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janders
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United could resume Guangzhou; seeks Air China Joint-Venture

Thu Jun 13, 2019 10:53 pm

United is looking to resume growth in flying to China.

Per Walter Dias, United's China Managing Director, Guangzhou will likely rejoin the airline’s route map. “Guangzhou continues to grow and transform itself from what it was even five years ago,” Dias said. “At some time in the future I would not be surprised to see us with a non-stop service from San Francisco.”
In addition, United still intends to launch a second a daily Newark-Shanghai flight in June 2020 pending US DOT, which is evaluating how to award limited traffic rights.

Also in the more distant future is a joint-venture with Air China. United has an existing JV with All Nippon Airways that covers Japan and some select other Asian countries, but not mainland China. “We would like to have a joint-venture with our partner in Beijing,” Dias said but cautioned “I don’t think it will happen any time soon.”

https://www.forbes.com/sites/willhorton ... 5472f62ad9


So while folks like AA cry about China, looks like United continues to see money making opportunity and growing there.
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LAXintl
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Re: United could resume Guangzhou; seeks Air China Joint-Venture

Thu Jun 13, 2019 11:01 pm

His comments about UA's experience in secondary China markets provides interesting insight.


What changed in United’s secondary city strategy was not the cities or their underlying demand, but a sharp increase in flights from first tier cities, Dias explained. Airlines discounted domestic connections in order to fill the trans-pacific sector, denting demand that would otherwise fly non-stop.

“A lot of airlines were scrambling to fill up their new flights from Beijing or Shanghai, so they were saying ‘Oh you’re in Kunming, I’ll give you a free airline ticket to Shanghai so you can fly to Los Angeles,’” Dias said. “There was too much overall capacity in the country.”

United would again expand in secondary cities, but Dias said “the demographics will have to catch-up” comprising GDP, disposable income, corporate customer demand and even where manufacturing plants are being constructed.



For Guangzhou, would be funny if UA returns while AA which has its partnership with hometown CZ does not serve CAN.
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910A
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Re: United could resume Guangzhou; seeks Air China Joint-Venture

Thu Jun 13, 2019 11:10 pm

Headline is confusing, UA has never serve CAN..
 
behramjee
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Re: United could resume Guangzhou; seeks Air China Joint-Venture

Thu Jun 13, 2019 11:33 pm

LAXintl wrote:
His comments about UA's experience in secondary China markets provides interesting insight.


What changed in United’s secondary city strategy was not the cities or their underlying demand, but a sharp increase in flights from first tier cities, Dias explained. Airlines discounted domestic connections in order to fill the trans-pacific sector, denting demand that would otherwise fly non-stop.

“A lot of airlines were scrambling to fill up their new flights from Beijing or Shanghai, so they were saying ‘Oh you’re in Kunming, I’ll give you a free airline ticket to Shanghai so you can fly to Los Angeles,’” Dias said. “There was too much overall capacity in the country.”

United would again expand in secondary cities, but Dias said “the demographics will have to catch-up” comprising GDP, disposable income, corporate customer demand and even where manufacturing plants are being constructed.



For Guangzhou, would be funny if UA returns while AA which has its partnership with hometown CZ does not serve CAN.


CAN is predominantly a trader and VFR route from USA with very little premium traffic so keeping this in mind, it’s best to operate SFO-CAN with the new A359s only as they will offer 15-20% more seats than the B789 as well as being a very efficient plane flying the long haul journey.

Am surprised though that a route such as SFO-HGH wouldn’t work in this day and age with the B787.
 
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RyanairGuru
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Re: United could resume Guangzhou; seeks Air China Joint-Venture

Thu Jun 13, 2019 11:50 pm

For United HGH was effectively a backdoor to Shanghai and was cancelled when SFO-PVG went double daily. It was basically a direct swap. While the Hangzhou region is a large economic center in its own right, its proximity to Shanghai is a limitation. The customers heading to Hangzhou that United care about (read: Apple) will continue to fly with UA to Pudong, with the added benefit of a larger market filling the rest of the seats.
Last edited by RyanairGuru on Fri Jun 14, 2019 12:18 am, edited 1 time in total.
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Sightseer
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Re: United could resume Guangzhou; seeks Air China Joint-Venture

Fri Jun 14, 2019 12:15 am

910A wrote:
Headline is confusing, UA has never serve CAN..


That made me double-take as well. But regardless, with SFO UA is probably in the best position among the US3 to make CAN work.
 
xiaotung
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Re: United could resume Guangzhou; seeks Air China Joint-Venture

Fri Jun 14, 2019 1:04 am

You can't do JV without open skies.
 
