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chrisp390
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United U.S - China Secondary Growth

Wed Jul 19, 2017 6:13 pm

It has been quite a while now since we have seen any additional growth from United in the U.S - Secondary China market. Does anyone know how their expansion has been going? How have the loads and yields been on these flights? Can we expect any additional secondary cities to be added in the near future, or additional U.S gateways connecting to these cities such as EWR?
 
Tdan
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Re: United U.S - China Secondary Growth

Wed Jul 19, 2017 6:45 pm

HGH and XIY are two of the worst routes in the system on a unit revenue perspective based on DOT data. CTU does ok, but I wouldn't expect much additional secondary growth to China from UA, from a commercial standpoint. Too much capacity from Chinese carriers flooding the market.
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TWA772LR
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Re: United U.S - China Secondary Growth

Wed Jul 19, 2017 7:17 pm

I'm surprised UA hasn't announced Chongqing yet.

HGH is the Silicon Valley of China, me thinks that there may be corporate contracts in play there.

With China potentially facing a huge bubble burst, I can see UA redeploying those 787s into BLR, HYD, and Chennai real quick.
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MaxTrimm
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Re: United U.S - China Secondary Growth

Wed Jul 19, 2017 7:19 pm

They are having a hard time competing against the heavily government subsidized Chinese carriers.
 
chrisp390
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Re: United U.S - China Secondary Growth

Wed Jul 19, 2017 10:26 pm

That is too bad to hear, maybe they can re-deploy some of that capacity to India secondary markets where there is much less competition?
 
intothinair
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Re: United U.S - China Secondary Growth

Wed Jul 19, 2017 11:53 pm

TWA772LR wrote:
I'm surprised UA hasn't announced Chongqing yet.

HGH is the Silicon Valley of China, me thinks that there may be corporate contracts in play there.

With China potentially facing a huge bubble burst, I can see UA redeploying those 787s into BLR, HYD, and Chennai real quick.


No. People have been speculating this since 2005 and it hasnt happened. The government will never allow it to happen, and they have all the monetary and fiscal flexibility in place to stop it, contrary to the 2008 subprime housing crash in the US.

Most second and third tier cities in China are still recording close to 10% growth annualy. What a remarkable economic revolution. More flights will open up between the US and secondary China cities. The question is whether they will be flown by UA or the Chinese carriers.
 
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jetblastdubai
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Re: United U.S - China Secondary Growth

Thu Jul 20, 2017 12:01 am

Tdan wrote:
HGH and XIY are two of the worst routes in the system on a unit revenue perspective based on DOT data.


Interesting. If UA can barely make secondary China work from SFO, the chances of AA/DL making secondary China work from LAX/SEA seem remote.
 
commavia
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Re: United U.S - China Secondary Growth

Thu Jul 20, 2017 12:06 am

intothinair wrote:
The government will never allow it to happen, and they have all the monetary and fiscal flexibility in place to stop it, contrary to the 2008 subprime housing crash in the US.


We'll see.

intothinair wrote:
Most second and third tier cities in China are still recording close to 10% growth annualy. What a remarkable economic revolution. More flights will open up between the US and secondary China cities. The question is whether they will be flown by UA or the Chinese carriers.


For whatever growth there will be going forward between the U.S. and non-coastal China, it's hard to imagine much of that growth being from U.S. carriers. Chinese carriers simply benefit from too many advantages - besides structurally lower costs and government ownership/support, they're also helped by the fact that much of the traffic on these routes is China point-of-sale.

jetblastdubai wrote:
If UA can barely make secondary China work from SFO, the chances of AA/DL making secondary China work from LAX/SEA seem remote.


Absolutely agree. I see very little, if any, potential in non-coastal China for either AA or Delta.
 
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LAXintl
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Re: United U.S - China Secondary Growth

Thu Jul 20, 2017 12:21 am

HGH was launched as a means to offer capacity to the market when UA was unable to secure slots for its second SFO-PVG flight.

HGH is about 80miles from central Shanghai and also a special high-tech development zone so the logic was it could offer capacity to the broader Shanghai region while also making some corporate accounts (such as Apple) very happy.

