5 months 3 days 12 hours ago) and read 2901 times:

I am quite surprised.

I was considering a connection through CAN recently and was really turned off by the horrible reviews I read about the airport - rats promenading in the terminal in full sight of the passengers, a cup of coffee for 10 USD, rude airport staff, long layovers when connectiong from SE Asia to Europe etc. etc. With such a poor travel experience, my guess is that they mainly attract low-yielding cost-conscious travellers.


User currently offlineBestWestern From Hong Kong, joined Sep 2000, 7062 posts, RR: 57
Reply 21, posted (1 year 5 months 3 days 10 hours ago) and read 2813 times:

VFW, less of the stereotypes. I have used CAN about 20 times in the last twelve months, and have never once seen a rat. Certainly not one promenading around! The last airport rat I saw was in Amsterdam.

The staff are a lot more friendly than say Heathrow, but are Chinese, and customer service is improving.

From memory, there is Starbucks, which sell coffee at the same price as downtown. Otherwise, you can go to KFC, etc. if you really want to pay an extra 100 euro for a similar service standard via the gulf to save a dollar of a coffee be my guest. If you want expensive airport food, head to Turkey.

CZ cask is far lower than other airlines due to lower staff costs, bulk buying of dozens aircraft - CZ have 85 aircraft coming online this year alone. They are only developing their hub and long haul network so are discounting as part of the strategy to grow.

I know many here discount CZ - a big big mistake. Their hard product is excellent, and the soft product is getting there - quickly.



The world is really getting smaller these days
User currently offlinetayser From Australia, joined Mar 2008, 1124 posts, RR: 0
Reply 22, posted (1 year 5 months 3 days 10 hours ago) and read 2768 times:

Quoting prost (Reply 4):
Do you think CX would have been more succesful if they were willing to cooperate with their oneworld partner QF more?

How are CX not successful already?

CX:

SYD: 4x daily
MEL: 2x daily 1x daily comes in via ADL (triangular) - eventually moving to 3x daily direct
BNE: 2x daily 1x daily comes in via CNS (triangular)
PER: 10x weekly.
ADL: 1x daily (goes out via MEL (triangular)) - eventually moving to 1x daily direct
CNS: 1x daily (goes out via BNE (triangular))
AKL: 2x daily + 1x daily codeshare on NZ


User currently offlineMaverickM11 From United States of America, joined Apr 2000, 17290 posts, RR: 46
Reply 23, posted (1 year 5 months 3 days 9 hours ago) and read 2711 times:

Quoting tayser (Reply 22):

How are CX not successful already?

Solidifying the codeshare with QF would mean the combined group would have a greater penetration of the Australian market than CX alone.



E pur si muove -Galileo
User currently offlinejustinlee From China, joined Aug 2012, 331 posts, RR: 0
Reply 24, posted (1 year 5 months 2 days 22 hours ago) and read 2457 times:

Quoting vfw614 (Reply 20):
I was considering a connection through CAN recently and was really turned off by the horrible reviews I read about the airport - rats promenading in the terminal in full sight of the passengers, a cup of coffee for 10 USD, rude airport staff, long layovers when connectiong from SE Asia to Europe etc. etc. With such a poor travel experience, my guess is that they mainly attract low-yielding cost-conscious travellers.

Really...Having travelled through CAN for a dozen times last year, I haven't seen any rats or cleaning issues. There are also 2 Starbucks, one in East II Concourse and one in West III Concourse. And I remember one grande Latte is RMB 32 which is about 5 USD.

I should say that staff with poor english and the noisy environment may be an issue but CAN is not NYC subway  


25 Post contains images MaverickM11 : the airport is very nice, but like all Chinese airports, regardless of how nice they are, the transfer process can be pretty screwy
26 justinlee : Yes...I forgot to mention this. For transferring in CAN, the worst thing is the chaos in the airport. I haven't done any international-international
27 BestWestern : International to domestic is better as you are driven by electric car and stay airside. Depending on your origin airport within China, your bags are s
28 MaverickM11 : It is? I've done that in KMG and CAN, and both times you were sent outside of security to start over.
29 MillwallSean : I think some foreign posters from markets far away struggle to grasp the impact CZ has made. They attract heaps of corporates. What company isn't plea
30 Post contains images vfw614 : Well, I can only rely on what I read on the internet when making my choices. Nice to hear from others that they have had a good experience, but if yo
31 motorhussy : Doesn't really help CX's bottom line though. The accounting practices of CZ in regard to their fleet purchases vs profitability, I've heard, are not
32 BestWestern : Ah,they joys of one off reviews on skytrax style airport reviews. Perhaps let your wife read this thread, where long term respected posters are sayin
33 MaverickM11 : Sure it does. A QF/CX strong partnership or JV would attract more high revenue passengers Australia point-of-sale than a lone CX could, without reall
34 RyanairGuru : While you are probably right about the benefits to both carriers given the strength of their brands in their home markets, a JV/JBA is not happening
35 Sydscott : The ACCC hasn't gone on record but the competition issues are obvious and there is plenty of precedent to indicate a negative answer would be forthco
36 BestWestern : Thats the same in most of the world - and for safety sake, it means that the weakest link is in your own airport, and not some far flung field with l
37 MaverickM11 : For domestic-domestic and domestic-international?? That is virtually no where else in the world, and certainly not at brand new airports.
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