Ionosphere
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Re: United could resume Guangzhou; seeks Air China Joint-Venture

Fri Jun 14, 2019 1:09 am

I think only NW flew to Guangzhou on the 757 from NRT
 
jayunited
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Re: United could resume Guangzhou; seeks Air China Joint-Venture

Fri Jun 14, 2019 1:18 am

If this service is dependent on a JV with Air China then we most certainly are years away from seeing it come to fruition. The U.S. government doesn't have the best relationship with China at the moment. And a second sticking point the Forbes article pointed out is even if open skies were to take place would U.S. carriers have equal access to Chinese airports some of which are slot constrained.
 
ITSTours
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Re: United could resume Guangzhou; seeks Air China Joint-Venture

Fri Jun 14, 2019 1:28 am

With the current tension between the governments, I do not see open skies and subsequent JVs.
 
ScottB
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Re: United could resume Guangzhou; seeks Air China Joint-Venture

Fri Jun 14, 2019 2:18 am

LAXintl wrote:
His comments about UA's experience in secondary China markets provides interesting insight.

[i]What changed in United’s secondary city strategy was not the cities or their underlying demand, but a sharp increase in flights from first tier cities, Dias explained. Airlines discounted domestic connections in order to fill the trans-pacific sector, denting demand that would otherwise fly non-stop.

“A lot of airlines were scrambling to fill up their new flights from Beijing or Shanghai, so they were saying ‘Oh you’re in Kunming, I’ll give you a free airline ticket to Shanghai so you can fly to Los Angeles,’” Dias said. “There was too much overall capacity in the country.”


I give very little credit to this argument given that the U.S. legacy carriers have long employed the same sort of pricing shenanigans. A connecting flight over a U.S. legacy hub was often far cheaper than one or both of the individual non-stop segments -- so by Dias's "free airline ticket to Shanghai" logic, the legacy carrier was paying passengers to take an extra flight.

Rather, the key issue has been that the Chinese market is extremely price-sensitive and they were unable to achieve the desired revenue premium in secondary Chinese markets thanks to the Chinese carriers employing similar pricing tactics for connections as the U.S. legacies use with their own hubs.
 
tphuang
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Re: United could resume Guangzhou; seeks Air China Joint-Venture

Fri Jun 14, 2019 2:22 am

Given that CZ is already on this route and probably requires a lot of cheap connection at CAN, I don't see how this can work for UA. Any market that has demand to CAN from NA are already served by CZ.
 
downdata
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Re: United could resume Guangzhou; seeks Air China Joint-Venture

Fri Jun 14, 2019 2:51 am

Doesnt AA have a JV with CZ?
 
Ishrion
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Re: United could resume Guangzhou; seeks Air China Joint-Venture

Fri Jun 14, 2019 2:59 am

downdata wrote:
Doesnt AA have a JV with CZ?


Codeshare only with reciprocal benefits for passengers.
 
Chasensfo
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Re: United could resume Guangzhou; seeks Air China Joint-Venture

Fri Jun 14, 2019 3:14 am

The CAN route was teased over and over again, even with public schedules with 747-400s at one point, and talk of double daily even when I was at United Express(Skywest). Even with China Southern on SFO-CAN route, I'd imagine there is room for competition, if the price is right. A large number of SFO-HKG pax take a ferry or ground transportation onward to CAN I've learned.
 
Jet-lagged
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Re: United could resume Guangzhou; seeks Air China Joint-Venture

Fri Jun 14, 2019 4:24 am

Chasensfo wrote:
A large number of SFO-HKG pax take a ferry or ground transportation onward to CAN I've learned.


We are doing something like that in a few weeks: SEA nonstop to HKG and then taking the airport ferry up the Pearl River to Nansha, on the outskirts of Guangzhou.
 
B1168
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Re: United could resume Guangzhou; seeks Air China Joint-Venture

Fri Jun 14, 2019 4:34 am

About 10 years ago, UA was promised 200 million rmb for 1 daily 772 flown... then came the financial crisis. I don’t know, CZ recently downgauged their service to SFO from 77w to 789.
 
x1234
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Re: United could resume Guangzhou; seeks Air China Joint-Venture

Fri Jun 14, 2019 4:21 pm

B1168, CZ downgraded the SFO-CAN route to a 789 but increased the frequency to 6x weekly. So SFO-CAN is now almost daily very soon.
 
codc10
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Re: United could resume Guangzhou; seeks Air China Joint-Venture

Fri Jun 14, 2019 4:33 pm

ScottB wrote:
LAXintl wrote:
His comments about UA's experience in secondary China markets provides interesting insight.

[i]What changed in United’s secondary city strategy was not the cities or their underlying demand, but a sharp increase in flights from first tier cities, Dias explained. Airlines discounted domestic connections in order to fill the trans-pacific sector, denting demand that would otherwise fly non-stop.

“A lot of airlines were scrambling to fill up their new flights from Beijing or Shanghai, so they were saying ‘Oh you’re in Kunming, I’ll give you a free airline ticket to Shanghai so you can fly to Los Angeles,’” Dias said. “There was too much overall capacity in the country.”