Unfortunately, no sooner did HGH come on line, then UA received its additional PVG slots and had to immediately launch that flight as well which created big influx of capacity in a very short period.

Regarding other cities, the big rush of Chinese cities offering incentives for new air service to US seems to have abated. United competed in several and lost out to others. I am not sure UA is ready to launch additional secondary markets without some sort of incentive or revenue guarantees in place.
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[email protected]
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Re: United U.S - China Secondary Growth

Thu Jul 20, 2017 12:40 am

Tdan wrote:
HGH and XIY are two of the worst routes in the system on a unit revenue perspective based on DOT data. CTU does ok, but I wouldn't expect much additional secondary growth to China from UA, from a commercial standpoint. Too much capacity from Chinese carriers flooding the market.


Blasted state-owned and state-subsidised Chinese airlines. ;-)
"Everyone writing for the Telegraph knows that the way to grab eyeballs is with Ryanair and/or sex."
 
Cointrin330
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Re: United U.S - China Secondary Growth

Thu Jul 20, 2017 1:01 am

Are HGH and XIY at risk of being cut? (XIY is seasonal).
 
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TWA772LR
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Re: United U.S - China Secondary Growth

Thu Jul 20, 2017 3:18 am

intothinair wrote:
TWA772LR wrote:
I'm surprised UA hasn't announced Chongqing yet.

HGH is the Silicon Valley of China, me thinks that there may be corporate contracts in play there.

With China potentially facing a huge bubble burst, I can see UA redeploying those 787s into BLR, HYD, and Chennai real quick.


No. People have been speculating this since 2005 and it hasnt happened. The government will never allow it to happen, and they have all the monetary and fiscal flexibility in place to stop it, contrary to the 2008 subprime housing crash in the US.

Most second and third tier cities in China are still recording close to 10% growth annualy. What a remarkable economic revolution. More flights will open up between the US and secondary China cities. The question is whether they will be flown by UA or the Chinese carriers.

On the flip side of the same coin, UAs expansion in China isn't the gold mine they thought it would be. India on the other hand is about to overtake China in terms of population and has a larger middle class to boot. With a Star Alliance partner in AI, and the Indian govt willingness to privatize AI (UA could become a stakeholder), UA has an adavantage. Delta is looking at jumping into India with their 9W relationship.
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LAXintl
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Re: United U.S - China Secondary Growth

Thu Jul 20, 2017 3:58 am

TWA772LR wrote:
On the flip side of the same coin, UAs expansion in China isn't the gold mine they thought it would be. India on the other hand is about to overtake China in terms of population and has a larger middle class to boot. With a Star Alliance partner in AI, and the Indian govt willingness to privatize AI (UA could become a stakeholder), UA has an adavantage. Delta is looking at jumping into India with their 9W relationship.


India for the next 20-years is forecast to remain a much smaller air travel market than China, and also one with forecast lower consumer buying power.

Per IATA, China is forecast to produce 1.3billion plane trips in 2035, India 442mil. (for comparison US is 1.1bil)

http://www.iata.org/publications/store/ ... ecast.aspx

So just because India is forecast to have more people, does not mean this equates to travel propensity nor their spending power.
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jfidler
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Re: United U.S - China Secondary Growth

Thu Jul 20, 2017 4:40 am

I was on UA's SFO-XIY flight last fall and it was fairly full both in front and back, but I know nothing about how much everyone paid for their ticket. I was in paid J and the price was similar to what I'd pay to fly to PEK instead. One possible issue is the flight was not daily, and the FAs I talked to said they had a 2-3 day layover there before heading back, so that must be costly for UA.

As for expansion, maybe CAN, CKG, or NKG?
 
MD80MKE
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Re: United U.S - China Secondary Growth

Thu Jul 20, 2017 7:19 am

Indeed UA had a hard time to gain ground in secondary China market. From the most recent DOT published figure, in the relatively hot month of January, HGH - SFO only had a combined load factor of 69%, one of the worst in China - US market, only better than CA's PVG - SJC. In contrast, 3U's HGH - LAX had about 90% load factor. Although yield might be another foactor, It's hard to make money if you constantly fly half-full plane for more than 12 hours. CTU did fairly well for UA, but with the competition from HU and eventually 3U with their A350s. It's just hard to see to much of a bright future for UA.
 
