China | China's surging domestic travel stokes boom for carriers
More than 10 Chinese carriers have begun flying since Beijing's aviation regulator relaxed a six-year suspension on new airlines licenses in 2013. They now operate or have ordered at least 100 jets made by Europe's Airbus, Boeing of the US and Brazil's Embraer. Photo: Reuters.
More than 10 Chinese carriers have begun flying since Beijing's aviation regulator relaxed a six-year suspension on new airlines licenses in 2013. They now operate or have ordered at least 100 jets made by Europe's Airbus, Boeing of the US and Brazil's Embraer. Photo: Reuters.

China’s surging domestic travel stokes boom for carriers

Surge in airline startups as Chinese regulator cuts red tape means a boom in new aircraft orders and happy days for pilots

November 1, 2016 8:59 AM (UTC+8)

China’s appetite for planes and pilots is building up, whetted by a slew of airlines launched in the past three years as local governments, private firms and larger carriers fight for a share of the country’s fast-growing domestic travel market.

More than 10 Chinese carriers have begun flying since Beijing’s aviation regulator relaxed a six-year suspension on new airline licenses in 2013. They now operate or have ordered at least 100 jets made by Europe’s Airbus, US giant Boeing and Embraer of Brazil.

Such breakneck expansion might give cause for alarm in mature aviation markets. But China’s new breed of carrier is focusing on second- and third-tier Chinese cities that have gleaming, newly built airports that helped stoke an 8.2 percent rise in domestic passenger traffic in 2015, according to the International Air Transport Association.

While state carriers like Air China, China Eastern Airlines and China Southern Airlines dominate for now, the newcomers have deep-pocketed backers like conglomerate HNA Group, plus support from local authorities as well as Air China itself.

“By 2020 we want to have 40-50 planes,” said Lan Yu, brand manager at Guangxi Beibu Gulf Airlines, a newcomer set up by the government of southwestern Guangxi province and Tianjin Airlines in 2015. Tianjin Airlines is a unit of HNA, an aviation and shipping giant with more than $100 billion in assets.

Guangxi Beibu will fly 13 Embraer E190 regional jets and three Airbus A320s to 28 Chinese cities by the end of 2016, Lan said. With average seat occupancy of more than 90% since flights began, Lan said the carrier was already profitable.

Aircraft makers like Boeing welcome the newcomers, provided they are financially sound.

“We obviously look a little more closely at new airlines to make sure we account for the risk, but we’re not seeing any issues with the ones that have started up in China,” said Darren Hulst, head of marketing in northeast Asia for Boeing’s commercial aircraft division.

As well as the newcomers already up and running, at least 10 more airlines have applied for air operator certificates, according to company statements and local media reports. At the end of last year, China had 48 passenger airlines, up from 36 at the end of 2012, according to data from the Civil Aviation Administration of China.

Along with racking up aircraft orders, the new airlines are also advertising pay packages up to 50 percent higher than their established rivals as they find it tougher to lure staff, said Sherrie Luo, general manager of Hong Kong-based crew recruitment firm Smile Aviation.

Hongtu Airlines, based in the southwestern city of Kunming, is offering Airbus A320 pilots monthly salaries of up to US$25,500, according to advertisements on Smile Aviation’s website. Pilots heading to China Eastern can expect as much as US$18,500 a month.

 

 

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