I give very little credit to this argument given that the U.S. legacy carriers have long employed the same sort of pricing shenanigans. A connecting flight over a U.S. legacy hub was often far cheaper than one or both of the individual non-stop segments -- so by Dias's "free airline ticket to Shanghai" logic, the legacy carrier was paying passengers to take an extra flight.

Rather, the key issue has been that the Chinese market is extremely price-sensitive and they were unable to achieve the desired revenue premium in secondary Chinese markets thanks to the Chinese carriers employing similar pricing tactics for connections as the U.S. legacies use with their own hubs.


I don't think it was a complaint in the same vein as US3 criticism of the ME3, but more of a fact of life in those markets. First, they are a bit premature in terms of demographics, as Dias notes. Significant growth, large population, air service expansion, but disposable income and premium demand still lags. So where the market is pretty discretionary, and price-elastic, it's a tough place to deploy a niche, premium-oriented product. Second, there's no doubt that TPAC capacity from China has outpaced demand, and the major hubs absorbed most of the growth.
 
910A
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Re: United could resume Guangzhou; seeks Air China Joint-Venture

Fri Jun 14, 2019 4:39 pm

x1234 wrote:
B1168, CZ downgraded the SFO-CAN route to a 789 but increased the frequency to 6x weekly. So SFO-CAN is now almost daily very soon.

The SFO-CAN #658 is still using the 77W. The one stop #660 via WUH is also currently using the 77W also.
 
NZ321
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Re: United could resume Guangzhou; seeks Air China Joint-Venture

Fri Jun 14, 2019 4:52 pm

910A wrote:
Headline is confusing, UA has never serve CAN..


I thought so! I also cannot recollect a UA service to CAN any time in my living memory since 1969. Those in the know please elaborate.
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simpv21
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Re: United could resume Guangzhou; seeks Air China Joint-Venture

Fri Jun 14, 2019 4:57 pm

What about SZX instead? Closer to HKG, but UA could at least use CA connections there.
 
NZ321
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Re: United could resume Guangzhou; seeks Air China Joint-Venture

Fri Jun 14, 2019 4:59 pm

Given the announced China Southern - American tie up I would have thought that CAN would be more on AA's radar than UAL.
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YYZORD
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Re: United could resume Guangzhou; seeks Air China Joint-Venture

Fri Jun 14, 2019 6:16 pm

AC already has a JV with CA so with UA adding a JV with them, it just makes sense. Who knows, maybe CA will have a tri JV with AC and UA to cover Canada and USA.
 
Chasensfo
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Re: United could resume Guangzhou; seeks Air China Joint-Venture

Sat Jun 15, 2019 1:22 am

B1168 wrote:
About 10 years ago, UA was promised 200 million rmb for 1 daily 772 flown... then came the financial crisis. I don’t know, CZ recently downgauged their service to SFO from 77w to 789.

CZ has resumed 77W service on that route for some time now.
 
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Coal
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Re: United could resume Guangzhou; seeks Air China Joint-Venture

Sat Jun 15, 2019 2:37 am

SZX to SFO would make way more sense given tech industry and Shenzhen Airlines presence.
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Re: United could resume Guangzhou; seeks Air China Joint-Venture

Sat Jun 15, 2019 2:45 am

xiaotung wrote:
You can't do JV without open skies.

Meh, just do what the US/Japan did:
Call it "open skies" anyway, despite a litany of restrictions that were previously deal-breakers for other nations (e.g. UK)...... problem solved.
I myself, suspect a more prosaic motive... ~Thranduil
 
B1168
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Re: United could resume Guangzhou; seeks Air China Joint-Venture

Sat Jun 15, 2019 4:16 am

Chasensfo wrote:
B1168 wrote:
About 10 years ago, UA was promised 200 million rmb for 1 daily 772 flown... then came the financial crisis. I don’t know, CZ recently downgauged their service to SFO from 77w to 789.

CZ has resumed 77W service on that route for some time now.


Yes, indeed. However, the equipment will be swapped indefinitely to 789 starting August 1st. I don’t know if the 789 they use to SFO have premium economy, but even if they don’t, there will still be 68 seats less per day. Even excluding the stopover flight via WUH (which will be downgauged at the same time), that capacity reduction still constitute 2 weekly of Unites 788 worth of capacity. I have seen LATAM doing TLV-GRU and AC doing YVR-BNE on 788 just fine, so I assume the same holds true for SFO-CAN.
 
ITSTours
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Re: United could resume Guangzhou; seeks Air China Joint-Venture

Sat Jun 15, 2019 5:32 am

LAX772LR wrote:
xiaotung wrote:
You can't do JV without open skies.

Meh, just do what the US/Japan did:
Call it "open skies" anyway, despite a litany of restrictions that were previously deal-breakers for other nations (e.g. UK)...... problem solved.


If we apply the same standard as Haneda to Beijing, Shanghai, and Guangzhou, then US-China is already almost open skies. Just open the Zone 2 and done.

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