MD80MKE
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Re: United U.S - China Secondary Growth

Thu Jul 20, 2017 7:21 am

jfidler wrote:
I was on UA's SFO-XIY flight last fall and it was fairly full both in front and back, but I know nothing about how much everyone paid for their ticket. I was in paid J and the price was similar to what I'd pay to fly to PEK instead. One possible issue is the flight was not daily, and the FAs I talked to said they had a 2-3 day layover there before heading back, so that must be costly for UA.

As for expansion, maybe CAN, CKG, or NKG?

The bilateral for tier 1 Chinese cities has all been used. So CAN is off the list for now until the change of bilateral frequencies.
 
simpv
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Re: United U.S - China Secondary Growth

Thu Jul 20, 2017 8:11 am

I always assumed that HGH and XIY were part of a longer term strategy to gain a foothold in China; even though there aren't high yields, it does prevent AA/DL from trying to invest.

I do think that the flood of Chinese carriers means that any expansion for UA will go to Japan/Korea/Vietnam/Australia from SFO.
 
eamondzhang
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Re: United U.S - China Secondary Growth

Thu Jul 20, 2017 8:13 am

MD80MKE wrote:
Indeed UA had a hard time to gain ground in secondary China market. From the most recent DOT published figure, in the relatively hot month of January, HGH - SFO only had a combined load factor of 69%, one of the worst in China - US market, only better than CA's PVG - SJC. In contrast, 3U's HGH - LAX had about 90% load factor. Although yield might be another foactor, It's hard to make money if you constantly fly half-full plane for more than 12 hours. CTU did fairly well for UA, but with the competition from HU and eventually 3U with their A350s. It's just hard to see to much of a bright future for UA.

At least for [email protected], they can feed the flight at both ends, wheras HU barely has anythiing at either end.

And 3U's HGH-LAX originates from CTU, so we can't exclude those who travelled from CTU, especially tour groups. With 4 A350's to be tied up with CTU-LAX direct and CTU-NYC direct, I don't see 3U in SFO market anytime soon.
 
commavia
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Re: United U.S - China Secondary Growth

Thu Jul 20, 2017 12:21 pm

simpv wrote:
I always assumed that HGH and XIY were part of a longer term strategy to gain a foothold in China; even though there aren't high yields, it does prevent AA/DL from trying to invest.


It doesn't "prevent" anything - neither AA nor Delta were going to be flying to non-coastal China in 2017, anyway, regardless of whether United was or not.
 
simpv
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Re: United U.S - China Secondary Growth

Thu Jul 20, 2017 12:24 pm

commavia wrote:
simpv wrote:
I always assumed that HGH and XIY were part of a longer term strategy to gain a foothold in China; even though there aren't high yields, it does prevent AA/DL from trying to invest.


It doesn't "prevent" anything - neither AA nor Delta were going to be flying to non-coastal China in 2017, anyway, regardless of whether United was or not.


You're right; let me rephrase. It makes an unlikely prospect of AA/DL flying to non-coastal Chinese even more unlikely, given that UA is already present and has a headstart in letting the market mature.
 
TWFlyGuy
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Re: United U.S - China Secondary Growth

Thu Jul 20, 2017 12:54 pm

[email protected] wrote:
Tdan wrote:
HGH and XIY are two of the worst routes in the system on a unit revenue perspective based on DOT data. CTU does ok, but I wouldn't expect much additional secondary growth to China from UA, from a commercial standpoint. Too much capacity from Chinese carriers flooding the market.


Blasted state-owned and state-subsidised Chinese airlines. ;-)


Odd that you don't hear Delta crying about this. ;)
 
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LAXintl
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Re: United U.S - China Secondary Growth

Sat Jul 29, 2017 3:20 pm

SFO-Hangzhou ends Oct 14th.
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SFOtoORD
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Re: United U.S - China Secondary Growth

Sat Jul 29, 2017 4:01 pm

LAXintl wrote:
SFO-Hangzhou ends Oct 14th.


Was this planned to be seasonal or is this the permanent end to the route? I assume the second PVG hastens this route's demise.
 
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LAXintl
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Re: United U.S - China Secondary Growth

Sat Jul 29, 2017 6:45 pm

Looks to be permanent. No restart showing in GDS for Spring/Summer 2018
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AH45
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Re: United U.S - China Secondary Growth

Sun Jul 30, 2017 3:32 am

LAXintl wrote:
Looks to be permanent. No restart showing in GDS for Spring/Summer 2018


I wonder where that freed up 787 could be deployed.
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BoeingGuy
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Re: United U.S - China Secondary Growth

Sun Jul 30, 2017 4:32 am

MD80MKE wrote:
Indeed UA had a hard time to gain ground in secondary China market. From the most recent DOT published figure, in the relatively hot month of January, HGH - SFO only had a combined load factor of 69%, one of the worst in China - US market, only better than CA's PVG - SJC. In contrast, 3U's HGH - LAX had about 90% load factor. Although yield might be another foactor, It's hard to make money if you constantly fly half-full plane for more than 12 hours. CTU did fairly well for UA, but with the competition from HU and eventually 3U with their A350s. It's just hard to see to much of a bright future for UA.


I know slightly off-topic, but how poorly is CA SJC-PVG doing? What are the load factors? You imply it's the worst performing US-China route.

Is HU SJC-PEK doing better?
 
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TWA772LR
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Re: United U.S - China Secondary Growth

Sun Jul 30, 2017 5:58 am

AH45 wrote:
LAXintl wrote:
Looks to be permanent. No restart showing in GDS for Spring/Summer 2018


I wonder where that freed up 787 could be deployed.

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BestWestern
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United Drops Hangzhou

Sun Jul 30, 2017 11:15 am

I've said this for close to a decade, but there is no gold at the end of the Chinese secondary city rainbow.

UA is dropping Hangzhou end October according to @airlineroute.

China is one of the few markets where US carriers have a perceived product strength, but Competing against totally subsidised and vertically integrated airlines means there are rock bottom yields.

Hangzhou is one of the wealthiest Chinese cities, so if a route is to work, it's here.
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Cointrin330
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Re: United Drops Hangzhou

Sun Jul 30, 2017 11:28 am

It was very clear from UAL's 3Q earnings report that the carrier is facing headwinds in the Pacific and specifically in China, where there is a lot of competition. The HGH route was started at a time when UA could not get a slot for a second daily service into PVG, which it now has. Time will tell if Xian and Chengdu service remains.
 
BlatantEcho
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Re: United Drops Hangzhou

Sun Jul 30, 2017 11:46 am

Damn, I was going to book that for the fall. Getting directly to HGH is a lot easier than doing the PVG shuffle (maglev, subway, train).

Maybe I can get the flight in before it ends, but, that's sad.
That said, R/T prices were often in the $500 range, so, I guess I'm not shocked entirely.
 
fun2fly
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Re: United Drops Hangzhou

Sun Jul 30, 2017 11:50 am

Seasonal end or total end?
 
BestWestern
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Re: United Drops Hangzhou

Sun Jul 30, 2017 11:51 am

Pudong to Hangzhou is about 5 hrs by public transport. They are two distinct markets.
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[email protected]
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Re: United Drops Hangzhou

Sun Jul 30, 2017 11:57 am

Blasted state-owned and state-subsidised Chinese airlines! Let's get into bed with them! ;-)
"Everyone writing for the Telegraph knows that the way to grab eyeballs is with Ryanair and/or sex."
 
factsonly
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Re: United Drops Hangzhou

Sun Jul 30, 2017 12:02 pm

[email protected] wrote:
Blasted state-owned and state-subsidised Chinese airlines! Let's get into bed with them! ;-)


UA and CA codeshare on HGH-SFO.
 
BestWestern
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Re: United Drops Hangzhou

Sun Jul 30, 2017 12:34 pm

Hangzhou is a China Eastern city. The UA route wasn't helped by sichuan starting LAX twice weekly - no doubt subsidised.

If UA with quality feed can't make HGH work, how does Sichuan make a LAX point to point work? Subsidies.

Yet, the US3 says nothing as the Chinese carriers eat their lunch and murder yields to south east Asia. Hypocrisy.

Look at what's happening with CX.
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MIflyer12
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Re: United Drops Hangzhou

Sun Jul 30, 2017 12:42 pm

BestWestern wrote:
Hangzhou is one of the wealthiest Chinese cities, so if a route is to work, it's here.


Luxembourg is very wealthy yet has zero non-stop service to the U.S. It's even close enough that a 757 would have range to BOS/NYC (or YYZ).

Successful route planning isn't single-variable stuff: not simply per capita income, or metro population, or hub to partner hub.
 
BestWestern
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Re: United Drops Hangzhou

Sun Jul 30, 2017 1:03 pm

As a former airline route planner, I think I know that.

Next time, come up with a better example.

Luxembourg country - population 500k
Hangzhou city - population 9m.
Zhenjiang province - population 55m
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yonahleung
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Re: United Drops Hangzhou

Sun Jul 30, 2017 1:28 pm

BestWestern wrote:
Pudong to Hangzhou is about 5 hrs by public transport. They are two distinct markets.

More like three hours changing for the Chinese Shinkansen at Hongqiao?
 
ca177
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Re: United Drops Hangzhou

Sun Jul 30, 2017 1:37 pm

BestWestern wrote:
Hangzhou is a China Eastern city. The UA route wasn't helped by sichuan starting LAX twice weekly - no doubt subsidised.

If UA with quality feed can't make HGH work, how does Sichuan make a LAX point to point work? Subsidies.

Yet, the US3 says nothing as the Chinese carriers eat their lunch and murder yields to south east Asia. Hypocrisy.

Look at what's happening with CX.

Just to be fair, UA was also subsidized by the Chinese government to start the route. The subsidy is on a non-renewable one year term, and UA left almost as soon as the term expires. So... blasting whom now?
Source: http://bbs.feeyo.com/posts/592/topic-0011-5929089.html (Chinese)
So is AF's CDG-WUH, and a lot of secondary Chinese cities long haul international routes.
 
Armaghman
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Re: United Drops Hangzhou

Sun Jul 30, 2017 2:11 pm

By road it is pretty direct and you avoid Shanghai completely and get there in around 2hrs, other catchment cities fir driving such as Wenzhou and ningbo can easily get to pvg. Frequent international travellers regularly go through pvg so it is just a nice to have the direct, going 2hrs up they may save it at the other side.

Personally I struggle to see enough premimijm for Hangzhou with proximity of pvg, I do see xian and chengdu survive as very different market.
 
SFOtoORD
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Re: United Drops Hangzhou

Sun Jul 30, 2017 2:15 pm

Was noted in this thread yesterday by LAXIntl: viewtopic.php?f=3&t=1368793&p=19708399#p19708399
 
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c933103
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Re: United Drops Hangzhou

Sun Jul 30, 2017 2:22 pm

Could it be a result of the bad presses the arilines received due to those previous incidents related to United and its passengers?
Also, just two months ago China decided to build a new high speed train station at Pudong that will link it to Hangzhou directly, which would probably kill any/all the prospect for HGH traffic to pick up in the future.
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SFOtoORD
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Re: United Drops Hangzhou

Sun Jul 30, 2017 2:26 pm

c933103 wrote:
Could it be a result of the bad presses the arilines received due to those previous incidents related to United and its passengers?


Seems unlikely given that they're not downsizing the rest of their China network in any way.

Most likely culprit is the start of the second SFO-PVG and poor loads from day 1.
 
LHUSA
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Re: United Drops Hangzhou

Sun Jul 30, 2017 2:33 pm

I wonder if XIY will suffer the same fate?
 
Armaghman
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Re: United Drops Hangzhou

Sun Jul 30, 2017 2:37 pm

By road it is pretty direct and you avoid Shanghai completely and get there in around 2hrs, other catchment cities fir driving such as Wenzhou and ningbo can easily get to pvg. Frequent international travellers regularly go through pvg so it is just a nice to have the direct, going 2hrs up they may save it at the other side.

Personally I struggle to see enough premimijm for Hangzhou with proximity of pvg, I do see xian and chengdu survive as very different market.
 
raylee67
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Re: United Drops Hangzhou

Sun Jul 30, 2017 2:43 pm

Really don't know where that CN3 getting subsidies thing comes from. Fake News!

It is true that Hangzhou is one of the wealthiest secondary cities in China, but it does not have a lot of business connection with US. And there is virtually no inbound tourist traffic from US to Hangzhou. For outbound tourist traffic, Chinese tourists go to Japan and SE Asia for short trips and Europe for long trips. North America is not really on top of their mind. The route is probably only busy during US holiday seasons when Chinese people living in US return to Hangzhou for VFR purpose, and also at the beginning and end of school seasons when scores of Zhejiang originated Chinese students travel between US and China.

If you look at CN3, even they don't try doing long haul with secondary cities, except Air China has some European flights from Chengdu and MU has some Middle East flights from Kunming. But Chengdu and Kunming are hubs of CA and MU respectively. The ones opening odd long haul routes are secondary carriers like Hainan Airlines, Sichuan Airlines and Xiamen Airlines, etc. Do they get subsidized? Certainly not from the Central Government in Beijing.
319/20/21 332/33 342/43/45 359/51 388 707 717 732/36/3G/38/39 74R/42/43/44/4E/48 757 762/63 772/7L/73/7W 788/89 D10 M80 135/40/45 175/90 DH1/4 CRJ/R7 L10
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BestWestern
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Re: United Drops Hangzhou

Sun Jul 30, 2017 2:54 pm

Hangzhou airport is a 30m+ Passenger airport that struggles with international airlines. KLM Started flying there in 2010 and are still operating x3 weekly. Within Asia, there are 7 daily flights to HKG, compared to 30 to nearby Pudong.

The Chinese carriers seem to do better than international ones - SQ has scoot operating the route, whilst Xiamenair operates daily. It's a beautiful city.

I'm very aware that foreign airlines get subsidies, but nothing of the level local carriers get. Just look at the frequencies for point to point flights from secondary cities to random Euro and US cities.
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factsonly
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Re: United Drops Hangzhou

Sun Jul 30, 2017 2:55 pm

Armaghman wrote:
By road it is pretty direct and you avoid Shanghai completely and get there in around 2hrs, other catchment cities fir driving such as Wenzhou and ningbo can easily get to pvg. Frequent international travellers regularly go through pvg so it is just a nice to have the direct, going 2hrs up they may save it at the other side.

Personally I struggle to see enough premimijm for Hangzhou with proximity of pvg, I do see xian and chengdu survive as very different market.


KLM has been operating to HGH-AMS for 7 years (since May 2010), while operating PVG-AMS up to 2x daily for all this time.
 
BestWestern
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Re: United Drops Hangzhou

Sun Jul 30, 2017 3:07 pm

raylee67 wrote:
Really don't know where that CN3 getting subsidies thing comes from. Fake News!


Fake news???? Seriously????

https://centreforaviation.com/insights/ ... ies-222454

$1.1bn in 2014 from central government to the CN4.
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tphuang
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Re: United Drops Hangzhou

Sun Jul 30, 2017 3:09 pm

yonahleung wrote:
BestWestern wrote:
Pudong to Hangzhou is about 5 hrs by public transport. They are two distinct markets.

More like three hours changing for the Chinese Shinkansen at Hongqiao?


They are the same market in the same way that Beijing and Tianjin are the same market. Shanghai folks would not fly out of HGH, but Hangzhou folks would fly out of Shanghai.

If one secondary market would work in China, it would probably be Shenzhen in my opinion. Other than being China Southern hub, there is no real reason why people in southern Guangzhou should pick CAN ahead of SZX to fly out of.

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